SEC extracting admissions of fault in settlement negotiations (at long last)

Hedge fund manager Philip A. Falcone has agreed to admit wrongdoing and to be banned from the securities industry for at least five years to settle market manipulation accusations. As part of the settlement, he and his fund, Harbinger Capital Partners, must also pay more than $18 million. This new plea deal overturns a previous proposal to the Securities and Exchange Commission (SEC) that was to let Falcone pay a fine without admitting any fault.

“The new, tougher terms reflect a wider policy change that Ms. White [new SEC head] outlined this year, aiming to shift the burden of admission of guilt onto the defendant, overturning a longstanding policy of allowing defendants to “neither admit nor deny” wrongdoing.

The agreement on Monday sets a potential precedent for the regulator, which is busy with investigations involving JPMorgan Chase and the hedge fund SAC Capital Advisors.

While going after a hedge fund manager is different than pressing a giant bank, the agency is said to be to seeking an admission of wrongdoing from JPMorgan in a settlement over a multibillion-dollar trading loss last at a bank unit in London, in an episode known as the London Whale.

The shift in S.E.C. policy to seek admission of wrongdoing comes after longstanding criticism that the agency was too soft on large organizations at the heart of the financial crisis”… See: Falcone to admit wrongdoing as SEC takes a harder line

See also: DOJ investigating JP Morgan

This entry was posted in Main Page. Bookmark the permalink.