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Deciding whether to settle or litigate enforcement actions
Journal of Financial Compliance,
8
(4),
359-364
(2025)
Abstract
All parties facing the risk of an enforcement action must make the difficult decision of settling the charges or fighting them in litigation or an administrative proceeding. Both options provide distinct advantages and disadvantages. By settling, a party can resolve charges without admitting or denying the allegations and can minimise public coverage of potentially lengthy litigation and trial. But litigating, while stressful and expensive, can end in public vindication or even a novel change in the law that could be advantageous to a defendant’s business or industry. Parties are motivated by different factors. For some, the primary goal might be limiting public scrutiny and reputational damage, while for others, the decision making is driven by a cost calculation weighing the prospective costs of a trial and potential damages against the costs of an anticipated settlement and potential penalties. Is there ever a right case to litigate? What factors should a party carefully examine when making the decision of whether to settle or litigate? And how do recent challenges to the power of Administrative Law Judges impact the analysis? This article provides an overview of principal considerations that parties facing an enforcement action should keep in mind as they evaluate whether to settle or litigate, especially during a climate in which regulatory agencies and administrative proceedings are facing increasing programmatic and reputational pressure. This article is included in The Business and Management Collection (https://hstalks.com/business/).
Keywords: regulatory enforcement; civil enforcement; administrative proceedings
The full article is available to subscribers to the journal.
Author's Biography
Sara Raisner focuses on regulatory examination and enforcement matters, internal investigations and securities-related disputes. She represents financial institutions, investment advisors, hedge funds and public companies before the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), Commodity Futures Trading Commission (CFTC), New York Office of Attorney General, Department of Justice (DOJ) and other regulators. Sara is a leader in the firm’s SPAC regulatory and litigation practice and regularly advises clients on capital markets and M&A transactions. A member of the firm’s dedicated Lat-Am team, Sara has extensive experience advising clients in Mexico, Argentina, Brazil and Chile. Sara also serves on the A&O Shearman Women’s Council and the firm’s Recruiting Committee and Women Partners Committee. Sara previously served as a director with FINRA, where she led a team of enforcement attorneys and investigators on regulatory matters involving securities fraud, suitability, anti-money laundering surveillance, operational failures and other violations of federal securities laws. Before joining FINRA, Sara was an associate at a global law firm where she represented financial institutions in civil litigation, SEC enforcement matters and internal investigations.
Parul Bhatia ’s practice focuses on internal and government regulatory investigations, as well as cross-border and complex commercial litigation at the state and federal levels. She has experience in white-collar criminal defence, anti-corruption and compliance investigations, workplace misconduct investigations, advising clients on economic sanctions and representing companies and individuals under investigation by government agencies, such as the US Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Office of Foreign Assets Control. She also has experience in civil securities fraud litigation and securities class actions. Parul maintains an active pro-bono practice that includes criminal defence work, representing individuals in parole board hearings, and Violence Against Women Act (VAWA) petitions.
