Almost five years ago the Dow Jones Industrial Average dropped about 600 points in five minutes, creating chaos in the markets and huge losses for many. The market debacle became known as the flash crash. The causes were...more
The Commission filed two settled offering fraud actions centered in part around an entity engaged in the purchase and sale of thoroughbred horses called Raintree Racing. A second involved an offering of interests in a real...more
Conflicts of interest involving market professionals continue to be a focus of SEC enforcement. In many cases the conflict is uncovered by the inspection staff, OCIE. This time, however, the information came from an article...more
Microcap fraud, misappropriation by investment advisers and offering fraud cases were the focus of SEC enforcement this week. The Commission filed a microcap fraud action centered on blank check companies involving ten...more
4/17/2015
/ CFTC ,
Congressional Investigations & Hearings ,
Disclosure Requirements ,
Enforcement Actions ,
Investment Adviser ,
Mary Jo White ,
Misappropriation ,
PCAOB ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Serious Fraud Office (SFO)
A staple of SEC enforcement in recent years has been offering fraud and Ponzi scheme cases. This week the Commission filed two more of these actions, one an offering fraud targeting military personnel and a second and...more
The Commission filed another offering fraud action tied to the sale of interests in the development of oil and gas wells prior to the recent downturn in the price of oil. Beginning in 2010 the defendants raised about $4.4...more
The SEC filed another FCPA action, this time against the company that financed a “world tour” as part of the bribes paid by employees to secure business. Previously, the Commission filed an action against the employees. ...more
The sale of spectrum to operate cell phones can yield millions of dollars in profits. This notion was at the center of an action brought by the SEC against six individuals and eleven entities. Investors who purchased...more
The SEC brought its first enforcement action centered on corporate restrictions which could impact employee whistleblowers, deterring them from reporting to the agency. ...more
The Second Circuit rejected a petition for rehearing by the U.S. Attorney’s Office in the Newman case. There the Court reversed and dismissed the insider trading actions against two traders based on the failure of the court...more
4/6/2015
/ Books & Records ,
CFTC ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Hong Kong ,
Illegal Tipping ,
Insider Trading ,
Internal Controls ,
Kraft ,
Misappropriation ,
Personal Benefit ,
Petition For Rehearing ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
UK ,
US v Newman ,
Whistleblowers
The former President and CEO of a public company repeatedly charged personal expenses to the firm largely by falsifying documents and records. Although the executive admitted certain misdeeds to internal investigators...more
The SEC issued an Order which charged investment manager Lynn Tilton, known as the Diva of Distressed Debt according to news reports, and her entities with fraud. Specifically, the Order Instituting Proceedings issued by the...more
The broken windows approach to enforcement continued this week. The Commission bundled together eight settled administrative proceedings centered on going private transactions in which the Respondents failed to update their...more
Microcap fraud is an on-going enforcement priority of the Commission. In SEC v. Craven, Civil Action No. 15-cv-1820 (S.D.N.Y. Filed March 11, 2015), the Commission brought a manipulation action against a father and son team,...more
Portfolio manager Steven Hart made a difficult situation worse. He was under investigation by the SEC. That inquiry focused on whether he had made a series of matched trades. The investigation resulted in an SEC enforcement...more
The “broken windows” approach to enforcement is alive, well and continuing. This time the Commission bundled together three groups of actions and eight proceedings, all centered on a failure to update disclosures tied to...more
One key debate regarding current SEC enforcement policy centers on the application of the so-called “bad actor” provisions. Previously the Commissioners split over the nature, use and application of those provisions. ...more
3/17/2015
/ Bad Actors ,
Disqualification ,
Enforcement Actions ,
Investment Adviser ,
Mary Jo White ,
Regulation D ,
Rule 506 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Waivers ,
WKSIs
The SEC filed one new action this week – an administrative proceeding involving the principal of an investment adviser and undisclosed conflicts of interest. The Commission also amended a complaint in an insider trading...more
3/17/2015
/ Australia ,
Australian Securities and Investments Commission ,
Breach of Duty ,
Criminal Prosecution ,
Enforcement Actions ,
False Advertising ,
Fund Managers ,
HKEx ,
Hong Kong ,
Injunctive Relief ,
Insider Trading ,
Investment Adviser ,
Investment Fraud ,
Mary Jo White ,
Misappropriation ,
Ponzi Scheme ,
Sanctions ,
Securities and Exchange Commission (SEC) ,
Short Sales ,
UK
The U.S. Attorney’s Office in Manhattan is trying to have the Second Circuit’s decision in U.S. v. Newman, No. 13-1837, 13-1917 (2nd Cir. Decided December 10, 2014 ) reheard and reversed. In seeking that rehearing the...more
3/9/2015
/ Construction Industry ,
Contractors ,
Enforcement Actions ,
Illegal Tipping ,
Insider Trading ,
Material Nonpublic Information ,
Personal Benefit ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
US v Newman
The SEC continued Operation Shell-Expel this week, suspending trading in the shares of 128 OTC issuers bringing its total for the program to about 8% of the shares traded in that market. The Commission also announced another...more
3/6/2015
/ Accounting Controls ,
CFTC ,
Enforcement Actions ,
Kickbacks ,
Price Manipulation ,
Securities and Exchange Commission (SEC) ,
Shareholder Litigation ,
Shareholders ,
Suspensions ,
Unregistered Securities ,
US v Yates ,
Whistleblowers
Trading suspensions, market manipulation and Ponzi scheme actions – staples of SEC enforcement. The Commission suspended trading for 128 dormant shell companies this week while bringing a market manipulation action involving...more
Cooperation was a key factor in the resolution of an action involving a minority owner of a broker-dealer that is alleged to have facilitated a fraudulent scheme to conceal losses at a major Japanese company. In the Matter of...more
Four SEC Commissioners addressed the annual SEC Speaks Conference, reviewing recent agency initiatives and tracing potential paths for the future. The SEC also brought another FCPA action, a misappropriation case and an...more
2/27/2015
/ Anti-Corruption ,
Australia ,
Bribery ,
Broker-Dealer ,
Compliance ,
Enforcement ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Fraud ,
Goodyear ,
Investment Funds ,
Mail Fraud ,
Misappropriation ,
Penny Stocks ,
Ponzi Scheme ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Unregistered Securities ,
Wire Fraud
The SEC Speaks conference has traditionally been a forum in which the agency reviewed significant recent undertakings and indicated its future direction. This year was no different. Four of the five Commissioners addressed...more
Waivers from the automatic disqualifications of the “bad boy” provisions which can come into play following the resolution of a Commission enforcement action is a topic of increasing concern. Consider the recent decision...more