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Sarbanes-Oxley News & Developments
SEC May Dump Indemnity Insurance Policy The SEC is considering making settlers pay own fines, admit guilt.
> > Reportedly, the SEC is debating whether defendents should have to admit guilt as part of an agreement. It is also considering forcing defendents to pay all financial penalties out of pocket instead of using insurance to cover some fines.
Under such a policy, called indemnification, wrongdoers escape financial penalties while passing the costs on to the shareholders.
Reportedly, four of 10 Wall Street Securities firms recently agreed to pay $1.4 billion to settle conflict-of-interest charges plan to pursue insurance claims for a portion of the settlement. Xerox Corp. said it would utilize its D&O insurance to cover $19 million of the $22 million that six companies must pay to settle recent charges.
A bill is being floated in Congress aimed at strenthening the SEC enforcement powers and increasing its ability to reimburse defrauded investors.
Source: CFO article
Published:2003-06-17
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