SEC trials rise 50% as execs increasingly fight suits

The U.S. Securities and Exchange Commission, long known for settling enforcement actions without having to prove its case in court, is struggling to cope with a surge in the number of executives and companies willing to go to trial to defend themselves. The SEC’s office in Washington is actively litigating about 90 cases—up more than 50% in the past year—Matthew Martens, the SEC’s chief litigation counsel, tells Bloomberg. At the same time, Martens’ trial unit staff has stayed relatively flat at about 36. He recently added three more lawyers to his group and is looking to hire more. Martens says it’s critical that his unit present a credible threat. “At the end of the day, if we can’t win cases, then people don’t settle. That’s the reality,” he says. The wave of litigation has two main sources: more complex cases stemming from the 2008 financial crisis and a related increase in lawsuits filed against individual executives. The collapse of the housing market and resulting financial turmoil involved complex securities for which there was little legal precedent. In addition, the agency has brought more financial crisis lawsuits against executives—more than 50 so far—and individuals are often inclined to fight claims that could damage or end their careers. Those cases, which have required years of investigation, are central to the agency’s effort to restore its reputation after being battered for more than three years by lawmakers, judges and investors who claimed it hasn’t been tough enough in holding Wall Street to account. Read the complete story here.