The number of Securities and Exchange Commission settlements declined for the second consecutive fiscal year in 2009, with 626 defendants, compared to 673 in fiscal year 2008, according to a new report.
NERA Economic Consultings SEC Settlements Trends report noted that the 2009 fiscal year-end figures represent the lowest annual number of settling defendants since the Sarbanes-Oxley Act was passed in 2002.
Monetary payments were a component of 58.6 percent of company settlements and 58.9 percent of individual settlements for FY 2009. For companies, the average settlement more than doubled to $10.7 million, compared to $4.7 million in the previous year. The median company settlement was $1.0 million, the same as in FY 2008.
The divergence between doubling average company settlements and unchanged median settlements is explained by three settlements over $100 million: Siemens $350 million alleged Foreign Corrupt Practices Act settlement, UBSs $200 million settlement for allegedly facilitating customer tax evasion, and the $177 million alleged FCPA violation settlement for Halliburton and its subsidiary KBR.
NERA authors found that in the post-SOX era, individuals have been more likely than companies themselves to be targeted by the SEC in misstatement cases. From the passage of SOX to the end of FY 2009, the SEC has reached settlements in cases relating to the alleged misstatements of 353 public companies. Of these cases, the SEC has settled only with the company 62 times, compared to 99 cases where the SEC has settled only with individual directors or employees. In the remaining 192 cases, the SEC has settled with both the company and individuals.
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