A rise in settlements with individuals this year is driving an overall increase in settlement activity at the U.S. Securities and Exchange Commission (SEC), according to a new report from NERA Economic Consulting.
NERA says that the SEC’s pledge to hold more individuals accountable is being borne out in the first half of 2012, with the SEC on pace for a 20% increase in settlements with individuals. So far this year, it has settled 286 cases with individuals, which puts it on pace for 572 deals for the full fiscal year 2012 —a total that would represent a 20% jump over the previous year.
Total SEC settlements have also increased for the first half of 2012, but NERA says that this is entirely due to the rise in settlements with individuals. In the first half, it settled with 379 respondents, and is on pace for 758 total settlements for the year, which would be a 13% increase over fiscal 2011. And, this would be its highest annual total since 2005.
Allegations of insider trading are largely driving the increase in individual SEC settlements, NERA says, with the commission on pace for 120 insider trading settlements in fiscal 2012, up from just 63 cases in 2011. Settlement activity has also increased in Ponzi scheme cases, and for misstatements by public companies. There have been decreases in settlement activity relating to misrepresentations to customers and misappropriation of funds by financial services firms, illegal securities offerings and market manipulation.
NERA also reports that median settlement values for individuals continued a three-year upward trend, reaching $190,000 in the first half. However, the median value of settlements with companies declined from a record $1.5 million in fiscal 2011 to $0.8 million in the first half of this year, which is in line with historical levels. More than one-third of SEC settlements in the first half of 2012 carry zero monetary penalty.