Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, September 29, 2011

SEC Plans to Bring More Negligence Actions

The Wall St. Journal says that SEC enforcement attorneys may bring more enforcement actions against individuals alleging negligence instead of fraud and quote Ken Lench, the head of the SEC's structured and new-product enforcement unit to that effect.  The article cites as an example of the agency's change in strategy a complaint filed in June against Edward Steffelin, a former executive of GSC Capital Corp., charging negligence over allegedly inadequate disclosure in a mortgage bond deal.  Of course, negligence charges may not satisfy those who want to see heads roll, and defendants charged with negligence may be enboldened to fight the charges rather than settle.  WSJ, SEC Changes Tack on Enforcement Strategy

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