Khuzami Defends and Explains SEC’s Settlement Practices
In testimony before the House Committee on Financial Services, SEC Enforcement Director Robert Khuzami defended his Division’s settlement policies. Mr. Khuzami explained the benefits of swift settlements over lengthy litigation including the risks that the SEC could lose at trial or win a lesser penalty. He also noted that the median time for disposition of civil cases in federal courts ranges from 19 to 44 months. Regardless, he explained, the SEC has prevailed in 84% of trials since the beginning of 2010. Mr. Khuzami also defended the SEC’s practice of allowing “neither-admit-nor-deny” settlements as necessary especially where respondents must consider private litigation implications. However, we think Mr. Khuzami did announce that the SEC would no longer allow “neither-admit-nor-deny” settlements where there is a parallel criminal proceeding.