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The Week In Securities Litigation: A New Direction For Securities Enforcement Actions?

Changes at the top of the SEC and the DOJ's criminal division may signal a new direction for securities enforcement actions. Former U.S. Attorney Mary Jo White was nominated by the President to be SEC Chairman. At the same time Lanny Breuer, Assistant Attorney General in charge of DOJ's Criminal Division will soon step down. The selection of a former U.S. Attorney to head the SEC rather than a seasoned securities regulator may suggest that a new, more aggressive approach is being sought for the agency.

The Supreme Court has agreed to consider a question regarding the application of the Securities Litigation Uniform Standards Act which was intended to prevent securities law plaintiffs from evading the stringent pleading requirements of the 1995 PSLRA. The question, brought in the context of litigation involving the Stanford Ponzi scheme, focuses on the reach of the Act. In another Stanford related case, the former CFO of Allen Stanford's entities was sentenced to prison and had a $1 billon personal money judgment entered against him.

Finally, in 2012 the number of securities class actions filed declined significantly compared to recent years. In part the decline tracks a change in the composition of SEC enforcement actions. In recent years the number of financial fraud claims brought by the Commission has diminished. That decline is reflected in private litigation.


Chairman: The President nominated former U.S. Attorney from the Southern District of New York Mary Jo White as Chairman of the SEC. If confirmed she would succeed Elisse Walter who has held the post since the resignation of Mary Schapiro in December 2012.

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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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