SEC's Emphasis on Individual Accountability Drives Settlement Pace Toward Seven-Year High

01 August 2012
By Dr. James Overdahl with former NERA economist Dr. Elaine Buckberg

The US Securities and Exchange Commission's (SEC's) promise to hold more individuals accountable was realized in the first half of fiscal year 2012 (1H12) in a 20% jump in the number of SEC settlements with individuals, according to this Wall Street Lawyer article. The article notes that the SEC settled 286 cases with individuals in the first half of 2012, putting it on pace for 572 settlements in FY12, the most since 2005. This marks a shift from the end of fiscal 2011, when NERA reported that the SEC's promise to hold more individuals accountable was borne out in the value, but not in the number, of settlements with individuals.

The authors note that total SEC settlements are also up, but the increase is entirely explained  by the rise in settlements with individuals. The SEC settled with 379 defendants in 1H12, putting in on pace for 758 settlements in FY12. This would constitute a 13% increase from the SEC's 670 settlements in 2011 and would constitute the most annual settlements since 2005. The pace of settlements with companies is down slightly, with 93 settlements, consistent with an annual pace of 186, as compared with 196 in FY11.