On a Roll: The SEC Continues to Deliver on its Promise to Seek Admissions of Wrongdoing

http://blogs.orrick.com/securities-litigation/files/2012/10/iStock_000002555017XSmall-200x150.jpgThe SEC announced last week that it has obtained yet another admission of wrongdoing in connection with an agreement to settle an SEC enforcement action.  This time, Peter A. Jenson, the former COO of Harbinger Capital Partners LLC, admitted that he aided and abetted Harbinger’s CEO, Philip Falcone, in obtaining a fraudulent loan from Harbinger.  Jenson agreed to a $200,000 penalty along with a two-year suspension from practicing as an accountant on behalf of any SEC-regulated entity.  The settlement awaits court approval.

The Jenson settlement is the latest in a series of settlements in which the SEC has obtained admissions of wrongdoing since announcing changes to its “no admit/no deny” settlement policy in June 2013. Other examples include the March 2014 Lions Gate settlement, the February 2014 Scottrade settlement, and the August 2013 Falcone/Harbinger settlement that settled charges related to those Jenson settled last week.   

The Jenson settlement is of particular interest because it is the first admission-of-wrongdoing settlement announced since the Second Circuit last month curtailed courts’ ability to reject proposed SEC settlements when it overturned U.S. District Judge Rakoff’s rejection of a SEC-Citigroup settlement in which Citigroup did not admit wrongdoing.  The Jenson settlement suggests that the SEC will continue to pursue its policy to seek admissions of wrongdoing in certain cases.

The Jenson decision is also notable because the target was an individual who aided and abetted securities violations, as opposed to acting as a primary violator.  As the SEC noted in its press release, the “settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”

 

Topics:  Corporate Counsel, Enforcement, Enforcement Actions, Fraud, Harbinger Capital Partners LLC, Neither Admit Nor Deny Settlements, SEC

Published In: Civil Remedies Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Securities Litigation and Regulatory Enforcement Group | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »