U.S. top cop: SEC to no longer delay civil cases

By Jonathan Stempel

NEW YORK, May 4 (BestGrowthStock) – The head of the U.S. Department
of Justice’s Criminal Division said the U.S. Securities and
Exchange Commission will no longer delay civil enforcement
actions so prosecutors can pursue related criminal cases.

Lanny Breuer, assistant attorney general for the criminal
division, said he expects the Justice Department to develop a
closer working relationship with SEC enforcement staff, saying
the Obama administration “cares very deeply about comprehensive
approaches” toward enforcement.

“Just because there’s a civil action … and a parallel
criminal action, the days are gone where the civil action will
necessarily be stayed until the criminal action is over,”
Breuer said after a speech at the Council of Foreign Relations
in New York. He did not discuss specific cases.

The timing of parallel enforcement activity has surfaced
recently in the sprawling hedge fund insider trading case
centered on the Galleon Group hedge fund.

It may also become an issue for the SEC’s civil fraud
lawsuit against Goldman Sachs Group Inc (GS.N: ), which was filed
two weeks before news surfaced of a Justice Department criminal
investigation.

Prosecutors face a higher burden of proof and tougher rules
on discovery than investigators pursuing civil cases.

The existence of a criminal probe could also cause
individuals to assert their Fifth Amendment right against
self-incrimination were the SEC to seek testimony.

The Justice Department sometimes uses deferred or
non-prosecution agreements to resolve corporate crime cases.

Breuer said he has become “very close” with Robert Khuzami,
who has been revamping the SEC’s investigatory practices as
head of that regulator’s enforcement division.

Khuzami previously spent 11 years as a federal prosecutor
in New York.

“I’m very attuned to what Rob and others are doing in
changing the enforcement area, making it more robust,” Breuer
said.

As to the working relationship between Justice and the SEC,
Breuer said: “I think you will continue to see that that
relationship will blossom.”

Investing Basics

(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)

U.S. top cop: SEC to no longer delay civil cases