SEC Poised to Modify 'No Admit, No Deny' Policy in Settlements

John Commins, for HealthLeaders Media , July 22, 2013

HLM: How should businesses prepare as this policy is ramped up?

Andreson: Having an awareness that this new policy is about to be implemented is important. But if they find themselves on the receiving end of an SEC inquiry it certainly behooves them to take a look at what private litigation may ensue from that, whether there is any prospect of DOJ involvement or a parallel investigation by DOJ, and if so how that might be affected by this new policy.

Evaluating for themselves what potentially the evidence is and whether that new policy might be applied to them. The SEC has made clear that in the majority of cases going forward they are not going to be seeking this but that they are going to use this sparingly. We will see if that actually happens.

Secondly, recognize that the SEC has intimated that they are only going to be using this is a small subset of cases, at least initially. Assuming that is the case it is important for hospitals that might be subject to SEC jurisdiction to first and foremost be aware of the policy and second if they find themselves on the receiving end of an SEC inquiry, to do two things.

The first is to ask themselves if there are other agencies or parallel investigations that potentially may ensue, whether it is private litigants or DOJ, and be aware of the effect it may have on the parallel litigation. The second thing is to evaluate what the evidence may be in that case.

How strong is the case? A bit of introspection might be helpful at that point because if they are dealing with facts or evidence that potentially egregious from the perspective of the SEC it may be one of those cases where the SEC throws this new policy out on the table as leverage.

John Commins is a senior editor with HealthLeaders Media.
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