The Week in Securities Litigation: SEC Issues Record Number Of Trading Suspensions

The Commission issued a record number of trading suspensions for one day this week as part of an on-going effort to prevent microcap manipulations. A House Committee heard testimony from the Director of the Enforcement Division on its long standing policy of settling cases on a neither admit nor deny basis. The Commission and Citigroup filed their briefs with the Second Circuit defending the settlement rejected by the district court in SEC v. Citigroup.

SEC enforcement filed cases involving investment fund fraud, unregistered offerings, an international manipulation, a Chinese issuer and insider trading. The Commission also resolved a Regulation FD action.

The Commission

Trading suspensions: The Commission suspended trading in the securities of 379 dormant companies on one day this week. This is the largest number of trading suspensions in one day.

Money market funds: Commissioners Luis Aguilar, Tory Paredes and Daniel Gallagher issued a statement regarding the publication by the IOSCO of its "Consultation Report of the IOSCO Standing Committee 5 on Money Market Funds: Money Market Fund Systemic Risk Analysis and Reform Options." The Commissioners stated that the report does not reflect the views and input of a majority of the Commission. To the contrary, the majority of the Commissioners expressed their opposition to the publication of the report and urged its withdrawal.

Testimony: Robert Khuzami, Director, Division of Enforcement, testified before the House Committee on Financial Services (May 17, 2012). His testimony was titled "Examining the Settlement Practices of U.S. Financial Regulators." It reviewed the Commission's long standing policy of settling actions on a "neither admit nor deny" basis as well as the recently instituted limited exception to that policy which applies when the defendant has admitted the facts in a parallel action (here).

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For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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