U.S. District Court Conditionally Approves CR Intrinsic Settlement with SEC Despite “Neither Admit Nor Deny Liability” Provision

A hedge fund manager that is negotiating a settlement to terminate an SEC enforcement action should not assume that a U.S. District Court will “rubber-stamp” the proposed settlement.  A recent decision by a U.S. District Court conditionally approving the settlement of the SEC’s civil insider trading action against hedge fund manager CR Intrinsic Investors, LLC shows that even a landmark settlement amount that gives the SEC virtually everything it could have won at trial will not insulate the settlement from close judicial scrutiny when the defendant does not admit any of the SEC’s allegations.  This article summarizes the Court’s decision, which provides an excellent discussion of the policy, legal and practical issues that courts have been considering when asked to approve SEC settlements.

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