The 10 Biggest SEC Settlements Of The Last Year

The debacle that was the proposed settlement between Bank of America and the SEC brought about a lot of criticism, most importantly from Judge Jed Rakoff:

  • The proposed amount was too low,
  • the SEC did not investigate enough, and
  • it was basically a rush job that allowed the SEC to look tough and BofA to avoid additional scrutiny.  

The hand shake deal was a no go and now they are litigating.  

But while this particular SEC settlement is getting a whole lot of attention, the SEC files, prosecutes and settles all sorts of different cases on a near-daily basis.  And its activity has picked up since the financial crisis.

According to NERA, a consulting firm that analyses and compiles SEC litigation data, SEC settlements and recoveries with and from companies averaged $10.1 million in the first half of 2009, up from $8.4 million for all of 2008.  The settlements, of course, include agreed payments but almost never an admission of the allegations.

Though a $10 million average is not to be minimized, many of these settlements are huge.  Of the top 10 settlements and judgments with companies over the last year, seven exceeded the proposed BofA $33 million.  

See the Top 10 >
Sources:  NERA Economic Consulting and SEC Litigation Press Releases

#10 - Ingram Micro Inc.

Company: Ingram Micro, Inc.

Settlement Amount: $15 million (disgorgement)

Allegations: Aiding and abetting public company misstatements

Settlement Announcement: May 12, 2009

The SEC said Ingram Micro, a technology distribution company, enjoyed 'off-contract enhancements' when it ordered an extraordinary amount of products from network security programmer McAfee - well more than it could ever sell - and received cash payments, prize concessions and unlimited returns for its troubles. McAfee previously paid a $50 million civil fine for overstating its revenues.

#9 - Headstart Fund Ltd.

Company: Headstart Fund, Ltd.

Settlement Amount: $17 million (disgorgement)

Allegations: Market Timing/Late Trading

Settlement Announcement: June 29, 2009

The SEC claimed that employees hid their shady dealings inside account names derived from the Harry Potter series, such as 'Voldermort Ltd.'

#8 - Zurich Financial Services Group

Company: Zurich Financial Services Group

Settlement Amount: $26 million ($25 million penalty, $1 million disgorgement)

Allegations: Mistatements and omissions in IPO; Aiding and abetting a reinsurance fraud

SEC Announcement: December 11, 2008

Zurich allegedly designed reinsurance transactions for the accounting benefits but failed to transfer the required risk, which resulted in its later reinsurance spin-off understating its losses to the tune of $100 million.

#7 - E*Trade Capital Markets LLC

Company: E*Trade Capital Markets LLC

Judgment Amount: $34 million (disgorgement and civil penalties, as part of total settlement with additional specialist firms)

Allegations: Unlawful proprietary trading on Chicago Stock Exchange

SEC Announcement: March 13, 2009

The SEC claims E*Trade and others filled orders from the firms' own proprietary accounts rather than through other customer orders, all the while failing to keep proper records of securities effected in its proprietary accounts.

#6 - Evergreen Investment Management Company, LLC

Company: Evergreen Investment Management Company, LLC and Evergreen Investment Services, Inc.

Settlement Amount: $40.1 million (between the two companies, $33 million to compensate fund holders, $4 million civil penalties and $3 million disgorgement.)

Allegations: Overstating value of mutual fund invested in mortgage-backed securities

SEC Announcement: June 8, 2009

The SEC said Evergreen only told select shareholders when it began re-pricing certain holdings to try to deal with its overstated value. The original overstatement occurred because the company failed to 'take into account readily available information about certain mortgage-backed securities in the valuation process,' the SEC said.

#5 - General Electric Company

Company: General Electric Company

Settlement Amount: $50 million (penalty)

Allegations: Reporting false and misleading results in its financial statements

SEC Announcement: August 4, 2009

GE allegedly used improper accounting methods that lead to erroneous financial statements. According to the SEC, the accounting violations resulted in avoiding unfavorable disclosures and an estimated $200 million pre-tax charge to earnings. GE also allegedly reported 'sales of locomotives that had not yet occurred in order to accelerate more than $370 million in revenue' in 2003 and reported 'sales of commercial aircraft engines' spare parts that increased GE's 2002 net earnings by $585 million.'

#4 - American Skandia Investment Services, Inc.

Company: American Skandia Investment Services, Inc.

Settlement Amount: $68 million ($34 million disgorement, $34 million penalty)

Allegations: Market Timing/Late Trading

SEC Announcement: April 17, 2009

The SEC alleged that ASIS failed to investigate credible complaints that market timing was having a detrimental effect on certain funds it supervised and failed to tell the funds' board about the potential effects, disabling the board from properly understanding the funds' performance or making adequate policy changes.

#3 - Halliburton

Company: Halliburton Co. and wholly-owned subsidiary KBR, Inc.

Settlement Amount: $177 million (disgorgement)

Allegations: Bribing Nigerian officials

SEC Announcement: February 11, 2009

The SEC alleged that Halliburton and three other companies paid $180 million to the government of Nigeria in exchange for a contract to build a $4 billion natural gas plant. Dick Cheney was the CEO of Halliburton at the time.


Company: UBS AG

Settlement Amount: $200 million (disgorgement)

Allegations: Facilitating tax evasion

SEC Announcement: February 18, 2009

The SEC alleged that UBS allowed at least 11,000 U.S. citizens to maintain undisclosed - and untaxed - accounts in Switzerland. UBS has since agreed to give up the names of many of the account holders in this long-running saga.

#1 - Siemens AG

Company: Seimens AG

Settlement Amount: $350 million (disgorgement)

Allegations: Bribery of foreign officials

SEC Announcement: December 15, 2008

The SEC alleged that Siemens had bribed officials operating metro transit lines in Venezuela, power plants in Israel, refineries in Mexico and mobile telephone networks in Bangladesh. Argentina, Vietnam, China and Iraq are other countries where Siemens allegedly made generous contributions.

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