2009 SEC Settlements Decline for Second Consecutive Year
7 December 2009
New York -- The number of Securities and Exchange Commission settlements declined for the second consecutive fiscal year in 2009, with 626 defendants, compared to 673 in FY 2008, according to NERA Economic Consulting's fiscal year-end SEC Settlements Trends report, released today.
The 2009 fiscal year-end figures represent the lowest annual number of settling defendants since the Sarbanes-Oxley Act ("SOX") was implemented in 2002.
Monetary payments were a component of 58.6% of company settlements and 58.9% of individual settlements for FY 2009. For companies, the average settlement more than doubled to $10.7 million, compared to $4.7 million in the previous year. The median company settlement was $1.0 million, the same as in FY 2008.
The divergence between doubling average company settlements and unchanged median settlements is explained by three settlements over $100 million: Siemens' $350 million alleged Foreign Corrupt Practices Act (FCPA) settlement, UBS's $200 million settlement for allegedly facilitating customer tax evasion, and the $177 million alleged FCPA violation settlement for Halliburton and its subsidiary KBR.
Trends in Company Misstatement Cases
The latest SEC Settlements Trends report analyzes all post-SOX SEC settlements relating to alleged public company misstatements, providing context for the SEC's $33 million proposed settlement with Bank of America being struck down in federal court.
NERA authors found that in the post-SOX era, individuals have been more likely than the companies themselves to be targeted by the SEC in misstatement cases. Since the passage of SOX to the end of FY 2009, the SEC has reached settlements in cases relating to the alleged misstatements of 353 public companies. Of these cases, the SEC has settled only with the company 62 times, compared to 99 cases where the SEC has settled only with individual directors or employees. In the remaining 192 cases, the SEC has settled with both the company and individuals.
SEC Settlement Trends Report Series
SEC Settlements Trends: 3Q09 Update, historical SEC settlements data, and previous SEC settlement trends reports can be viewed on NERA Economic Consulting's Securities Litigation Trends website at www.securitieslitigationtrends.com.
This report is authored by NERA Senior Vice President Dr. Elaine Buckberg and Consultant Jan Larsen, and Dr. Baruch Lev, NERA Special Consultant and Philip Bardes Professor of Accounting and Finance at the Stern School of Business and Director of the Vincent C. Ross Institute of Accounting Research at New York University.
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 nearly 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.
NERA's clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world's largest economic consultancies. With its main office in New York City, NERA serves clients from over 20 offices across North America, Europe, and Asia Pacific.
