During a panel discussion Friday, U.S. Securities and Exchange Commission chief litigation counsel Matthew Martens defended the agency's prowess in court - as well as its willingness to enter into what he termed "appropriate" settlements.
"The reality is, we've had tremendous success and are not shying away from bringing challenging cases," he said today at the Practicing Law Institute’s “SEC Speaks” conference in Washington. “We’re willing to take on litigated matters, knowing from the outset they will not be settled.”
Martens said that of the 68 cases that the SEC has brought against individuals in connection to the 2008 financial crisis, 50 are being litigated, or 74 percent.
The SEC came under fire by Judge Jed Rakoff last year, when he blasted the SEC for reaching a settlement with Citigroup Global Markets Inc. that did not require the company to admit or deny wrongdoing in connection with a failed mortgage-backed securities fund, and refused to sign off on the deal. The SEC has appealed his ruling to the U.S. Court of Appeals for the 2nd Circuit.
Martens said it was “good policy to accept a settlement” if it offered relief comparable to “what we could reasonably expect if we prevailed at trial.” He continued, “At the end of the day, it’s a mistake on our part to turn down a settlement simply because there’s not an admission of liability.”
The SEC has brought about 2,000 cases in the last three years, Martens said, and fewer than 10 judges had issues with settlement terms. (“And only one judge to my knowledge has rejected” a deal, he said, drawing a laugh).
He also noted that the SEC’s no admit/no deny settlement policy is “consistent with what every other agency does....We’re not some outlier in terms of a government agency.”
The bigger question IMO is why companies should have to pay for the sins of the individuals that allegedly violated the law? That victimizes the very same shareholders that the SEC purports to protect.
Posted by: Dissident | February 25, 2012 at 12:21 PM