SEC to review policy on settling cases; debt firm faces federal charges

May 7, 2013
SEC
Chairman to review case-settling policy

The new chairman of the Securities and Exchange Commission says she will review the agency’s policy of letting companies and individuals settle charges without admitting or denying wrongdoing.

Mary Jo White defended the policy at a budget hearing Tuesday on Capitol Hill, saying it has enabled the government to quickly return money to investors without a trial. But White, who became chairman in April, told the panel she is reviewing it with the agency’s enforcement division to be certain.

Critics, including a federal judge, have complained that the policy doesn’t deter repeat violations. It came under scrutiny in settlements the SEC reached with big financial firms, including Citigroup and JPMorgan Chase, for their conduct in sales of mortgage securities in the years leading up to the financial crisis.

Defenders of the policy include White’s predecessor, Mary Schapiro. They say that changing the policy could clog courts with cases that are otherwise settled quickly.

The SEC has only civil authority. White noted that several other federal agencies that wield only civil authority also use the policy.

In January 2012, the SEC modified the policy to eliminate “no admit or deny” in settlements in which authorities such as the Justice Department file related criminal charges against a company or individual, and that company or person admits guilt in resolving the criminal charges. Most SEC settlements don’t fall into that category.

— Associated Press

LEGAL
Debt-settlement firm faces federal charges

Federal authorities announced fraud charges against a debt-settlement company Tuesday, in the first criminal case based on work by the new U.S. Consumer Financial Protection Bureau.

A newly unsealed indictment filed in U.S. District Court in Manhattan charged Mission Settlement Agency and four individuals with mail and wire fraud involving a scheme that prosecutors said victimized more than 1,200 people across the United States.

Manhattan U.S. Attorney Preet Bharara suggested that the case would not be the only one arising out of ongoing investigations related to the debt-settlement industry.

Based on the results so far, “our concern is that predatory practices pervade the industry,” he said.

Prosecutors called the case the first criminal referral from the CFPB, an agency established after passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

— Reuters

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— From news services

Coming Today

l  9 a.m.: The Congressional Progressive Caucus holds event with low-wage workers employed under federal contracts to launch the “Good Jobs Nation” campaign.

l  10 a.m.: Senate Small Business and Entrepreneurship Committee hearing on “Strengthening the Entrepreneurial Eco­system for Minority Women.”

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