A negotiated settlement has been reached involving the liquidators for what used to be Caledonian Bank and the US Securities and Exchange Commission.
But the judge who approved the settlement last week took one more shot at the SEC for missteps that led to the bank’s collapse last year. To review, the SEC, in February of 2015, accused Caledonian of being deeply involved in “pump and dump” penny stock sales and asked a US judge to freeze Caledonian assets worth $76 million.
Days later, the bank collapsed, but months later, the judge lashed out at US regulators for not making clear that Caledonian was more of a broker and not a direct seller of the unregistered stocks. Caledonian had received less than $2 million dollars in fees or commission from the stocks that were sold from other companies.
While the new SEC settlement calls for Caledonian’s liquidators to make a $25 million “payback,” known technically as a “disgorgement,” the SEC will then waive the actual payment. The judge blasted that provision, calling it “somewhat of a legal fiction,” but ultimately approved the settlement in New York district court.