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
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.
l AIG can proceed with a lawsuit against Bank of America over residential mortgage-backed securities bought from the bank’s Countrywide Financial unit, a judge ruled. U.S. District Judge Mariana Pfaelzer in Los Angeles partly denied a defense request that she throw out the case, ruling that New York-based AIG can pursue claims of fraudulent inducement. AIG sued Bank of America and Countrywide for $10 billion in damages in 2011, alleging that it was misled into thinking that loans underlying its investment were issued according to underwriting guidelines that had been “long abandoned.”
l Google’s services in Syria are inaccessible, the operator of the world’s most popular search engine said. Google’s transparency report, which tracks the status of Google products available to users around the world, showed a dropoff in Internet traffic in Syria, which is in the midst of a civil war. Services became inaccessible just before 3 p.m. Tuesday, said the report.
l Americans cut back on using their credit cards in March, suggesting that many were reluctant to take on high-interest debt to make purchases. Consumer borrowing rose just $8 billion in March from February, to a seasonally adjusted $2.81 trillion, the Federal Reserve said Tuesday. It was the smallest increase in eight months. The gain was driven by school and car loans.
l Pfizer has started offering its impotence drug Viagra through a company-sponsored Web site to combat counterfeit versions that are sold online. Men who are prescribed the erectile-dysfunction medicine can order the drug at Viagra.com.
l BMW is recalling 45,500 3 Series sedans in the United States and Canada because their passenger air bags may not inflate properly. The recall affects 3 Series from the 2002 and 2003 model years.
l United Airlines expects to start flying its Boeing 787s again on May 20. The 787s had been grounded because of concerns about smoldering batteries, but they have been returning to the skies. Ethiopian Airlines was the first to fly a 787 on April 27.
l Walt Disney Co. topped analyst expectations as revenue gains at its parks and movie studio led to a 32 percent increase in net income during the January-March quarter. Net income grew to $1.51 billion, or 83 cents per share. Revenue grew 10 percent, to $10.55 billion, topping the $10.49 billion expected by analysts.
— From news services
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.”
l Earnings: AOL, News Corp., Tesla Motors, Transocean, TransUnion, Wendy’s.