New Report on Trends In SEC Settlements
A new report by NERA Economic Consulting titled “SEC Settlement Trends: 2H12 Update” details trends in recent Commission enforcement settlements. For the last fiscal year the top ten settlements range from the $285 million Citigroup Global Markets, Inc., which is on appeal since the Court declined to enter it, to the $46.08 million in the case with Wachovia Bank N.A. In order those settlements were:
· Citigroup: $285 million
· Mizuho Securities USA: 127.5 million
· Amanda E. Knorr & Tony B. Wragg: $114.81 million
· Raj Rajaratnam: $92.81 million
· Magyar Telekom: $90.80 million
· Raymond P. Morris: $82.94 million
· Michael Lauer: $63.60 million
· George David Gordon: $50.51 million and
· Thomas Chow: $48.47 million
None of these settlements were large enough to be included among the ten largest since the passage of the Sarbanes-Oxley Act or SOX in 2002. That list does include three settlements from 2010 however. Those were Goldman, Sachs at $550 million; State Street Bank and Trust at $314 million; and Milowe Allen Brost & Gary Allen Sorenson at $310 million.
The total number of settlements in fiscal 2012 increased over those obtained in the last several years. In fiscal 2012 there were 714 settlements compared to 670 in 2011 and 2010, 606 in 2009 and 657 in 2008.
The number of settlements last year in insider trading cases was significantly higher compared to the last several years. In fiscal 2012 there were 120 settled insider trading cases compared to 67 in 2011, 71 in 2010 and 66 in 2009. In other categories the number of settlements last year was at a post-SOX high:
· Misrepresentations to customers and the misappropriation of funds by financial services firms: 208 settlements last year compared to 199 the year before and 193 two years ago;
· Ponzi scheme cases: 92 settlements last year compared to 81 in 2011, 77 in 2010 and 52 in 2009; and
· Trading violations: 48 settlements in fiscal 2012 compared to 25 in 2011, 37 in 2010 and 16 in 2009.
In contrast the number of settled FCPA cases last year fell slightly to 16 from 18 in 2011 and 20 in 2010 but equaled the 16 in 2009. Settlements last year in this area still exceeded the average of 12 per year for the post-SOX era.
Finally, the Report provides an overview of activity in the whistleblower area. During the first full year of the program the Commission received 3,001 tips. The largest categories were: corporate disclosure and financials with 547 tips offering fraud, 465; manipulation, 457 and insider trading with 190 tips.