Earlier this week, I wrote here about Commissioner Aguilar's speech at SEC Speaks, and his wish that 2011 will bring an end to press releases issued by defendants following settlements arguing that "the conduct was really not that bad or that the regulator over-reacted."  If such statements continue, Aguilar said, "it may be worth revisiting the Commission's practice of routinely accepting settlements from defendants who agree to sanctions 'without admitting or denying' the misconduct." I asked if readers could send me examples of such press releases, and received a link to one interesting example discussed below from Charles Schwab.

On January 11, 2011,the SEC announced that it had "charged Charles Schwab Investment Management (CSIM) and Charles Schwab & Co., Inc. (CS&Co.) with making misleading statements regarding the Schwab YieldPlus Fund and failing to establish, maintain and enforce policies and procedures to prevent the misuse of material, nonpublic information."

Specifically, the SEC's complaint charged CSIM and CS&Co. with "willfully violat[ing] anti-fraud provisions of the Securities Act, Sections 17(a)(2) and (3)" when it, among other things, allegedly "(1) made materially misleading statements and omissions about the Fund and its risk before the Fund's NAV declined; (2) made materially misleading statements and omissions during the Fund's NAV decline...." Without admitting or denying the allegations in the SEC's complaint, the Schwab entities settled the SEC charges for more than $118 million.

Later that day, Schwab issued a press release of its own stating that while it had settled the case, "Schwab would never seek to profit at the expense of its clients" and that, in fact, "Charles R. Schwab, the company's founder and chairman, was one of the largest investors in the fund." Schwab further stated that

To provide future protection for individual investors from similar market crises, the company hopes that greater focus and attention will ultimately be given to the investment banks that created mortgage-backed securities and the ratings agencies that legitimized them with triple-A ratings, which have so far largely escaped scrutiny and accountability.

I don't know whether this was one of the press releases Aguilar had in mind when he made his "wish" for 2011, but it seems to be in the neighborhood. What do you think? Are there other examples out there?

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