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16 July 2009

The SEC always wins

[T]he SEC rarely loses. According to official statistics, it obtained a favorable outcome--judgment, default judgment or settlement--in 99% of the cases it brought.


From here.

Note that such high success rate isn't necessarily a good thing. It may indicate that the agency is not bringing cases that are very strong, but not certain to prevail, and thus is failing to aggressively enforce securities laws. The high success rate is particularly notable because securities law violators are among the most affluent and sophisticated defendants out there. Many securities fraud defendants have college degrees and sufficient funds to hire expensive and highly skilled attorneys to represent them. By comparison, about a third of state prison inmates in Colorado are high school dropouts with substance abuse problems and no marketable skills.

On the other hand, almost all prosecutorial bodies have very high success rates on cases that they choose to prosecute. It would be unusual for a local district attorneys' office to secure convictions either by guilty plea or at trial, in less than 95% of the cases that it brings. Civil plaintiffs also receive either a judgment or settlement in a very large percentage of all cases brought with a handful of exceptions (medical malpractice suits, habeas corpus suits and civil suits brought by inmates being among the most likely to fail). Courts are better described as "right enforcement" bodies than "dispute resolution" forums.

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