NERA Economic Consulting published a report in June on trends in SEC settlements. They found some interesting shifts in the predominant settlement types that you may find surprising. Here are the highlights of the report:
The SEC settled with 681 defendants in 2010 and is estimated to settle with 688 this year, showing a steady trend, however…
Public company misstatements and insider trading settlements were once the most prevalent allegations, but have been decreasing since the enactment of the Sarbanes-Oxley Act in 2002.
Another shift has been between company and individual settlements. In the first half of the 2011 fiscal year, company settlements increased by 43 percent and individual settlements decreased by 12 percent. Despite this fact, four of the ten largest settlements in 1H11 were with individuals; one of which, against Brost & Sorenson, settled for $310 million. Not only was this one of the largest settlements of 1H11, it ranks as the ninth largest SEC settlement since SOX was ratified.
Yet on average, individual settlements that included a monetary payment decreased by over 4 percent while company settlements with payment increased by almost 2 percent. So although the majority of SEC settlements have shifted to companies, the example of Brost & Sorenson shows us that individual settlements are still making history.