You're talking about a settlement tactic often referred to as an AWC (acceptance, waiver and consent), and of which you've only named one of the components - there are two: not admitting guilt and not denying it. The practice of settling such disputes is not limited to the securities industry, either; the same are seen across the scope of industries - often where environmental damage, predatory pricing practices (LOL), and other such charges are brought by the government.
Those types of settlements are offered because regulatory bodies, whether federal or operating via federal mandate (i.e. SROs), know that trials can be exceedingly costly and take years upon years to resolve. In addition, that a single mistake can result in mistrial/dismissal of the case, wasting taxpayers' money and potentially emboldening other violators. They opt for the economic solution, knowing both the time value of money and the marketing benefits of a "quick hit" against an alleged violator.
As for the firms against whom allegations are made or charges brought, would you really expect them - or anyone, for that matter - to admit to anything when the option to take a quick hit to the bottom line and not explicitly state culpability exists?
This is, incidentally, one reason why I take such a hard line against interventionist market engineering: I'd rather the regulators keep their powder dry to litigate against large violators rather than spend tax money (or membership dues, as the case may be) on inherently biased and foolhardy tinkering initiatives.
Then again, I'm not exactly sure what the basis is for this case. Salespeople not actually believing in a product they're being paid to sell?
LP. |
