For decades, the SEC has let companies and individuals settle charges without actually admitting guilt, letting bigwigs more or less off the hook with only tacit — but not legal — acknowledgment of wrongdoing.
No longer. The Commission will begin to push for more accountability on a "case-by-case" basis, the Wall Street Journal reports :
From the Journal:
The new policy, which came out of a review [SEC Chairman] Ms. White began when she joined the agency in the spring, will be applied in "cases where…it's very important to have that public acknowledgment [of wrongdoing] and accountability," she told reporters at a Wall Street Journal CFO Network conference in Washington, D.C.
Decisions will be made on a "case-by-case" basis, Ms. White said. But she added the agency intends to target cases of egregious intentional conduct or widespread harm to investors.
Most cases still will be allowed to settle using the standard "neither admit nor deny" formula, Ms. White said.
Washington legislators like Elizabeth Warren have recently urged the SEC to take big banks to task for wrongdoing, the Journal reports.
Additionally, Judges like New York City's infamous Jed Rakoff have been railing against this policy for years. Here's what he said about it in his massive takedown of Citigroup back in 2011 and he blamed the SEC for the problem as well.
"Of course, the policy of accepting settlements without any admissions serves various narrow interests of the parties. In this case, for example, Citigroup was able, without admitting anything, to negotiate a settlement that (a) charges it only with negligence, (b) results in a very modest penalty, (c) imposes the kind of injunctive relief that Citigroup (a recidivist) knew that the S.E.C. had not sought to enforce against any financial institution for at least the last 10 years... (d) imposes relatively inexpensive prophylactic measures for the next three years. In exchange, Citigroup not only settles what it states was a broad- ranging four-year investigation by the S.E.C. of Citigroup's mortgage-backed securities offerings... but also avoids any investors' relying in any respect on the S.E.C. Consent Judgment in seeking return of their losses. If the allegations of the Complaint are true, this is a very good deal for Citigroup; and, even if they are untrue, it is a mild and modest cost of doing business."
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