Why Settling with the SEC Can Be Worse Than Losing at Trial

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Published: Forbes
Author: Daniel Fisher
 

In SEC enforcement cases, the Commission has had a policy where they accept a “no-admit, no-deny” settlement from defendants.

Defendants get to close their case without having to admit or deny wrongdoing. Many cases have been settled with this standard, however, recently, the Securities and Exchange Commission announced that it intends to seek more admissions for wrongdoing as a condition of settlement in some of the more harmful cases, defined as those that include “misconduct that harmed large numbers of investors or placed investors or the market at risk of potentially serious harm; where admission might safeguard against risks posed by the defendant to the investing public, particularly when the defendant engaged in egregious intentional misconduct; or when the defendant engaged in unlawful obstruction of the Commission’s investigative process.”

This shift in enforcement policy has implications and collateral consequences that can manifest with defendants that are facing both a criminal and civil case. Admission of wrongdoing in settling a SEC civil suit can have collateral consequences if that defendant has a parallel criminal case. That is just one example of the far reaching effects of this policy shift.

To go into further details of potential consequences of this shift in policy, please read the article here.

By : Securex /January 30, 2014 /Compliance, Marketforms.com, Public Company Accounting, Section 16 Filings, Securites Law /1 Comment