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WASHINGTON - The new chairman of the Securities and Exchange Commission says she will review the agency's policy of letting companies and individuals settle charges without admitting or denying wrongdoing.
Mary Jo White defended the policy at a budget hearing Tuesday on Capitol Hill, saying it has enabled the government to quickly return money to investors without a trial. But White, who became chairman in April, told the panel she is reviewing it with the agency's enforcement division to be certain.
Critics, including a federal judge, have complained that the policy doesn't deter repeat violations. It came under scrutiny in settlements the SEC reached with big financial firms, including Citigroup and JPMorgan Chase, for their conduct in sales of mortgage securities in the years leading up to the financial crisis.
Defenders of the policy include White's predecessor, Mary Schapiro. They say that changing the policy could clog courts with cases that are otherwise settled quickly.
The SEC only has civil authority. White noted that several other federal agencies that wield only civil authority also use the policy.
In January 2012, the SEC modified the policy to eliminate "no admit or deny" in settlements in which authorities such as the Justice Department file related criminal charges against a company or individual, and the company or person admits guilt in resolving the criminal charges. Most SEC settlements don't fall into that category.
In November 2011, U.S. District Judge Jed Rakoff struck down a $285 million settlement between the SEC and Citigroup over sales of mortgage securities because he couldn't tell whether the deal was fair. By allowing Citigroup to neither admit nor deny the allegations, Rakoff said, the SEC made it impossible for him to determine if the settlement amount squared with the facts of the case.