SEC vs. Evergreen Assets Management

Evergreen Assets Management, which was recently acquired by Wells Fargo, recently agreed to a 40 million settlement with the Securities and Exchange Commission. The groups reached a settlement to avoid a trial in which Evergreen would be charged for withholding valuable investment information from the majority of their shareholders.
The SEC monitors the buying and selling of stocks and bonds and makes certain that a company’s information is transparent to the public and its shareholders. Evergreen is being charged with “inflating by as much as 17 percent” the value of their company and its ranking among other related companies. This case is in direct violation of the Securities Act of 1933 which requires that shareholders are given perfect information as to the company’s financial stability and future ventures.
Due to the large monetary settlement, it was likely that Evergreen was guilty of some regulation violations typically monitored by the SEC. With the 40 million dollar settlement agreement Evergreen felt as if its probability of winning the case was not high enough to risk the trial. If this case had gone to trial, it is possible that Evergreen would have been forced to pay hundreds of millions in damages to its shareholders.
Despite the billions of dollars that have been lost recently due to unethical business practices and the lack of preventative regulation by the SEC, the shareholders that incurred financial losses are receiving their fair share of the 40 million settlement. The SEC is currently lacking the power to prevent all of the fraudulent information being released to shareholders. With their existing powers they are able to identify, prosecute, and seek retribution from violators post infringement. This raises the question of whether or not the SEC’s regulation should be expanded to be able to stop these types of crimes before they happen.

http://dealbook.blogs.nytimes.com/2009/06/08/evergreen-to-pay-40-million-to-settle-sec-case/?scp=5&sq=sec&st=cse

Zach Ogaz
Meredith Shores