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The recidivism rate among companies caught violating securities laws can be a bit disheartening. Despite settlements that include corporate proclamations of a commitment to compliance, the same names seem to appear again and again in settlements for new violations. The Securities and Exchange Commission has recently taken a small step toward making the cost of a violation a bit steeper by refusing to give companies a free pass.
In August, Bank of America reached a $16.65 billion settlement with the Justice Department over accusations that it duped investors into buying troubled residential mortgage-backed securities. As part of that settlement, the S.E.C. resolved charges of securities fraud. That case was fairly small, requiring the bank to pay about $135 million for selling a security that resulted in heavy losses to investors.
But getting the settlement approved was held up until late last month because the S.E.C.’s commissioners could not agree on granting the bank a waiver from rules that could prevent it from selling certain investments. That would have had a significant effect on its Merrill Lynch subsidiary by cutting off access to certain types of hedge fund investments, a lucrative segment of the market that would probably cost it clients.
Source: DealB%k
