On June 18, 2013, SEC Chair Mary Jo White announced that the agency would soon begin requiring admissions of wrongdoing from defendants to settle enforcement actions that involved “egregious intentional misconduct” or “misconduct that harmed large numbers of investors.” The announcement signaled a departure from the SEC’s long-standing policy of allowing defendants to enter into settlements in which they could “neither-admit-nor-deny” the charges against them.
Just two months later, the SEC took its first step under the new policy, announcing yesterday that hedge fund adviser Philip A. Falcone and his advisory firm Harbinger Capital Partners have agreed to a settlement in which they must pay more than $18 million and, more notably, admit wrongdoing. Falcone will also be barred from the securities industry for at least five years under the agreement.
