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January 6, 2012

Look Out: SEC Really Getting Tough Now….. Not

In a late Friday afternoon orchestrated leak (presumably to prevent too much scrutiny or laughter), The New York Times just reported (& CNBC and elsewhere are repeating) that the SEC to going to make a big change in enforcement policy.  If you don’t think about the coming announcement too much, it sounds like it might actually be something worthwhile, but, you guessed it, it’s just window dressing and not even much of that really.

Here’s the New York Times lead:  “The Securities and Exchange Commission is making a major change in how it settles some securities fraud cases, telling companies that they will no longer be allowed to say they neither admit nor deny the commission’s civil charges when, at the same time, they admit to or have been convicted of criminal violations.”  CNBC is reporting that SEC to make “major change in no admit or deny policy”  

Wow.  That’s what the SEC thinks is a “major change”!   When a person or company ALREADY admits or is convicted of the SAME conduct at the SAME time in a parallel criminal proceeding, the SEC won’t allow them to deny the very same conduct in the SEC’s civil case.  

Look out.  Truth and justice is on the march!

The NYT goes on to say that “The SEC will continue to use the ‘neither admit nor deny’ settlement process when it alone reaches a deal with a company in a case of civil securities law violations ….  Those types of cases make up the majority of its settlements.”

That is a gross understatement.  I don’t know the actual numbers, but I’d bet “those types of cases” make up 95+% of “its settlements.”  

This is a the worst kind of leak:  late on a Friday so that it gets reported without anyone having the time to really scrutinize what the SEC is doing or, having scrutinized it, criticize it as just more meaningless PR spin that the SEC seems to specialize in as of late. 

Sadly, this isn’t about enforcement or doing their job.  This is just more window dressing to get their indefensible sweetheart settlement with Citigroup approved, which we have and continue to oppose as you can read here and here.  



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