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
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 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 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
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
Cyber security is a key focus for virtually everyone these days. The SEC, for example, has been issuing releases discussing disclosure requirements and offering guidance for a number of years. Prominent issuers have reported...more
8/12/2015
/ Criminal Prosecution ,
Cybersecurity ,
Data Breach ,
Enforcement Actions ,
Hackers ,
Insider Trading ,
Popular ,
Press Releases ,
Russia ,
Securities and Exchange Commission (SEC) ,
Traditional News ,
Ukraine
Amid all the concern regarding the selection by the SEC of an administrative rather than a district court forum for brining agency enforcement action comes a decision which has the potential to change the tenor of the debate,...more
The Government filed its long awaited Petition for a Writ of Certiorari with the Supreme Court in the Newman insider trading case. The Petition presents three key issues which were generally presaged in the request for...more
8/3/2015
/ Criminal Prosecution ,
Dell ,
Hedge Funds ,
Illegal Tipping ,
Insider Trading ,
Investment Adviser ,
Material Nonpublic Information ,
NVIDIA ,
Personal Benefit ,
Petition for Writ of Certiorari ,
Securities and Exchange Commission (SEC) ,
US v Newman
The Government requested that the Supreme Court overturn U.S. v. Newman, the Second Circuit’s decision on tipping and the personal benefit test. Previously, the Second Circuit had declined a request to either rehear the case...more
7/31/2015
/ Australia ,
Australian Securities and Investments Commission ,
Brokers ,
Criminal Prosecution ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Foreign Corrupt Practices Act (FCPA) ,
Hong Kong ,
Insider Trading ,
Misrepresentation ,
Offering Fraud ,
Petition for Writ of Certiorari ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
US v Newman
The U.S. Chamber of Commerce published a report containing a series of recommendations regarding the SEC’s Enforcement program. Several recommendations focused on the use of administrative proceedings, including one which...more
7/17/2015
/ Administrative Hearings ,
Australia ,
Chamber of Commerce ,
Cooperation ,
Enforcement Actions ,
Hong Kong ,
Insider Trading ,
Investment Funds ,
Mary Jo White ,
Misrepresentation ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Wells Notice
DOJ and SEC officials repeatedly encourage cooperation. There are benefits for both sides. Cooperation can facilitate the Government’s investigation, providing a road to the scheme. Testimony can aid in obtaining a favorable...more
7/14/2015
/ Cooperation ,
Criminal Prosecution ,
Disgorgement ,
Enforcement Actions ,
Forfeiture ,
Government Investigations ,
Insider Trading ,
Permanent Injunctions ,
Restitution ,
Securities and Exchange Commission (SEC) ,
SiriusXM
The Ninth Circuit upheld a conviction for illegal tipping, following Dirks but raising doubt regarding its adherence to Newman in an opinion authored by Judge Rakoff, sitting by designation.
The Commission filed settled...more
7/10/2015
/ Auditors ,
Clawbacks ,
Deloitte ,
EB-5 ,
Enforcement Actions ,
Federal Jurisdiction ,
Goldman Sachs ,
Illegal Tipping ,
Insider Trading ,
Investment Funds ,
Judge Rakoff ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Fraud ,
US v Newman ,
Wells Fargo
One of the questions regarding U.S. v. Newman, 773 F. 3d 438 (2nd Cir. 2014)(here) and its personal benefit test for illegal tipping is its application outside the Second Circuit. When applying Newman, Judge Rakoff has...more
When the SEC announced it financial fraud task force and a related data initiative to facilitate the identification of situations where the company “cooked the books,” many dubbed the data program “Robocop.” While the SEC may...more
Jing Wang, a former Qualcomm Inc. Executive Vice President began by constructing a cover-up. Then he engaged in insider trading, using inside information taken from his employer. The scheme failed. Mr. Wang has been sentenced...more
Outsized trades continue to draw SEC scrutiny and enforcement actions – even where the agency does not have the evidence to fully plead a claim. Despite the difficulties of these so-called “suspicious” trading cases, in many...more
The Commission chose to appeal the decision in Hill v. SEC in which the Court held that the manner in which SEC Administrative Law Judges are retained violates the Appointment Clause of the Constitution. While the Court...more
One question in the wake of the Second Circuit’s decision in Newman regarding the personal benefit test for illegal tipping has been how the SEC would respond to a decision the U.S. Attorney told the Court would significantly...more
6/16/2015
/ Acquisition Agreements ,
Apple ,
Cease and Desist Orders ,
Enforcement Actions ,
Illegal Tipping ,
Insider Trading ,
Personal Benefit ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Settlement ,
Target Company
The acquisition of Foundry Networks, Inc., a networking hardware company, by Brocade Communications System, Inc., a technology company specializing in data and storage networking products, announced on July 21, 2008, has...more
6/15/2015
/ C-Suite Executives ,
Civil Monetary Penalty ,
Criminal Conspiracy ,
Criminal Prosecution ,
Disgorgement ,
Enforcement Actions ,
Injunctions ,
Insider Trading ,
Prejudgment Interest ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
The question of forum selection by the SEC was a key issue this week. While to date suits challenging the SEC’s right to bring an action as an administrative proceeding rather than in federal court have had little success –...more
6/13/2015
/ Administrative Hearings ,
Administrative Law Judge (ALJ) ,
Appointments Clause ,
Article II ,
Australia ,
Australian Securities and Investments Commission ,
Broker-Dealer ,
Brokers ,
CFTC ,
Delegation Doctrine ,
Department of Justice (DOJ) ,
Derivatives ,
Enforcement Actions ,
False Statements ,
Forum Selection ,
Injunctions ,
Insider Trading ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Investment Funds ,
Investment Management ,
Rule 105 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Settlement ,
Seventh Amendment
The SEC brought an insider trading case against a senior corporate official and a chain of tippes that starts with his brother-in-law broker who then tipped his friend, another broker. Others, not named as defendants, were...more
The SEC’s shift to administrative proceedings in recent months has spawned a series of suits against the agency challenging its forum selection authority. The suits have generally met with little success. Nevertheless,...more
6/10/2015
/ Administrative Authority ,
Administrative Law Judge (ALJ) ,
Administrative Procedure Act ,
Appointments Clause ,
Article I ,
Article II ,
Delegation Doctrine ,
Exclusive Jurisdiction ,
Forum Selection ,
Insider Trading ,
Preliminary Injunctions ,
Securities and Exchange Commission (SEC) ,
Seventh Amendment
The SEC continues to bolster its allegations regarding the relationships between tipper and tippee in insider trading cases as well as the knowledge of the tippee. Whether those allegations will be sufficient to meet the...more
6/9/2015
/ Disgorgement ,
Enforcement Actions ,
Fifth Amendment ,
Insider Trading ,
Internal Investigations ,
Penalties ,
Permanent Injunctions ,
Right to Remain Silent ,
Rule 10(b) ,
Securities and Exchange Commission (SEC) ,
Tippees ,
US v Newman