* Liberal group demands that SEC take big banks to trial
* Petition comes after Senator Warren scolds regulators
* Warren demanded to know when banks had been brought to
By Sarah N. Lynch
WASHINGTON, Feb 19 Democratic Senator Elizabeth
Warren's strong criticism of U.S. financial regulators last week
has inspired a liberal political action committee to launch an
online petition urging the Securities and Exchange Commission to
take more Wall Street banks to trial.
The petition, introduced by the Progressive Change Campaign
Committee on Sunday, came a few days after the freshman senator
from Massachusetts made her debut on the influential Senate
In an exchange that drew applause from protesters in the
audience, Warren demanded to know the last time banking and
financial market regulators had taken Wall Street banks to
trial, as opposed to settling the cases.
"I'm really concerned that too-big-to-fail has become
too-big-for-trial," Warren told the regulators.
After the hearing, Warren's staff posted clips of the
exchange on YouTube that soon went viral. So far, three separate
postings of a version of the clip have collectively received
more than 1 million hits. (To see the YouTube video, click on)
The Progressive Change Campaign Committee, which helped
Warren raise more than $1.6 million in her 2012 campaign to
defeat Republican incumbent Scott Brown, posted its petition to
the SEC on Sunday.
The petition, which urges the SEC to end its practice of
"too big for trial," garnered more than 10,000 signatures in the
first 24 hours, a number that has climbed to more than 16,000,
according to Matt Wall, a spokesman for the group.
Wall said he expects the group to deliver the petition to
the SEC in the "near future."
Last week SEC Chairman Elisse Walter told reporters after
the hearing that she does not believe the agency should bring
banks to trial if it can obtain relief through a settlement.
She added that the SEC, whose budget must be approved by
Congress, needs to take account of its resources in deciding
which cases to settle and which to take to trial.
On Tuesday, SEC spokesman John Nester said the agency is
"fully prepared to go to trial every time" it files a suit.
However, he added, "There's no reason under our authority to
delay justice and financial relief for investors when we can get
it all without a trial."
A spokesman for Warren did not have an immediate comment in
response to the petition.
SETTLEMENTS UNDER ATTACK
The SEC's settlements have been under the heavy scrutiny in
The agency is currently appealing a judge's rejection of a
proposed $285 million settlement with Citigroup. In
refusing to approve the accord, the judge challenged the SEC's
practice of letting companies settle without admitting or
Many of the SEC's most notable cases against banks arising
from the financial crisis have resulted in settlements.
One prominent settlement was a $550 million deal with
Goldman Sachs Group Inc over allegations it misled
investors in a subprime mortgage product.
When the SEC has taken banks to trial, it has been met with
Some successes included one last week when the SEC won a
$110,500 judgment against Morgan Keegan in connection
with its sale of auction-rate securities. A court ruled that
Morgan Keegan was negligent, but it did not find that the firm
intentionally defrauded investors.
However, other high-profile cases have not been decisive
In November, a jury rejected civil fraud charges against
Reserve Primary Fund founder Bruce Bent, whose money market fund
"broke the buck" during the financial crisis after its heavy
exposure to Lehman Brothers prompted an investor sell-off.
His son, Bruce Bent II, was cleared of knowingly violating
securities laws but was convicted on one count of negligence.
Two of the Bents' companies were also found liable on some
In one of the biggest blows to the SEC, a jury in July threw
out a civil fraud case against former Citigroup manager Brian
Stoker over allegations he misled investors in a pool of