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SEC Disgorgement Waiver Process Lax: OIG Audit

Law360 (February 4, 2009, 12:00 AM EST) -- The U.S. Securities and Exchange Commission's Enforcement Division follows flawed procedures for granting disgorgement waivers to defendants who violate federal securities laws, according to a report by the Office of the Inspector General.

Sent Tuesday to Linda Thomsen, director of the SEC's Enforcement Division, the final draft of the audit concludes that in 63 disgorgement waiver cases involving 72 defendants between October 2005 and May 2008, the OIG identified 56 instances when the division's staff failed to ensure the waivers were justified.

Specifically, the report highlights...
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