SEC alters policy on companies’ admissions of guilt
By Paul Wilson
ProWEB Wire (Industry News)
The Securities and Exchange Commission will no longer allow companies to say they neither admit nor deny charges in cases of civil fraud or insider trading charges when they admit to or have been convicted of criminal violations.
Robert Khuzami, head of the SEC’s enforcement division, said firms can still use this wording in cases where the SEC reaches a deal with a company in a case of civil securities law violations.
In addition, the new policy will apply to cases in which a company or individual enters an agreement with criminal authorities to defer prosecution or to or not be prosecuted as part of a settlement, the New York Times reports.
The SEC has been criticized for allowing firms to settle fraud cases while neither admitting or denying the charges, especially in cases where the company had acknowledged wrongdoing to other government agencies, such as the Justice Department.
As part of the new policy, civil settlements will cite the admission of conduct of conviction in corresponding civil cases, but the SEC will have discretion whether to use facts from the criminal case in its own civil case, Khuzami said.