SEC settlements with top companies over financial misstatements have declined since 2007, and nearly three quarters of SEC settlements with companies over misstatements are for no money, according to a group of economic consultants.
Three consultants from NERA Economic Consulting spoke Tuesday during an audio webcast by the SEC Historical Society examining the impact of the Sarbanes-Oxley Act on the nature of SEC settlements since the legislations passage in 2002.
Given that SOX was intended to strengthen corporate accounting controls by increasing SEC regulation, NERA senior vice president Elaine Buckberg pointed out that companies generally pay more in penalties than in disgorgement of ill-gotten profits to the affected parties. She noted that SEC settlements with top companies over misstatements have been lower since 2007. Additionally, she said that 72 percent of SEC settlements with companies over misstatements are for $0.
NERA senior consultant Christopher Lauren went behind the scenes to examine how the Federal Reserve and U.S. Treasury bailouts helped to ensure that corporate debt issuances did not default. In his presentation, he discussed the rationales behind structured finance in both improving investor diversification and reducing borrowing costs.
Referencing civil fraud charges against some Wall Street firms that created mortgage deals that soon went sour, NERA senior vice president Chudozie Okongwu discussed the conflicts of interest between various agents involved in such structured finance deals. His presentation looked at variables in the information before and after the issuance of a structured finance deal. Using examples from the SECs recent lawsuit against Goldman Sachs, and the SEC's investigation of collateralized debt obligation deals involving Magnetar Capital, he discussed the dichotomy between what can be controlled and known, and what is uncontrollable or unknowable.
To listen to an archive of the webcast, visit www.sechistorical.org.
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