SEC Chooses Not to Pursue ChoicePoint

Although the company already agreed to pay $15 million to settle FTC charges of facilitating identity theft, it's off the SEC's hook.
Stephen TaubJanuary 23, 2008

The Securities and Exchange Commission has completed an investigation of ChoicePoint Inc. without recommending any enforcement action.

The SEC was looking into possible identity theft and trading in ChoicePoint stock by its CEO and COO, according to ChoicePoint, which provides identification and credential-verification services.

This is another among a growing number of cases whereby the SEC has notified a target of a probe that an investigation has been completed with taking any enforcement action.

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The SEC began doing this last fall for formal investigations, according to Walter Ricciardi, deputy director of the Division of Enforcement, but it is not an iron-clad policy. The applicable rule says only that “The staff, in its discretion, may advise the party” that the probe has been terminated. There is no policy at all for notifying subjects of informal inquiries.

Two years ago, ChoicePoint agreed to pay $15 million to settle Federal Trade Commission charges that its security and record-handling procedures violated consumers’ privacy rights and federal laws.

Without admitting any wrongdoing to the FTC, the company will pay $10 million in civil penalties and $5 million in consumer redress to settle charges that it violated the Fair Credit Reporting Act by furnishing consumer credit histories to parties that did not have a permissible purpose to obtain them. The FTC also charged that ChoicePoint violated the FTC Act by making false and misleading statements about its privacy policies.