Throughout the week over at Securities Docket I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending October 21.

The Late Mover Advantage in Citigroup's Settlement

DealBook | Peter J. Henning | Oct 20, 2011

Oldest children often complain that their parents treated them worse than their younger siblings. Goldman Sachs may feel the same way after Citigroup agreed to a settlement with the Securities and Exchange Commission. The two cases are almost identical, but Citigroup doesn't face the same highly charged outrage.

The Bigger Problem Raised by the David Becker Conflict Report

AmLaw Litigation Daily | Susan Beck | Oct 20, 2011

But my main concern today isn't conflicts.What concerns me even more than Becker's decision not to recuse himself (which I find baffling), is a bigger problem with our financial regulatory system that Kotz's report highlights: the special access phenomenon.You see, by Becker's own account, he got involved in Madoff investor issues only after he was contacted by Davis Polk & Wardwell, which represents Mets executives Fred Wilpon and Saul Katz. Furthermore, that contact came from Davis Polk partner Annette Nazareth, who is a former SEC Commissioner and worked directly with Becker at the agency.

What Will Deter Insider Trading?

TIME Ideas | Douglas Berman | Oct 19, 2011

I wonder whether our legal system might better deter white-collar crime by imposing extensive shaming sanctions rather than extensive prison terms. What if, after perhaps a couple of years in prison, Rajaratnam was required every business day to ring the opening bell at the stock exchange while wearing his prison jumpsuit? What if Martha Stewart's magazines and televisions shows had to include an image of Stewart eating in the federal prison's cafeteria along with other convicted felons when she was imprisoned? What if all people convicted of a white-collar offense were required for decades to post a large sign on their lawns that highlighted to all that the resident inside did not always play by the rules?

An Unjustified Sentence

Atlas Society | Alexander Cohen | Oct 18, 2011

And as long as the sentence is—and it is much longer than is typical in insider-trading cases—it's less than half the maximum the government wanted, 24.5 years. Looking at that number, Rajaratnam's lawyers offered, as points of comparison, the average sentences for other crimes in 2010: For sexual abuse, 109 months—nearly two years less than Rajaratnam got. For arson, 79 months—more than four years less. For manslaughter, 73 months. That's right: People who killed people got sentences more than four years shorter than Rajaratnam's.

FCPA Compliance: Does the SEC 'Get It?'

SEC Actions | Thomas Gorman | Oct 17, 2011

Seaboard is the Commission's statement on cooperation....[E]nforcement officials continually tout the benefits of cooperating by self-reporting, conducting a full investigation, turning over all the facts to the staff, making full disclosure and implementing the necessary remedial steps to prevent a future reoccurrence. Watts took every Seaboard step and more, much more, undoubtedly spending far more in remediation than the profits from the violations. Watts demonstrated beyond all doubt that the company “got it.” Yet it was sanctioned by the SEC although its cooperation was acknowledged. The question now is “Does the SEC get it?”

Capitol Gains: Are members of Congress guilty of insider trading—and does it matter?

The Atlantic | Megan McArdle | Oct 17, 2011

But legally, [Professor Stephen] Bainbridge thinks it's a little more murky. He believes that members of Congress are effectively fiduciaries of no one. “There's at least a strong argument,” he says, “that congressional insider trading is not illegal under current law.” Certainly, the guardians of our laws don't seem eager to pursue the question. No member of Congress has ever been investigated for insider trading. Four times since 2006, Congresswoman Louise Slaughter (D–New York) has sponsored the STOCK Act, which would explicitly make congressional insider trading illegal, and require members of Congress to disclose significant trades within 90 days. It's never even come to a vote.

India: When will SEBI have its Rajaratnam moment?

Moneycontrol.com | Santosh Nair | Oct 17, 2011

Back home, market regulator Sebi has been pursuing insider trading cases since 1997... but the results have been been far from encouraging.... While the quantum of Rajaratnam's punishment could possibly deter those looking to gain from insider information in the US markets, Sebi is still seeking that one high-profile conviction that could send out a strong message to market participants here.

Government has no business legalizing insider trading

Los Angeles Times | Larry Harris | Oct 17, 2011

The SEC's efforts to enforce insider trading laws, with the Rajaratnam prosecution front and center, are a bid to restore its reputation and to restore public investor confidence in the markets in the aftermath of financial crisis and scandal. But more important, enforcement efforts reduce the incentives that corporate managers have to withhold information so necessary to the efficient operation of our capital market system.

Rajaratnam and the "No One Has Gone to Prison" Myth

Reason | Tim Cavanaugh | Oct 16, 2011

The idea that Wall Street criminals are getting away with a criminal conspiracy against the American people is a popular one. Nobody ever asks how the seemingly victimized American people managed to make so much of Wall Street's money disappear through their own deadbeat behavior. But the claim that nobody gets convicted of financial crimes is a lie.

Topics