NY judges adopt new standards for settlement agreements

Author: | Published: 4 Apr 2013

KEY TAKEAWAYS:

· The Southern District of New York is giving greater scrutiny to settlements involving alleged securities law violations;

· A Second Circuit decision could allow judges to reject settlement agreements for not including an admission of wrongdoing;

· Counsel are divided, along client lines, on the impact this would have on deterrence. However, it is clear the SEC would not be able to bring as many cases;

· An admission of guilt would likely expose the relevant company to class action civil litigation.

Although courts are giving greater scrutiny to settlement agreements involving banks and other financial companies, it is uncertain if courts will begin to require admissions of culpability by potentially fraudulent actors.

On...