U.S. Securities and Exchange Commission building in Washington, D.C. January 5, 2019. Collateral Consequences of No-Admit-No-Deny SEC Settlements
Some courts have expressed skepticism about the wholesale use of unadjudicated administrative allegations in securities complaints. However, others—including a recent decision in the District of Maryland in the 'Under Armour' case—have given weight to the SEC's allegations when denying motions to dismiss. In this edition of his Corporate Crime column, William F. Johnson offers several practical suggestions to minimize the collateral effects of entering into an administrative settlement with the SEC or a similar agency.
June 30, 2021 at 12:45 PM
14 minute read
Parties settling with the SEC pursuant to an administrative order have always been mindful of the collateral consequences that such settlements can have on private litigation arising out of the same facts. The impact of SEC enforcement on private litigation in general is significant—civil cases arising out of the same facts as an SEC action typically settle for higher amounts than cases with no corresponding SEC action. Between 2010 and 2019, more than a quarter of securities class action settlements had a corresponding SEC action. Laarni T. Bulan and Laura E. Simmons, Securities Class Action Settlements 2019 Review and Analysis, Cornerstone Research 11 (2020).
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