Securities: SEC Reaches Bifurcated Settlement with Bernard Madoff

The SEC has announced that it reached a partial settlement with Bernard Madoff. The parties have submitted a proposed settlement to a portion of the case to the federal judge hearing the matter.

The SEC refers to such settlements as "bifurcated" settlements. In this instance, as in other bifurcated settlements, Madoff agrees not to contest fraud allegations and the imposition of disgorgement and penalties. The issues that remain open are the amounts of the disgorgement of Madoff's ill-gotten gains and the amount of the penalty that he will pay.

The SEC and Madoff's defense team will now concentrate on negotiating the monetary amounts in the settlement. If the parties are unable to do so and the case goes to trial, the trial will be limited to the issues of the amount the Madoff defrauded from investors to determine disgorgement and as legal argument the amount of the appropriate monetary penalty. The trial would not consider whether Madoff is liable for fraud as that is part of the proposed settlement.

This proposed settlement and the ultimate disposition of the SEC's civil case does not bear on the criminal action brought by the Department of Justice against Madoff. That case is proceeding separately.