SEC enforcement: What has gone wrong? — The National Law Journal

But none of these factors explains why the SEC is losing in court. In marked contrast, U.S. attorneys have been highly successful in prosecuting insider-trading cases, and they have to meet the higher standard of “proof beyond a reasonable doubt.” ….

What then is a feasible answer? The most logical response would be for the SEC to retain private counsel on a contingent-fee basis in those large cases that it cannot staff adequately itself. This is exactly what the FHFA has done in retaining Quinn Emanuel Urquhart & Sullivan to sue the major banks for the losses it sustained on toxic CDOs. Such a strategy kills at least three birds with one stone: (1) It allows the SEC to acquire highly experienced trial counsel for big cases (without having to pay their salaries for the long term); (2) it economizes on the SEC’s budget by paying the attorney fees only out of any recovery obtained; and (3) it enables privately retained counsel to invest greater time and effort, getting “deeper into the reeds” of a complex case (at least if the potential fee is large enough to justify such an effort)….

via SEC enforcement: What has gone wrong? — The National Law Journal