SEC Settles with 344 Defendants

June 27, 2011 ( - In the first half of fiscal 2011(1H11), the Securities and Exchange Commission settled with 344 defendants, bringing predictions for the full year to 688 settlements, compared with 681 in 2010.

According to NERA Economic Consulting’s biannual report, SEC Settlements Trends: 1H11 Update, total SEC settlements have remained stable compared to the previous fiscal year, but there has been a substantial shift in their composition.

The number of company settlements jumped to 114, up 43%, for an annual pace of 228, compared to the 160 company settlements recorded in FY2010. Individual settlements, however, declined 12% in the first half of the year to 230, indicating 460 in the full year, compared to 521 in FY10.

For those settlements that included a monetary payment, the average amount declined to $6.0 million compared to $18.5 million in FY10. The median company settlement, however, increased to $1.4 million, compared to $0.8 million last year. Public company misstatement settlements declined sharply in 1H11 to 33, an annual pace of 66, down 39% from the 108 settlements in FY10.

For individuals whose settlements include a monetary payment, the average was $4.48 million and median amount was $310,000. The SEC has reached 25 insider trading settlements in 1H11, despite recent high-profile cases, suggesting the full year total will be down 33% from 74 settlements reached in FY10. FCPA charges with 13 defendants have been settled in 1H11, putting it on pace to reach 26 settlements for the full fiscal year.

The report also listed the ten largest settlements thus far in fiscal year 2011:

  • Milowe Allen Brost & Gary Allen Sorsenson - $310 million;
  • US Pension Trust Corp & US College Trust Corp. - $113 million;
  • Jacob “Kobi” Alexander – cofounder, Converse Technology - $54 million;
  • Alcatel-Lucent, S.A. - $45 million;
  • Joseph P. Nacchio, former CEO, Quest Communications Intl. - $45 million;
  • Daniel Spitzer, controller, eighteen entities - $44 million;
  • Banc of America Securities - $36 million;
  • AXA Rosenberg Group - $25 million;
  • BNY Mellon Securities LLC - $24 million; and
  • Pride International - $24 million.

The report: SEC Settlements Trends: 1H11 Update, was authored by NERA Senior Consultant Jan Larsen, Senior Vice President Dr. Elaine Buckberg, and Vice President Dr. James A. Overdahl. It is available for download here.


-Sara Kelly