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Firms Broke Promises to SEC

Companies have broken pledges to the SEC multiple times, analysis shows.

Corporate boards are responsible for ensuring their companies maintain compliance with regulations in the business world, but some failed to do so, breaking promises made to the Securities and Exchange Commission, according to

Corporate boards are responsible for ensuring their companies maintain compliance with regulations in the business world, but some failed to do so, breaking promises made to the Securities and Exchange Commission, according to analysis from The New York Times.

While laws restrict corporations from committing fraud or lying to their customers, the SEC has had to get pledges from companies - such as Citigroup, Goldman Sachs, JPMorgan Chase, Bank of America and Morgan Stanley - asserting they would not break the rules, yet they have violated those provisions multiple times, the news outlet reports. The SEC started the practice of having offenders make the promises as part of their settlement in an effort to deter future violations.

However, Barbara Roper, director of investor protection for the Consumer Federation of America, is skeptical that the policy has been effective.

"You can look at the record and see that it clearly suggests this is not deterring repeat offenses. You have to at least raise the question if other alternatives might be more effective," she told the newspaper.

Others are also calling the efficacy of the practice into question. Reuters reports that U.S. District Judge Jed Rakoff, before approving a settlement the agency had made with Citigroup about a toxic mortgage debt sale, questioned an SEC lawyer and expressed "impatience with an SEC settlement process that may appear to not punish wrongdoers sufficiently."  

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