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SEC Chair Discusses the Value of Trials

In a speech on November 14, SEC Chair Mary Jo White discussed “the importance of trials and their unique place in our system of justice” as well as the SEC’s position on trials.  She highlighted two important roles of trials, both the development of the law and public accountability “for both defendants and the government through the public airing of charges and evidence.”  Chair White expressed concern that the decline of trials may compromise the “more thoughtful and nuanced interpretations of the law” that result from trials.  In addition, she cautioned that a declining number of trials compromises public adjudication that is only available through trials.  Chair White contrasted guilty pleas with private or regulatory settlements that are not required to include an admission of wrongdoing, stating that guilty pleas provide “an open forum for public accountability” in a way that other settlements may not.

Chair White also addressed the SEC’s settlement philosophy.  She stated that she continued to believe that, in many cases, the SEC’s no-admit/no deny settlements make “very good sense.”  She stated that SEC settlements are generally made only when the agency receives equivalent relief than what would be available at trial.  Further, settlements “eliminate all litigation risk, resolve the case, return money to victims more quickly, and preserve our enforcement resources for other investigations.”  However, she noted that some cases may need more to “achieve public accountability” and “to send a strong message of deterrence.”  In order to secure such admissions, Chair White stated that the agency must be able to “credibly say that it will proceed to trial and prevail if the required admissions are not agreed to by the defendant.”  She stated that the SEC welcomed the possibility of more trials to achieve greater public accountability and better development of the law.

Chair White praised the quality of the enforcement lawyers at the SEC, noting that the lawyers had an 80 percent success rate over the past three years.  She stated that the success comes in often complicated cases and in spite of the fact that the SEC’s cases “rely heavily on circumstantial evidence, hostile witnesses, or on the cross-examination of the defendant.”