By Sarah N. Lynch
WASHINGTON, June 18 U.S. securities regulators
are going to try to extract admissions of wrongdoing from
defendants in some of their settlements, a move that could
ultimately force more cases to go to trial, Securities and
Exchange Commission Chair Mary Jo White said Tuesday.
The announcement from White marks a departure from the
typical practice at the SEC and many other civil federal
regulatory agencies of allowing defendants to settle cases
without admitting or denying the charges.
That practice has come under scrutiny following the
financial crisis, leading some federal judges to challenge or
strike down proposed settlements with defendants.
"I have reviewed the policy," White said at the annual "CFO
Network" event hosted in Washington by the Wall Street Journal.
"We are going to in certain cases be seeking admissions
going forward. I think ... public accountability in particular
kinds of cases can be quite important and if we don't get them,
then we litigate them."
White's planned changes to settlement policy come as the
SEC is awaiting a critical decision from a New York appeals
court after U.S. District Judge Jed Rakoff declined to approve a
proposed $285 million settlement with Citigroup Inc over
whether the bank misled investors during the financial crisis.
White told reporters on the sidelines of the event that
people should not interpret the change as a criticism of the
settlement policy and in fact a "majority" of cases will still
likely be settled with defendants neither admitting nor denying
"This is not a criticism of the past practice and having 'no
admit, no deny' settlement protocols in your arsenal as a civil
enforcement agency ... (is) critically important to maintain,"
She added that cases will need to meet certain criteria in
order for the SEC to seek admissions. Those include cases where
there was "widespread harm to investors" or "egregious
intentional misconduct," she said.
Rakoff, who has been arguably the most vocal about the SEC's
settlement policy, declined to comment on the changes White