NERA Economic Consulting Releases Biannual SEC Trends Report
14 May 2010
Credit Crisis Drives the Largest SEC Settlements for First Half of 2010
New York -- The Securities and Exchange Commission settled with 354 defendants in the first half of fiscal year 2010 compared to 328 defendants in the second half of 2009 and 290 in the first half of 2009, according to NERA Economic Consulting's biannual SEC Settlement Trends report.
The SEC's settlement activity in the first half of 2010 marks the second consecutive semiannual increase and third-largest number of settlements in any six-month period since 2005. According to the authors of SEC Settlements Trends: 1H10 Update, the increase in settlements over the past two semiannual periods has largely been driven by settlements with individuals (257 in the first half of 2010 versus 225 in the second half of 2009).
The State Street Bank and Trust Company's $314 million settlement with the SEC ranks as the largest in the first half of 2010, and the seventh-largest settlement overall since the passage of the Sarbanes-Oxley Act ("SOX").
"While the number of settling defendants has been on an upward trend over the past year, overall settlement values have remained relatively steady compared to historical levels," said SEC Settlements Trends: 1H10 Update report co-author Dr. James Overdahl, NERA Vice President and former Chief Economist and Director of the Office of Economic Analysis for the SEC. "Notably the SEC settled two subprime-related cases for over $100 million in the first half of the 2010 fiscal year. What remains to be seen is whether these cases, along with the recent action against Goldman Sachs, are the beginning of a new wave of subprime-related SEC settlements."
Additional Settlement Trends
- Settlements involving insider trading rebounded sharply in the first-half of 2010, after two consecutive half-yearly declines. The 50 insider trading settlements so far in 2010 represent the third-largest number in any semiannual period since SOX.
- Monetary settlements were a component of 67% of company settlements in the second quarter versus 42% in the first quarter 2010.
- The median settlement value of $0.7 million for companies in 1H10 was the fourth lowest of any semiannual period since SOX. For individuals the median settlement amount was approximately $167,000, post-SOX high.
This report is authored by NERA Senior Consultant Jan Larsen, Senior Vice President Dr. Elaine Buckberg, and Vice President Dr. James A. Overdahl.
About NERA
NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.
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