On March 21st, Judge Jed S. Rakoff reluctantly granted the proposed settlement of the SEC's accounting fraud action against a company and two of its executives. In doing so, he called into question the SEC's practice of allowing defendants, against whom serious allegations of fraud have been made, to settle the claims "without admitting or denying the allegations of the Complaint." In the instant matter Judge Rakoff concluded the issue is not overriding since the individual defendants pleaded guilty in related criminal proceedings and because the company made significant payments in a private investor lawsuit. But he reserved for the future substantial questions of whether the Court can approve other settlements that involve the practice. SEC v. Vitesse Semiconductor Corp.
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Court questions SEC's settlement practice
- Winston & Strawn LLP
- March 28 2011
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Senior Patent Counsel
Royal DSM NV