Wildcatting

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Will Kenton
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Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.
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Updated May 07, 2022
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Erika Rasure
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Reviewed by Erika Rasure
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Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

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Fact checked by Suzanne Kvilhaug
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Suzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.
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Wildcatting

Investopedia / Michela Buttignol

What is Wildcatting?

Wildcatting informally refers to a practice instituted by the Securities and Exchange Commission (SEC) that calls for the review of an entire industry whenever critical problems are found within one or two companies in that industry.

Key Takeaways

  • Wildcatting informally refers to a practice instituted by the SEC that calls for the review of an entire industry whenever critical problems are found within one or two companies in that industry.
  • Wildcatting is a term used in the oil industry, where companies drill test wells for oil in unexplored or wild areas.
  • Wildcatting emerged after the Sarbanes-Oxley Act of 2002, which provided greater transparency for investors.

Understanding Wildcatting

The SEC may investigate any number of critical issues with a particular firm, including accounting irregularities, executive compensation and the use of derivative transactions, and parlay this investigation into an investigation of other firms within the same industry.

This term is derived from the oil industry, where companies drill test wells for oil in unexplored or wild areas. The intent of this practice as it pertains to the securities industry is to probe industries or practices about which the SEC has concerns, even if there is no clear indication of wrongdoing. Under this initiative, the SEC has conducted investigations on many industries, including the oil, cable TV and video game industries. This policy emerged after the Sarbanes-Oxley Act of 2002, which provided greater transparency for investors.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. U.S. Congress. "H.R.3763 - Sarbanes-Oxley Act of 2002." Accessed Jan. 25, 2021.

  2. Securities And Exchange Commission. "How Investigations Work." Accessed Jan. 25, 2021.