Last Thursday, SEC Chair Mary Jo White told a crowd of white collar lawyers and judges in Washington, D.C., that the Commission is prepared to try more cases in the wake of its recent policy change requiring certain respondents to admit wrongdoing as a condition of settling enforcement cases. This was another in a series of “get tough” pronouncements by the Chair in recent months.
Chair White used the venue—the keynote address at an annual lecture series on the justice system in Washington, D.C.—to speak glowingly about the role of trials in the American legal system. Trials, she said, offer public accountability and encourage development of precedent on important legal issues. Noting the steady decline in the number of trials over the last few decades, the Chair questioned whether there is adequate public accountability for the government and defendant alike in today’s justice system. She highlighted the civil enforcement context in particular, where she said cases are oftentimes resolved with settlement agreements that merely recount the allegations, rather than in-court guilty pleas before a judge, as in criminal cases.
Having described the legal system as “trial-light,” the Chair acknowledged that the SEC’s policy change, announced in June, of encouraging enforcement staff to secure more admissions of wrongdoing where there is evidence of particularly serious violations or conduct may cause more individuals and firms to try their luck in court rather than settling with the Commission. She welcomed this prospect, reiterating that an increase in the number of trials would foster public accountability and provide a more complete record than pretrial briefs and motions practice. In speaking to members of the defense bar in attendance, Chair White said the Commission was willing to take cases to trial even if it meant exchanging blows in court with the nation’s best private litigators.
Whether the Commission follows through on the Chair’s tough talk remains to be seen. Even the Chair acknowledged during her speech that, despite the policy change, she expects most enforcement cases still to be settled on terms permitting the respondent to “not admit or deny” wrongdoing. In the meantime, no one can say they weren’t warned of Chair White’s resolve to use all available judicial means to hold violators of the securities laws accountable.