When it comes to lawsuits and sanctions, the SEC’s strategy has long been to push for settlement long before trial, thereby conserving time and resources. But more executives are “calling their bluff,” and the agency 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, said in an interview with Bloomberg. At the same time, Martens’ trial unit staff has stayed relatively flat at about 36, according to the news service. He recently added three more lawyers to his group and is looking to hire more.
Martens told Bloomberg 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 said.
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The wave of litigation has two main sources, he said: more complex cases stemming from the 2008 financial crisis and a related increase in lawsuits filed against individual executives.