SEC Settlements Trends: 2Q09 Update

Mon Aug 03 16:24:38 EDT 2009

The number of Securities and Exchange Commission settlements for the first six months of 2009 is slightly higher than the same period for 2008, with 335 defendants in 2009 versus 330 in the first half of 2008, according to NERA's new SEC Settlement Trends report. In the second quarter of 2009, the SEC settled with 160 defendants, compared to 175 in the previous quarter and 174 in the second quarter of 2008.

The report's authors note that monetary payments were a component of 62% of company settlements and 57% of individual settlements. Among companies whose settlement included a monetary payment, the median company settlement, (i.e., the settlement with an equal number of values above and below it), was $1.6 million. This represents a slight decrease from the $1.7 million median in the first quarter, but remains above the $1.3 million median for 2008. The average settlement through the first half of 2009 was $10.1 million, an increase over the full-year average of $8.4 million in 2008.

Two of the three largest settlements during this quarter were related to mutual fund market timing. Other allegations involved in the top SEC settlements for the quarter included: misrepresentation to clients in financial statements, and misappropriation of investment funds.