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Leaders of Financial Services Committee Jointly Announce Hearing on SEC Settlement Practices


Washington, Dec 16 -

Financial Services Committee Chairman Spencer Bachus and Ranking Member Barney Frank today jointly announced that the Committee will hold a hearing next year to examine the practice by the Securities and Exchange Commission of settling cases with defendants that neither admit nor deny complaints made by the SEC.

The SEC has proposed to settle a string of recent cases by levying fines without requiring the defendants to admit wrongdoing.  In the most recent case, U.S. District Court Judge Jed S. Rakoff rejected a $285 million settlement between Citigroup and the SEC in November because, the judge said, he could not determine whether the settlement was fair, adequate or in the public interest since the SEC had alleged, but had not proven, that Citigroup committed fraud.  Such settlements require approval by a federal judge.

“The SEC’s practice of using ‘no-contest settlements’ has raised concerns about accountability and transparency, and I’m pleased the Committee will examine these concerns in a bipartisan manner,” said Chairman Bachus.

“The policy of signing agreements without forcing firms to admit or deny wrongdoing raises serious issues,” said Congressman Frank.  “I appreciate Chairman Bachus’ willingness to address this issue in a bipartisan, cooperative manner.”

The timing of the hearing will be announced at a later date, as will the list of witnesses the Committee will call to testify.