Settlements for 3 Wall Street Banks Hold a Silver Lining<br />But while the commission and Justice Department trumpeted their crackdown on market manipulation, the settlements included language<br />that gave all three banks an automatic waiver from the bad actor rule — drawing sharp criticism from one Securities and Exchange commissioner, a Democrat.<br />It simply meant they had to apply to the Securities and Exchange Commission for the waivers — which were always granted.<br />That provision, known as the bad actor rule, was created to make legal settlements with regulators riskier<br />and more financially painful for banks — an incentive for them to avoid the conduct that precipitates such settlements.<br />Otherwise, she said, the banks would have wanted to apply for waivers from the<br />bad actor rule before finalizing and announcing the settlement agreements.<br />The Securities and Exchange Commission oversees the sale of securities like stocks and bonds.
