HLM: SEC commissioners are political appointees. Will we see uneven applications of this policy?
Andreson: Well, sure. Things change. Commissioners come and go and as leadership changes at the SEC the policy may be modified. It may be used more or less depending upon who is there.
But once they lay the groundwork for it and roll it out, presumably in the near future they are going to set certain bench marks. Consistency, particularly in enforcement matters, is one of the most important principles. So you are going to see them try to see some consistency applied through the years. But again it is certainly subject to who is running the show.
HLM: Would forcing some defendants to admit their guilt compel them to fight when they otherwise would have settled?
Andreson: Absolutely. That is one of the anticipated effects that remain to be seen. But you are already seeing some of the commentary out there referencing that fact particularly in parallel investigations where you might have private litigants waiting in the wings watching to see what happens.
Certainly in the case of parallel Department of Justice and SEC matters where admission of wrongdoing in an SEC enforcement matter may well embolden DOJ prosecutors. Perhaps they had shelved the case or perhaps they had hit a wall in the case as far as evidence.
This may embolden them to pursue further that target in particular. It may embolden private litigants to move forward particularly given the heightened procedural processes that they must go through. Having an admission like that certainly gives strength to the case for private litigants or at least their motivation and their conviction going forward.