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Tuesday, August 20, 2013

This is a Breath of Fresh Air………

The SEC just settled with a hedge fund that misused funds and manipulated markets, and in addition to a fine, and a 5 year ban for the principal, they got an explicit admission of wrongdoing:

Wall Street’s regulator sent a message on Monday that it was now taking a more aggressive stance on securities settlements as it extracted its first admission of wrongdoing under a new policy.

The regulator, the Securities and Exchange Commission, said that the hedge fund manager Philip A. Falcone had agreed to admit wrongdoing and to be banned from the securities industry for at least five years to settle market manipulation accusations. As part of the settlement, he and his fund, Harbinger Capital Partners, must also pay more than $18 million.

The deal comes a month after the commission had in a rare move overruled its own enforcement staff to reject a settlement struck with Mr. Falcone and Harbinger.

That original agreement had called for a two-year ban from raising new capital and no admission of wrongdoing. It also did not include an injunction against committing fraud in the future — language common to nearly every single securities settlement.

The original settlement terms had irritated the S.E.C.’s new chairwoman, Mary Jo White, people briefed on the matter said, and frustrated many others within the agency who saw that deal as too lax.

The new, tougher terms reflect a wider policy change that Ms. White outlined this year, aiming to shift the burden of admission of guilt onto the defendant, overturning a longstanding policy of allowing defendants to “neither admit nor deny” wrongdoing.
If this is a start of a trend, then this is a big deal.

I hope that this is not just political atmospherics.

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