The Securities and Exchange Commission, long known for settling enforcement actions without having to prove its case in court, is struggling to cope with a surge in the number of executives and companies willing to go to trial to defend themselves.
He recently added three more lawyers to his group and is looking to hire more. It’s critical that his unit present a credible threat, he said.
“At the end of the day, if we can’t win cases, then people don’t settle. That’s the reality,” Martens said.
The wave of litigation has two main sources. First, the collapse of the housing market and resulting financial turmoil involved complex securities for which there was little legal precedent.
Second, the agency has brought more financial crisis lawsuits against executives – more than 50 so far – and people are often inclined to fight claims that could damage or end their careers.