From my post on LinkedIn today:
The SEC’s rescission of its gag rule is a welcome event, as forcing settling respondents to remain silent about the allegations they have denied is manifestly unfair. However, as detailed in this Cleary Gottlieb post, the issues surrounding an SEC settlement remain. What struck me in the post was this statement, which is absolutely correct.
The goal in almost every SEC investigation is to convince the Staff that there is no case or that it should not be pursued. My partners and I have managed to do that numerous times, but we have also settled SEC cases because of the sheer cost of defense.
The fact remains that the SEC can put any number of attorneys and professionals on a case. It has the ability to force the respondent to spend hundreds of thousands of dollars defending the claims, money which most individuals and smaller firms cannot afford.
‘Winning is still better than denying. It’s nice to be able to deny SEC allegations, but it’s even better if the SEC never makes the allegations. Entities and individuals under investigation can increase the chances of closing an investigation outright by engaging counsel who can establish a relationship of credibility with investigative staff from the outset; educate the staff on key factual and legal issues, which may include helping them understand a complex industry, accounting rule, or financial transaction; and knowing when and how to forcefully advocate in a way that highlights that a contested enforcement action is not consistent with SEC priorities or carries untenable litigation risk for the SEC. And counsel who have a proven ability to litigate and win SEC cases have particular credibility when discussing the litigation and programmatic risks to the agency of pursuing cases before a judge or jury. If the SEC insists on bringing an enforcement action with allegations that the defendant thinks are simply false, a win in court will provide far better vindication than a debate in the media. Wins don’t come easy—they are built on a factual record and legal strategy that must be developed from the earliest stages. ‘ “
The Cleary Gottlieb article is here – https://lnkd.in/e97vwYDf
 | Representing Advisors, Investors and Firms, Nationwide. |
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
