Neither Admit Nor Deny Settlements

News & Analysis as of

CFPB settles second loan originator compensation case

The CFPB entered into a stipulated order and final judgment with Franklin Loan Corporation (Franklin) to settle allegations that Franklin paid its employee loan originators compensation based on the interest rates charged on...more

SEC Sanctions Athena in First High-Frequency Trading Manipulation Case

On October 16, in a groundbreaking trading manipulation case, the Securities and Exchange Commission entered an Order instituting a settled administrative proceeding against high-frequency trading firm Athena Capital...more

SEC Charges Private Equity Sponsor for Misallocation of Expenses on Integrated Portfolio Companies

The SEC charged a private equity sponsor with breaching its fiduciary duty to a pair of private equity funds by sharing expenses between a company in one’s portfolio and a company in the other’s portfolio in a manner that...more

SEC Charges Investment Adviser for Misleading Performance Advertising

In a settled action, the SEC charged an investment adviser for false advertising and its chief compliance officer on related matters. The defendants did not admit or deny the charges....more

SEC Settles With Hedge Fund Adviser Over Trade Allocations and Disclosures Regarding Trading and Investment Strategies

The SEC settled administrative proceedings against Structured Portfolio Management, L.L.C., a hedge fund adviser (the “Adviser”), and two of its affiliated advisers, SPM Jr., L.L.C. (“Adviser A”) and SPM IV, L.L.C. (“Adviser...more

District Court Considers Prior SEC Complaint Evidence to Establish Scienter Under PSLRA

The US District Court for the Southern District of New York recently denied a defendant’s motion to dismiss a securities fraud class action, accepting as sufficient factual allegations of scienter that were drawn from a...more

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

The 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...more

Smith & Wesson Pays $2 Million to Resolve SEC Charges

On July 28, Smith & Wesson Holding Corporation, one of the largest gun manufacturers in the United States, agreed to pay more than $2 million to settle Securities and Exchange Commission charges alleging that it had bribed...more

SEC Charges Corporate Officers with Fraud Arising from Failure to Disclose Internal Controls Issues and Alleged Misrepresentations...

On July 30, 2014, the Securities and Exchange Commission (“SEC”) advanced a novel theory of fraud against the former CEO (Marc Sherman) and CFO (Edward Cummings) of Quality Services Group, Inc. (“QSGI”), a Florida-based...more

Securities Enforcement 2014 Mid-Year Review

While not nearly as transformative and dramatic as the first half of 2013 and the early days of Chair Mary Jo White and Director of Enforcement Andrew Ceresney, the first six months of 2014 was just as busy and productive...more

Patience is a Virtue: District Court Suggests that the SEC “Wait and See” Before Seeking Certain No-Admit, No-Deny Settlements

On June 18, 2014, Judge Victor Marrero of the U.S. District Court for the Southern District of New York approved the SEC’s no-admit, no-deny consent decrees in its insider trading case against CR Intrinsic Investors, LLC and...more

District Court Confirms “Neither Admit Nor Deny” Settlements Applying Citigroup Factors

In March 2013, the SEC requested that Judge Victor Marrero of the United States District Court for the Southern District of New York approve consent judgments as to CR Intrinsic and CR Intrinsic Investments, LLC; S.A.C....more

SEC Settles Enforcement Proceeding Against Former Portfolio Manager over Prohibited Joint Transaction Involving Registered...

The SEC settled administrative proceedings against Christopher B. Ruffle (the “Portfolio Manager”) over his role in causing The China Fund, Inc., a U.S. registered closed-end fund (the “Registered Fund”), to engage in a...more

Second Circuit Upholds "Neither Admit Nor Deny"

On June 4, 2014, the United States Circuit Court for the Second Circuit endorsed the Securities and Exchange Commission's practice of settling enforcement cases on a "neither admit nor deny" basis. In its order issued in SEC...more

Five Questions and Answers About the Second Circuit’s SEC v. Citigroup Decision

Last week we posted a summary of the Second Circuit’s decision in SEC v. Citigroup Global Markets, Inc. This week, as a follow-up, we pose the following five “yes or no” questions and provide responses as a way to further...more

Second Circuit upholds broad SEC settlement powers - for potential defendants, 3 key points

The United States Court of Appeals for the Second Circuit has found that Judge Jed S. Rakoff of the District Court for the Southern District of New York abused his discretion in refusing to approve a settlement between the...more

The Second Circuit Confirms the SEC’s Ability to Settle Without Requiring Admissions of Wrongdoing

In November 2011, Judge Jed Rakoff of the Southern District of New York ignited a firestorm of commentary and concern among the securities bar by declining to approve a settlement between the SEC and Citigroup in which the...more

Deference and Compromise Reigns over Establishment of Truth: Second Circuit Validates SEC Use of "Neither Admit Nor Deny"...

On June 4, 2014, the Second Circuit Court of Appeals vacated U.S. District Judge Jed Rakoff’s influential and controversial decision to reject a consent injunction between the SEC and Citigroup Global Markets Inc. (Citigroup)...more

The Securities and Exchange Commission (“SEC”) Prevails in the Second Circuit in Defending Its No-Admission Settlement Policy

The long legal battle over the SEC’s neither-admit-nor-deny settlement policy has finally come to an end. On June 4, 2014, the Second Circuit issued an opinion vacating the district court’s rejection of a proposed consent...more

SEC Brings Settled Administrative Proceedings Against NYSE Relating to Informational Advantages, Electronic Trading and Other...

The Securities and Exchange Commission (SEC or Commission) on May 1, 2014 announced a settlement (Settlement) with the New York Stock Exchange LLC and certain of its affiliates (collectively, the NYSE), addressing a variety...more

SEC Enforcement Year in Review - 2013

Marked by leadership changes, high-profile trials, and shifting priorities, 2013 was a turning point for the Enforcement Division of the Securities and Exchange Commission (the “SEC” or the “Commission”). While the results of...more

SEC Chairman Ready to Deploy the Agency's "Full Enforcement Arsenal"

SEC Chairman Mary Jo White again made her stance on aggressive enforcement clear during her recent speech to the Council of Institutional Investors in Chicago. Speaking to a room full of investors, Ms. White outlined the...more

Looking Past The Labels: Bank’s Disgorgement Payment To SEC Not Necessarily Excluded From D&O Coverage

In 2006, Bear Stearns agreed to a $250 million “neither admit nor deny” settlement with the SEC to settle charges that it facilitated late trading and deceptive market timing by its hedge fund customers....more

Litigation: The expanded role of courts in settling government investigations - A growing number of federal judges are closely...

Government investigations of companies typically end in settlements. These may be civil in nature, in which companies commonly agree to pay money and take remedial measures to deter and prevent the misconduct that the...more

Recent Notable Industry Developments

Following SEC Chair Mary Jo White’s recent remarks suggesting a change to the SEC’s long-standing policy of permitting defendants to settle cases “without admitting or denying” the SEC’s allegations of wrongdoing,...more

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