Under new Chair Mary Jo White, the SEC recently rethought its longstanding policy of allowing all defendants to settle the agency's cases against them without any kind of admission of wrongdoing. Specifically, Chair White announced in June 2013 that the SEC would now demand admissions in cases in which the defendant engaged in “egregious intentional misconduct” or “misconduct that harmed large numbers of investors.” Indeed, the SEC required such admissions in two recent cases against hedge fund manager Philip Falcone and his firm Harbinger Capital Partners, and also against JPMorgan Chase.

One key issue that this new policy brings with it is whether the SEC has the resources and the capability to respond to the expected consequence: more trials due to more defendants choosing to fight the SEC rather than admitting wrongdoing in a settlement. In a speech yesterday, Chair White stated that her answer to this is a "resounding yes."

Chair White said that the agency welcomes the possibility that its change in policy could lead to more trials. "More trials should mean greater public accountability and more instances of a full factual record of wrongdoing that should foster better development of the law," she stated. She believes the SEC is ready for this as its trial attorneys are "incredibly skilled and effective," and have over the past three years prevailed at an 80 percent success rate in cases that are often quite complex. Although the agency's trial lawyers "often face a horde of lawyers on the other side," she stated, "they have shown that they won't back down and are very much up to the task."

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