NERA Economic Consulting Releases Biannual SEC Trends Report; SEC Settlements with Companies Soar in First Half of Fiscal 2011

27 June 2011

New York -- The Securities and Exchange Commission settled with 344 defendants in the first half of fiscal year 2011 (1H11), putting the agency on pace to settle with 688 defendants for the full year, compared to the 681 settlements in fiscal year 2010, according to NERA Economic Consulting's biannual SEC Settlements Trends report.

According to the authors of SEC Settlements Trends: 1H11 Update, while total SEC settlements have remained stable compared to the previous fiscal year, there has been a substantial shift in their composition. The number of company settlements jumped 43% to 114 -- for an annual pace of 228, compared to the 160 company settlements recorded in FY2010. However, individual settlements declined 12% in the first half of the year to 230, an annual pace of 460, compared to 521 in FY10.

"Although we have seen the share of individual settlements decline relative to company settlements, individual accountability has remained an important theme during the first half of the fiscal year. This is reflected in the fact that four of the 10 largest settlements over this period were with individuals," said NERA Vice President and Trends co-author Dr. James Overdahl.

Additional Settlement Trends

  • For companies whose settlements included a monetary payment, the average amount declined to $6.0 million compared to $18.5 million in FY10. However, the median company settlement increased to $1.4 million, compared to $0.8 million in FY10.
  • For individuals whose settlements include a monetary payment, the average was $4.48 million and median amount was $310,000. Both figures are greater than any full fiscal year since SOX was implemented.
  • Public company misstatement settlements declined sharply in 1H11 to 33, an annual pace of 66, down 39% from the 108 settlements in FY10 and more than 60% from the post-SOX high of 170 in 2007.
  • The SEC has only reached 25 insider trading settlements in 1H11, despite recent high-profile cases. If this pace is maintained, the agency will only reach 50 insider trading settlements in FY11, which would represent the lowest number in any year since SOX and a one-third drop from the 74 settlements reached in FY10.
  • The SEC settled FCPA charges with 13 defendants in 1H11, putting it on pace to reach 26 settlements for the full fiscal year-a post-SOX high. FCPA median settlements values in 1H11 increased 40% relative to the post-SOX average.

Ten Largest Settlements in 1H11

Defendant      Amount (millions)
 Milowe Allen Brost & Gary Allen Sorsenson  $310
 US Pension Trust Corp & US College Trust Corp.  $113
 Jacob "Kobi" Alexander - cofounder, Comverse Technology  $54
 Alcatel-Lucent, S.A.  $45
 Joseph P. Nacchio, former CEO, Quest Communications Intl.  $45
 Daniel Spitzer, controller, eighteen entities  $44
 Banc of America Securities  $36
 AXA Rosenberg Group  $25
 BNY Mellon Securities LLC  $24
 Pride International  $24

SEC Settlement Trends Report Series

You can download the report: SEC Settlements Trends: 1H11 Update, and find historical SEC settlements data and previous SEC settlements trends reports at

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 ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over 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 more than 25 offices across North America, Europe, and Asia Pacific.