Broken Windows – the SEC initiative cloned from the NYC Police Department which prosecutes every case large and small based on the a deterrence theory – is alive and well in the form of the Rule 105 Initiative. This week the...more
The Commission brought its first case tied to inadequate disclosure regarding structured notes. The complex instruments, a debt security linked to a derivative tied to the performance of other products, are frequently...more
10/14/2015
/ Banking Sector ,
Cease and Desist Orders ,
Debt Securities ,
Derivatives ,
Disgorgement ,
Enforcement Actions ,
Failure To Disclose ,
Prejudgment Interest ,
Securities and Exchange Commission (SEC) ,
Structured Financial Products ,
UBS
The PCAOB filed a settled action involving an auditing firm in which the consent order of settlement was based on admissions of facts. The approach is similar to the one adopted by the SEC in which the Commission requires...more
10/9/2015
/ Accounting Fraud ,
Auditors ,
Bristol-Myers Squibb ,
Consent Order ,
Disclosure ,
Enforcement Actions ,
Financial Conduct Authority (FCA) ,
Foreign Corrupt Practices Act (FCPA) ,
Insider Trading ,
Misrepresentation ,
PCAOB ,
Price Manipulation ,
Related Parties ,
Spoofing ,
UK ,
Whistleblowers
The SEC’s Asset Management Unit continues to review and analyze fees, expenses and the related disclosure at private equity firms. The Unit has encouraged advisers to self-report these issues. The most recent action emanating...more
The SEC filed another action centered on a restatement resulting from improper accounting and internal controls. In this instance the firm lacked procedures for dealing with related party transactions despite contrary...more
10/7/2015
/ Accounting Controls ,
Audit Committee ,
Cayman Islands ,
Cease and Desist Orders ,
Enforcement Actions ,
GAAP ,
Internal Controls ,
Mortgage Servicers ,
Related Parties ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
FCPA procedures, internal controls and travel, entertainment and gifts were at the center of the SEC’s latest FCPA action. The action names as a Respondent Bristol-Myers Squibb Company and focuses on its efforts to sell...more
10/6/2015
/ Bristol-Myers Squibb ,
China ,
Civil Monetary Penalty ,
Consent Order ,
Disgorgement ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Internal Controls ,
Meals-Gifts-and Entertainment Rules ,
Pharmaceutical Industry ,
Prejudgment Interest ,
Securities and Exchange Commission (SEC)
Suits challenging the SEC’s forum selection decisions continue to proliferate. As the trend has unfolded the Commission posted a memo on its website discussing the issue of forum selection and has proposed modifications to...more
10/5/2015
/ Administrative Hearings ,
Administrative Law Judge (ALJ) ,
Administrative Procedure Act ,
Bebo v SEC ,
Chevron Deference ,
Dismissals ,
Dodd-Frank ,
Due Process ,
Enforcement Actions ,
Equal Protection ,
Fifth Amendment ,
Forum Selection ,
Investment Adviser ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
September 30th Madness dominated this week. The drive for stats was evident as the Commission stacked up cases like cord wood at a pace seldom seen. Twenty-two municipal bond actions were filed in one swoop; an insider...more
10/2/2015
/ Accounting Fraud ,
CFTC ,
Enforcement Actions ,
False Statements ,
Foreign Corrupt Practices Act (FCPA) ,
Insider Trading ,
Investment Funds ,
Misappropriation ,
Municipal Bonds ,
Offering Fraud ,
PCAOB ,
Price Manipulation ,
Pyramid Schemes ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Self-Dealing ,
Whistleblower Awards
The SEC filed a settled insider trading case which names as defendants two attorneys, an accountant and two other individuals. The action is based on information misappropriated from a corporate director by his personal...more
When the bond market collapsed in Puerto Rico many clients at UBS Financial Services Incorporated of Puerto Rico had significant losses. Many had purchased shares of UBS PR closed-end funds or CEFs. UBSPR had been selling...more
9/30/2015
/ Arbitrage ,
Banks ,
Bonds ,
Cease and Desist Orders ,
Closed-End Funds ,
Corporate Fines ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Fraud ,
Internal Investigations ,
Letter of Credit ,
Puerto Rico ,
Securities and Exchange Commission (SEC) ,
UBS
The SEC filed a settled FCPA books and records and internal controls action centered on a firm which used a subsidiary partially owned by a foreign political party to influence the award of government contracts. Specifically,...more
9/29/2015
/ Books & Records ,
Due Diligence ,
Energy Market ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Hitachi ,
Internal Controls ,
Lobbying ,
Permanent Injunctions ,
Political Parties ,
Power Plants ,
Securities and Exchange Commission (SEC) ,
Shareholders' Agreements ,
Subsidiaries
The Commission responded to critics of its administrative proceedings this week, proposing changes to the Rules of Practice which govern them. If adopted the new rules would modify the time period within which the actions...more
9/25/2015
/ Accounting Fraud ,
Administrative Hearings ,
Bitcoin ,
Criminal Prosecution ,
Cybersecurity ,
Enforcement Actions ,
ETFs ,
False Press Release ,
Foreign Corrupt Practices Act (FCPA) ,
Injunctions ,
Insider Trading ,
Investment Funds ,
Jury Verdicts ,
Liquidity Risk Management Rule ,
Management Fees ,
Mutual Funds ,
PCAOB ,
Ponzi Scheme ,
Price Manipulation ,
Proposed Regulation ,
Rules of Practice ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
The SEC announced another new initiative. It is known as the “Distribution-in-Guise Initiative.” This initiative focuses on preserving the assets of mutual funds for its shareholders, apparently by ensuring that fund managers...more
Microcap fraud is a key part of the broken windows enforcement approach. One of the more significant actions brought in this regard is In the Matter of John Briner, Esq., Adm. Proc. File No. 3-16339 (Jan. 15, 2015). There the...more
9/21/2015
/ Auditors ,
Broken Windows ,
Cease and Desist Orders ,
Disgorgement ,
Enforcement Actions ,
Mining ,
Offerings ,
Prejudgment Interest ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
The Yates Memo, refocusing DOJ criminal and civil corporate investigations, continues to be the critical topic of discussion this week. The Memo, discussed here, directs that individuals be the focus of the inquiry from the...more
9/18/2015
/ Administrative Law Judge (ALJ) ,
Algorithmic Trading ,
Audits ,
Australia ,
C-Suite Executives ,
CFTC ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Dirks v SEC ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Government Investigations ,
High Frequency Trading ,
Insider Trading ,
Offering Fraud ,
Personal Benefit ,
Price Manipulation ,
Pyramid Schemes ,
Securities and Exchange Commission (SEC) ,
US v Newman ,
Yates Memorandum
Since at least the market crisis there has been a clamor to charge and convict senior corporate officials – or at least name them in a civil law enforcement action by the SEC or another agency. For years the Government...more
Microcap fraud and offering fraud cases are staples of SEC enforcement. The agency added to its totals in these areas, filing an additional offering fraud and microcap fraud action. SEC v. Mogler, Civil Action No. 15-cv-01814...more
9/16/2015
/ Criminal Prosecution ,
Enforcement Actions ,
Foreclosure ,
Mexico ,
Misrepresentation ,
Offering Fraud ,
Price Manipulation ,
Private Offerings ,
Real Estate Development ,
Securities ,
Securities and Exchange Commission (SEC)
When the Second Circuit handed down Newman the SEC joined with the Manhattan U.S. Attorney seeking rehearing en banc and arguing that the case would significantly hinder insider trading enforcement. Many wondered if the...more
9/15/2015
/ Administrative Law Judge (ALJ) ,
Cease and Desist Orders ,
Dirks v SEC ,
En Banc Review ,
Enforcement Actions ,
Illegal Tipping ,
Insider Trading ,
Material Nonpublic Information ,
Personal Benefit ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
US v Newman ,
Wells Fargo
In a burst of post-Labor Day energy, the SEC filed a number of significant actions. Those include a series of actions arising out of the audit failure by BDO; actions centered on a financial fraud at an on-line lender; cases...more
9/11/2015
/ Advertising ,
Audits ,
CFTC ,
Consumer Lenders ,
Disclosure Requirements ,
Enforcement Actions ,
Executive Compensation ,
False Advertising ,
Financial Institutions ,
Foreign Corrupt Practices Act (FCPA) ,
Foreign Official ,
Fraud ,
Insider Trading ,
Investment Adviser ,
Investment Funds ,
Misrepresentation ,
Offering Fraud ,
PCAOB ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Unregistered Securities
The SEC has long sought to enlist professionals as the advance guard of its Enforcement Division. The point is understandable: auditors, attorneys and other professional consultants are typically at the company long before...more
The SEC and the U.S. Attorney’s Office for the District of Connecticut charged three senior traders with fraud by misrepresenting pricing information to clients regarding securities traded in opaque markets. In those markets...more
The Sixth Circuit last week concluded that Morrison, which held that Section 10(b) does not have extraterritorial reach, is inapplicable to Advisers Act Section 10(b). The DC Circuit, on rehearing, reaffirmed its prior...more
8/28/2015
/ Appeals ,
Charles Schwab ,
Conflict Mineral Rules ,
Disclosure Requirements ,
Dodd-Frank ,
EB-5 ,
Enforcement Actions ,
Extraterritoriality Rules ,
False Statements ,
Financial Industry Regulatory Authority (FINRA) ,
First Amendment ,
Fraud ,
Insider Trading ,
Investment Adviser ,
Misappropriation ,
NAM ,
NAM v SEC ,
Net Capital Rule ,
Offering Fraud ,
Securities and Exchange Commission (SEC)
The EB-5 program is supposed to provide a path to a permanent green card. The program was designed to create that path for foreign national who invest specified sums in the U.S. that create jobs – a win win for everyone....more
8/27/2015
/ Construction Project ,
EB-5 ,
Enforcement Actions ,
Foreign Nationals ,
Fraud ,
Green Cards ,
Popular ,
Real Estate Development ,
Real Estate Investments ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
USCIS
The SEC and the Department of Justice announced insider trading charges against a former investment banker and his long time friend centered on two deals. The SEC’s complaint also named a third person alleged to have been a...more
The SEC has been investigating sovereign wealth funds and issues relating to the hiring of friends and family of foreign officials for some time. Now it has filed a settled action centered on both of those issues which...more
8/19/2015
/ Asset Management ,
Bank of New York (BNY) Mellon ,
Banking Sector ,
Cease and Desist Orders ,
Civil Monetary Penalty ,
Code of Conduct ,
Disgorgement ,
Enforcement Actions ,
Financial Institutions ,
Foreign Corrupt Practices Act (FCPA) ,
Foreign Official ,
Internships ,
Popular ,
Securities and Exchange Commission (SEC) ,
Sovereign Wealth Funds