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
Financial fraud actions have traditionally been a staple of SEC Enforcement. During the market crisis, however, the number of those cases waned. Following the formation of a task force focused on financial statement fraud,...more
Cybersecurity is one of the current hot topics of discussion. Regulators here and abroad have expressed concern regarding cybersecurity. Breaches are periodically reported in the media. Now the SEC has brought its first...more
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
The SEC’s interpretation of the Dodd-Frank whistleblower provisions prevailed in a recent Second Circuit decision, creating a circuit split that could be heading for the Supreme Court. Specifically, the Circuit Court deferred...more
9/14/2015
/ Accounting Fraud ,
Appeals ,
Dodd-Frank ,
Financial Reporting ,
Motion to Dismiss ,
Reporting Requirements ,
Retaliation ,
Reversal ,
Sarbanes-Oxley ,
Securities and Exchange Commission (SEC) ,
Statute of Limitations ,
Whistleblower Protection Policies
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 Dodd-Frank Wall Street Reform Act imposed a requirement on the SEC in Section 1504 to promulgate a disclosure rule regarding certain extraction payments involving resource issuers within 270 days of passage or by April...more
9/8/2015
/ Administrative Procedure Act ,
American Petroleum Institute ,
Disclosure Requirements ,
Dodd-Frank ,
Injunctions ,
Mineral Extraction ,
Multi-Factor Test ,
Oil & Gas ,
Resource Extraction ,
Rulemaking Process ,
Securities and Exchange Commission (SEC)
Two cases challenging the SEC’s use of administrative proceedings based on the Constitution’s Appointment Clause are headed for the Circuit Courts. One, Duka v. SEC will be considered by the Second Circuit. A second, Hill v....more
The battle lines are now clearly drawn over Newman and what constitutes impermissible tipping in violation of Exchange Act Section 10(b). Previously, the Government filed a petition for certiorari arguing that Newman, which...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’s conflict mineral disclosure rule, enacted under Dodd-Frank, is a continuing source of controversy. An initial challenge to the rules was brought by the National Association of Manufactures. That challenge was...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
The market crisis may have ended years ago, but not the SEC’s supply of cases from that time period. The agency filed a settled action in which those soliciting sophisticated investors misrepresented the risks of two funds,...more
A recurrent theme in today’s enforcement environment is parallel and often overlapping proceedings. That is the case with a District of Columbia based broker that drew sanctions from the SEC, FINRA and DC. In the Matter of...more
8/17/2015
/ Broker-Dealer ,
Cease and Desist ,
Civil Monetary Penalty ,
Department of Insurance ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Misrepresentation ,
Promissory Notes ,
Restitution ,
Sanctions ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
A second insider trading action was brought by the Commission against a senior banking official based on the same take-over for which he was previously charged — but a different securities trading account is at the center of...more
8/14/2015
/ Administrative Hearings ,
Banking Sector ,
BHP Billiton ,
Confidential Information ,
Conflicts of Interest ,
Criminal Conspiracy ,
Criminal Prosecution ,
Enforcement Actions ,
Financial Conduct Authority (FCA) ,
Financial Industry Regulatory Authority (FINRA) ,
Foreign Corrupt Practices Act (FCPA) ,
Insider Trading ,
Investment Funds ,
Municipal Advisers ,
Municipal Bonds ,
Obstruction of Justice ,
Offering Fraud ,
Popular ,
Regulation SHO ,
Securities and Exchange Commission (SEC) ,
UK ,
Underwriting
Dark pools are one of the issues which have been debated at least since Michael Lewis published Flash Boys and Scott Patterson put out Dark Pools. To date the SEC has brought two actions involving the trading venues. One was...more
8/13/2015
/ Algorithmic Trading ,
Alternative Trading System (ATS) ,
Broker-Dealer ,
Civil Monetary Penalty ,
Confidential Information ,
Dark Pool ,
Enforcement Actions ,
Prejudgment Interest ,
Proprietary Information ,
Proprietary Trading ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC)