Philadelphia partner Mary P. Hansen was quoted in the Law360 article, “SEC's Thinking Still A Mystery After Merrill Lynch Megadeal.” After the SEC secured an admission of wrongdoing alongside a significant fine from Merrill Lynch for misusing customer cash, many were left wondering how the agency calculates penalties and chooses to seek an admission of guilt. The inconsistences are especially glaring in light of a previous announcement that the SEC would require more admissions of wrongdoing.
Mary noted, “Three years ago when the SEC first announced the policy, everybody thought it would drastically change SEC practice ... it's more than a handful at this point, but we don't see them requiring admissions to the extent that most people had anticipated they would require them.”
She continued, “When the SEC announced it would require admissions in egregious cases, I thought we were going to see the staff require admissions in cases involving fraud and significant losses to investors.”
With respect to self-reporting and civil penalties, Mary noted "Given the size of the civil penalty and the fact that the SEC will be conducting exams focused on similar conduct, I think it's important for other broker-dealers to ensure that they are in compliance with the customer protection rule . . . If they are not, self-reporting may be the best option even if the value of doing so may not be quantifiable."Read “SEC's Thinking Still A Mystery After Merrill Lynch Megadeal.”