Litigating disciplinary proceedings against the SEC and FINRA: it sometimes pays

Abstract

Purpose

The purpose of this paper is to determine with statistics whether respondents should litigate or settle enforcement actions with the SEC or FINRA.

Design/methodology/approach

All SEC administrative and FINRA litigated decisions from October 1, 2007 to September 30, 2008 were reviewed to see, among other things, how often the staff succeeded in proving its charges and, when it did, what penalties were sought and awarded. The approach is empirical, designed to inject meaningful quantitative data into the decision of whether to litigate.

Findings

The research shows, among other things, that respondents rarely win on liability but are usually successful in persuading SEC ALJs or FINRA panels to impose substantially lower sanctions than the staff sought.

Research limitations/implications

The primary limitation is that it is usually not known what terms were offered to settle cases by the staff prior to the complaint being filed.

Practical implications

The implication is that respondents in SEC and FINRA cases should consider more carefully whether to litigate rather than settle.

Originality/value

The statistics in the study are new and provide new evidence confirming prior years' studies. Any potential SEC or FINRA respondent would be interested in the statistics presented here.

Citation

Rubin, B.L. and Cannon, C.J. (2009), "Litigating disciplinary proceedings against the SEC and FINRA: it sometimes pays", Journal of Investment Compliance, Vol. 10 No. 2, pp. 45-49. https://doi.org/10.1108/15285810910971283