* Pace of SEC settlements with individuals up in FY12 -NERA
* SEC could see 20 pct hike in settlements by fiscal
* Insider-trading cases helping drive up the numbers
* Overall number of settlements also up in first half FY12
* JOBS Act could lower enforcement actions -NERA
By Sarah N. Lynch
WASHINGTON, June 27 Aggressive efforts to combat
insider trading a re helping U.S. securities regulators boost the
number of settlements they reach with individual defendants, a
new report has found.
The U.S. Securities and Exchange Commission has settled 286
cases with individuals in the first half of its 2012 fiscal
year, a pace that puts the agency on track for a 20 percent jump
in individual settlements over fiscal 2011, an analysis by NERA
Economic Consulting said.
The report could help the SEC in its effort to be seen as a
tough enforcement agency, especially after failing to catch
convicted Ponzi swindlers Bernard Madoff and Allen Stanford.
NERA's report found that the increase in individual
settlements is primarily being driven by insider trading cases,
including a $92.81 million settlement with the now-imprisoned
Galleon Group founder Raj Rajaratnam.
The report was written by NERA Senior Vice President Elaine
Buckberg and Vice President James Overdahl, a former SEC chief
economist. Th e N ERA has re leased S EC settlement trend reports
since July 2002. The reports come out twice a year.
This latest report found that the increased number of
individual settlements is the driving force behind an overall
increase in settlements, with 379 defendants in the first half
of fiscal 2012, which began on Oct. 1.
That puts the SEC on pace for a 13 percent jump over the
p revious fiscal year and the busiest year for SEC settlements
NERA also found that the median individual settlement value
has extended a three-year upward trend, and is now $190,000.
LONGEVITY OF TREND?
The largest settlement of any kind this fiscal year was a
$285 million accord last October with Citigroup Inc. U.S.
District Judge Jed Rakoff in Manhattan later rejected that
settlement; the SEC and Citigroup have appealed his decision.
Another large corporate settlement was a $90.8 million
agreement with Hungary's Magyar Telekom to resolve
The median settlement with companies, however, fell to
$800,000 i n the first half of this fiscal year f rom $1.5 million
in fiscal 2011.
NERA cautioned, however, that new legislation enacted in
April could curb settlement activity.
The JOBS Act, which scales back certain securities
regulations to help startups raise capital and eventually go
public, could affect enforcement involving unregistered
securities offerings. NERA said 15 percent of SEC settlements
in the last three years related to such offerings.