SEC Seeks Admission, Apologies from Big Banks that Broke Securities Laws During Crashes

Attorney Advising Disclaimer

In a long due departure from its standard practice of allowing banks, brokerages, and companies to settle civil cases without admitting any wrongdoing, SEC chair Mary Jo White went on record stating her desire for companies that break the law to continue to pay fines and restitution for what they've done—but also admit it.

Stating that "major companies, in particular, really don't want to be at war with their primary regulator"—the Securities and Exchange Commission—White implored her Commission to realize the power and leverage it holds and to use this to enhance public accountability and honesty.

President Obama nominated White to the SEC chair nearly one year ago and White has served in that role since April 2013. Since then, and in concert with White's accountability approach, multiple offenders—both individual and firm—have had to admit wrongdoing as part of a settlement or punishment's terms.

JPMorgan Chase & Co., for instance, admitted it broke securities laws during the "London Whale" episode. The 2012 estimated trading loss of $2 billion—later revised to over $6 billion—resulted from what JPMorgan Chase CEO Jamie Dimon said was a "flawed, complex, poorly reviewed, poorly executed and poorly monitored" trading strategy.

With cooperation from the FBI and Federal Reserve, the SEC ordered JPMorgan Chase to not just pay $1 billion in penalties, but to concede it broke the law.

Similarly, Philip Falcone, founder of the Harbinger Capital Partners hedge fund in New York, received an $11.5 million settlement, including $6.5 million disgorgement of illicit profits, $1.01 million in prejudgment interest and over $4 million in civil penalties—furthermore, the deal, brokered by Mary Jo White after she felt an earlier deal—which only ordered Falcone pay $4 million—was too lenient, ordered Falcone to admit he broke the law, the first time in several years a defendant was ordered to admit wrongdoing.

White also stated the SEC has developed "much stronger" systems for the detection and pursuit of Madoff or similar Ponzi schemes.

If you have invested with a broker, adviser or firm who you suspect of shady dealings—including outright violations of law or SEC/FINRA rules or firm policies—and this illicit behavior has proven harmful to your financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881.

News: SEC's Mary Jo White wants companies to fess up (LA Times)