SEC's New Settlement Language Could Affect Some Investment Fraud Cases

The U.S. Securities and Exchange Commission has recently said that it will no longer allow its "neither admit nor deny" language in the settlement of some of its cases, and this significant change in settlement language is met with great interest from investment fraud attorneys and their clients. It comes after several cases have come to light in the last few years, in which companies were able to "neither admit nor deny" wrongdoing in civil cases with the SEC while, at the same time, admitting wrongdoing in related federal criminal cases.

This policy change will mean that any admission of guilt made by the defendant in criminal proceedings related to financial fraud will be noted in the SEC's settlement documentation. Some experts have applauded the change and say it will help many investors who are seeking civil damages; however, other experts believe that it will affect few cases and is "too little, too late" on the SEC's part.


Why Does the SEC Allow Companies to "Neither Admit nor Deny" Investment Fraud Charges?
The SEC has classically allowed this language to make settlements easier. The SEC has pointed to the expense of pursuing a lengthy court case against a defendant as a reason, and they report that there is little difference in the actual monetary amount awarded between settlement and litigation. Investors are able to see their cash returned more quickly with a settlement, and, additionally, taking these defendants to court carries the inherent risk of losing the case.


How Will the Change Affect My Investment Fraud Case?
If you have a case against a firm that has also faced criminal charges, then it may be easier for you to pursue - and win - a civil case. However, it is important to note that these changes only apply to defendants who have already faced criminal charges with the Justice Department. Most of the SEC's day-to-day securities fraud cases do not involve associated criminal charges, and defendants in those cases can continue to settle with the SEC without admitting guilt.


If you have been affected by investment fraud or stockbroker misconduct, don't hesitate to contact a skilled investment fraud attorney today at 1-866-8-BROKER (1-866-827-6537). The Law Firm of Meyer Wilson is entirely devoted to investor claims and class actions, and we take pride in helping our clients recover losses after investment fraud and other financial fraud. For more information about protecting your nest egg from fraud, request your FREE copy of David P. Meyer's book Five Signs of Investment Fraud ...And What to Do if it's Happened to You.