Hedge-fund honcho Steve Cohen is suddenly looking pretty smart.
Just months after Cohen’s SAC Capital agreed to a $602 million SEC settlement over insider trading — without admitting any wrongdoing — the SEC is talking tough.
Mary Jo White, the new head of the Securities and Exchange Commission, plans to hold a town hall meeting to discuss when to require some defendants to admit to wrongdoing as a condition of settling the commission’s enforcement actions, The Post has learned.
Staffers of the SEC’s enforcement division have been told to assess their “ongoing investigations and pending actions” with an eye toward “whether the conducts and circumstances” might require a public admission of guilt, according to an internal letter sent on Monday.
The policy shift described in the letter, a copy of which was obtained by The Post, comes on the heels of growing dissent over the commission’s practice of allowing defendants to settle cases without admitting wrongdoing.
Manhattan federal Judge Jed Rakoff shone a spotlight on the practice in November 2011 when he rejected a $285 million settlement between Citigroup and the SEC over allegations of securities fraud, saying the public was “deprived of ever knowing the truth in a matter of obvious public importance.”
Since then, several judges have balked at similar settlements, including the SEC’s record $602 million settlement with Cohen’s SAC.
“It seems counterintuitive and incongruous to settle a case for $600 million that might cost $1 million to litigate,” Manhattan federal Judge Victor Marrero said. “How believable is it to the public, the claim that they did nothing wrong?”
Marrero approved the SAC settlement, contingent on an appeals-court case over whether Rakoff had the authority to reject the settlement with Citi.
According to Monday’s letter, sent by SEC enforcement division co-directors George Canellos and Andrew Ceresney, the agency would do away with the “neither admit nor deny” policy in limited cases.
Currently, the agency forbids such settlements only in cases in which the defendant admitted guilt elsewhere, such as in a parallel criminal case.
On Tuesday, White announced the broader shift in policy at a conference in Washington.
“We are going to, in certain cases, be seeking admissions going forward,” White said. “Public accountability in particular kinds of cases can be quite important and if we don’t get them, then we litigate them.”