Insider trading continues to be the focus as the first quarter of the year
came to a close. The SEC and the Manhattan U.S. Attorney's Office brought
another insider trading case against an SAC Capital official. More unidentified
traders were identified and then settled with the Commission in its Well
Advantage insider trading action. A third insider trading case involved two
market professionals and an insider. Another centered on the acquisition of Del
Monte. A hedge fund manager and the founder of a New York brokerage firm along
with his firm were named as Respondents in an Order alleging fraud and breach
of fiduciary duty.
Quarterly statistics show a drop in the number of enforcement actions filed
by the SEC in the first quarter of this year compared to the same period in
2012. The number of civil injunctive actions filed in the first quarter of 2013
declined compared to the same period in 2012 while the number of administrative
proceedings filed year to date increased over the same period last year.
Remarks: Chairman Elisse Walter addressed the Australian Securities
and Investment Commission Forum, Sydney, Audstralia via videoconference (March
24, 2013). Her remarks focused on the new normal of international regulation,
particularly in the derivatives markets (here).
Securities class actions
Securities class action settlements reached a 14 year low last year in terms
of the number of cases resolved, according to a new report from Cornerstone
The total dollars paid in those settlements more than doubled compared to the
prior year however. In 2012 the total amount paid to settle securities class
actions was $2,201 million compared to just $1,405 million in 2011. Settlement
values for last year were significantly impacted by mega settlements, defined
as those over $100 million. Those settlements accounted for nearly 75% of the
total settlement dollars in 2012. That compares to 41% in 2011, 60% in 2010,
75% in 2009 and 52% in 2009. These higher settlement values may also account
for the fact that less than 60% of the settlements were fully funded by D&O
insurances compared to almost 80% in the prior year. The number of settled
cases that involved a corresponding action by the SEC increased last year
compared to 2011. In 2012 there were 11 settled securities class actions with a
parallel SEC enforcement action compared to just 5 in the prior year. The
number last year is far below those in earlier years. In 2012 about 60% of the
settled securities class actions cases involved alleged violations of GAAP
while the number of accounting fraud actions brought by the SEC in recent years
has declined significantly.
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For more commentary on developing securities issues, visit SEC Actions, a blog by Thomas
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