Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

SEC Chair Sheds Light on New Settlement Policy

Author: Dan Brecher

Date: October 29, 2013

Key Contacts

Back

In recent remarks before the Council of Institutional Investors, Securities and Exchange Commission (SEC) Chair Mary Jo White offered additional details about the agency’s new settlement policy. The speech, entitled “Deploying the Full Enforcement Arsenal,” also detailed the SEC’s priorities in creating a tougher enforcement program.

To start, White highlighted the following as key enforcement priorities:

  • Misconduct by investment advisers at hedge funds, private equity funds, and mutual funds.
  • Financial statement and accounting fraud.
  • Insider trading
  • Fraud in connection with microcap securities, particularly those perpetrated through social media
  • New markets and regulatory regimes resulting from the new rules mandated by the Dodd-Frank and JOBS Acts

White also highlighted that the SEC will be “aggressive and creative in the way we use the enforcement tools at our disposal.” As she explained, this means the agency will “neither shrink from bringing the tough cases, nor fail to bring smaller ones.”  White further added that the Enforcement Division will consider all the legal avenues available, including bringing negligence cases when there is not enough evidence to prove intentional wrongdoing.

White also shed further light on the SEC’s revised settlement policy, which will more frequently require defendants to admit wrongdoing. While White acknowledged that settling cases on a no-admit-no deny basis still makes sense in a large majority of cases, she also reaffirmed that “more may be required for a resolution to be, and to be viewed as, a sufficient punishment and strong deterrent message.” According to White, cases potentially requiring admissions include:

  • Cases where a large number of investors have been harmed or the conduct was otherwise egregious
  • Cases where the conduct posed a significant risk to the market or investors
  • Cases where admissions would aid investors deciding whether to deal with a particular party in the future
  • Cases where reciting unambiguous facts would send an important message to the market about a particular case

With regard to penalties, White noted that the agency plans to incorporate more forward-looking mandatory undertakings, such as requiring companies to implement new policies, procedures and compliance testing. As she noted, these sanctions are intended to prevent future wrongs rather than simply punish prior conduct.

The recent SEC defeat in the insider trading case it brought against Mark Cuban evidences that the Commission intends to carry through on Ms. White’s stated priorities, including not avoiding tough cases, which the Cuban case certainly appeared to be from the outset, years ago. On the other hand, the recent SEC “victory” in obtaining a $13 billion settlement from JP Morgan Chase certainly shows proof of the SEC’s revised settlement policy, a much tougher approach than in the past.

For a larger discussion of these two cases, please stay tuned.

If you have any questions about the SEC’s new policies or would like to discuss the legal issues involved, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public post image

Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public

Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]

Author: Bryce S. Robins

Link to post with title - "Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public"
Understanding Chattel Paper: A Key Component in Secured Transactions post image

Understanding Chattel Paper: A Key Component in Secured Transactions

Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]

Author: Dan Brecher

Link to post with title - "Understanding Chattel Paper: A Key Component in Secured Transactions"
Crypto Compliance: A Comprehensive Guide post image

Crypto Compliance: A Comprehensive Guide

For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]

Author: Bryce S. Robins

Link to post with title - "Crypto Compliance: A Comprehensive Guide"
Supreme Court and Title VII: Implications for Reverse Discrimination post image

Supreme Court and Title VII: Implications for Reverse Discrimination

Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]

Author: Matthew F. Mimnaugh

Link to post with title - "Supreme Court and Title VII: Implications for Reverse Discrimination"
SPACs Are Back, What You Need to Know post image

SPACs Are Back, What You Need to Know

Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]

Author: Dan Brecher

Link to post with title - "SPACs Are Back, What You Need to Know"
Short Form Merger: Streamlining the Process for Businesses post image

Short Form Merger: Streamlining the Process for Businesses

Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]

Author: Dan Brecher

Link to post with title - "Short Form Merger: Streamlining the Process for Businesses"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!