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Category Archives: Securities Litigation

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Broker-Dealer Defendants, SEC, Securities Litigation, Uncategorized

Variable Annuities Are Retirement Investment Product of Interest in SEC’s 2016 Examination Priorities

As we discussed yesterday, the Securities and Exchange Commission’s (SEC’s) Office of Compliance Inspections and Examinations (OCIE) released its examination priorities for 2016 on January 11 (the “Examination Priorities”). Retirement investments continue to be an area of focus for OCIE as we march into the new year. Digging deeper into this area, OCIE identified variable… Continue Reading
SEC, SEC Enforcement

Just Admit It – SEC Requiring Admissions with Increased Frequency

As we previously reported, in 2012 and 2013 the Securities and Exchange Commission (SEC) changed its longstanding policy of permitting defendants to settle enforcement actions without admitting or denying liability. Initially, the policy was changed only with regard to settlements involving parallel criminal actions. Subsequently, the policy was further revised to require admissions in certain… Continue Reading
FCPA Investigations, SEC, SEC Enforcement, Securities Litigation

SEC ‘Broken Windows’ Enforcement Policy Is Showing FCPA Results

In October 2013, SEC Chairwoman Mary Jo White announced a broken windows enforcement policy to “pursue even the smallest infractions” of U.S. securities laws, including the FCPA, as a means of deterrence. As White stated in announcing the policy, “minor violations” that a company fails to address “feed bigger ones, and, perhaps more importantly, can… Continue Reading
Compliance, Enforcement Actions, Financial Regulation, SEC, SEC Enforcement, Securities Fraud

SEC Enforcement Continues to Pursue Hedge Fund Advisers

The SEC continues to pursue enforcement actions against hedge fund managers for alleged self-dealing, undisclosed conflicts of interest, and valuation issues. As we’ve previously reported (here and here), the SEC has stepped up its review and enforcement of private fund managers following Dodd-Frank, which required most investment advisers to private funds to register with the… Continue Reading
SEC, SEC Enforcement

SEC Proposes to Amend Rules Governing Administrative Proceedings

On September 24, 2015, the Securities and Exchange Commission (SEC) issued a press release announcing proposed amendments to its Rules of Practice governing administrative proceedings. The announcement comes at a critical time, when the SEC’s use of administrative proceedings has come under increasing fire. The proposed rules attempt to address aspects of the administrative process… Continue Reading
Compliance, Corporate Compliance, Enforcement Actions, Market Manipulation, SEC, SEC Enforcement, Securities Litigation, White Collar Crime

SEC Issues Wells Notice to Pimco Over Fund Valuations

On Monday, August 3, 2015, Pacific Investment Management Co. LLC (Pimco) announced that it had received a Wells notice from the Securities and Exchange Commission concerning the valuation of certain nonagency mortgage-backed securities in its popular, exchange-traded Pimco Total Return ETF fund. The notice indicated that the SEC staff had made a preliminary determination to… Continue Reading
Corporate Compliance, Corporate Fraud, SEC, SEC Enforcement, Securities Litigation

Inadequate Internal Controls Cost Tech Firm $750,000

Without admitting or denying the U.S. Securities and Exchange Commission’s findings, Polycom Inc. settled with the agency on Tuesday, March 31, 2015, over alleged insufficient internal controls and disclosure violations for personal perk expenses. Andrew Miller, Polycom’s former CEO, traveled to Indonesia and South Africa with his girlfriend, took limousine rides, and purchased dress shirts,… Continue Reading
Anti-Corruption, Charging, Compliance, Corporate Compliance, Dodd-Frank, DOJ Policy, Enforcement Actions, FCPA, FCPA Investigations, Non-Prosecution Agreements, Regulation, SEC, SEC Enforcement, Securities Litigation, Sentencing, UK Bribery Act, Whistleblowers, White Collar Crime

Biomet FCPA Announcement Highlights Distributor-Related Risks

Last week, Biomet Inc. announced in a filing with the U.S. Securities and Exchange Commission (SEC) that instead of its 2012 deferred prosecution agreement with the U.S. Department of Justice (DOJ) regarding violations of the U.S. Foreign Corrupt Practices Act (FCPA) expiring this week, the company would be monitored under it for an additional year.… Continue Reading
Compliance, Corporate Compliance, Dodd-Frank, Enforcement Actions, SEC, SEC Enforcement, Securities Litigation, Uncategorized, Whistleblowers, White Collar Crime

SEC Awards $500K to Company Officer Whistleblower

On Monday, March 2, the Securities and Exchange Commission (SEC) announced that it will award between $475,000 and $575,000 to a corporate officer who reported “high quality, original information” about a securities fraud. The SEC’s whistleblower program was adopted under the Dodd-Frank Act of 2010 and rewards high quality, original information that results in enforcement… Continue Reading
Enforcement Actions, Financial Regulation, SEC, SEC Enforcement, Securities Litigation

SEC Speaks 2015: Enforcement Highlights

On February 20, 2015, the Securities and Exchange Commission (SEC) held its annual SEC Speaks conference, which updated the public regarding the staff’s work over the last year and its plans for 2015. The conference covered several areas, but this posting focuses on the chairman’s remarks regarding enforcement in 2014 and beyond. In her opening… Continue Reading
SEC, SEC Enforcement, Securities Litigation

Tippee Liability for Insider Trading Remains Focus in Second Circuit Following Newman, Conradt

The significant impact on insider trading prosecutions following the Second Circuit’s landmark ruling in United States v. Newman, 773 F.3d 438 (2d Cir. 2014) continues. In that case, the Second Circuit vacated insider trading convictions of two hedge fund managers, and directed that the charges against them be dismissed with prejudice. In reversing the convictions,… Continue Reading
Compliance, Dodd-Frank, Enforcement Actions, Financial Regulation, Regulation, SEC, SEC Enforcement, Whistleblowers

Taking Aim – the SEC’s Continued Focus on Hedge Funds

“It is difficult to overstate how much the regulatory landscape for hedge fund managers has changed over the past four years.” So said Norm Champ, director of the Securities and Exchange Commission’s Division of Investment Management, in a recent speech wherein he outlined how the SEC has built on its newfound authority to regulate private… Continue Reading
Compliance, Financial Regulation, Regulation, SEC, SEC Enforcement

Widening the Scope: The SEC Turns its Attention to Alternative Mutual Funds

In a recent speech to the Practising Law Institute’s Private Equity Forum, Norm Champ, Director of the SEC’s Division of Investment Management, discussed the SEC’s increasing attention to the growth in “alternative mutual funds,” or open-end mutual funds that feature investment strategies more typically seen in private funds. Similar to recent speeches and discussions related… Continue Reading
Financial Regulation, Regulation, SEC, SEC Enforcement

The SEC Moves to Improve “Intermediation” in the Municipal and Corporate Fixed Income Markets

The average investor does not get very far when trying to buy a bond in today’s municipal and corporate fixed income markets. Some may find it difficult to find the exact bond they want to purchase, while many grow frustrated with the lack of transparency in bond pricing. Contrasted with the equity markets, where information… Continue Reading
Enforcement Actions, Financial Regulation, Judgments, News, SEC, SEC Enforcement, Securities Class Actions

Update: Second Circuit Vacates Judge Rakoff, Clarifies Standard of Review for Consent Decrees.

In a much anticipated decision, on June 4 the Second Circuit vacated District Court Judge Rakoff’s rejection of a consent judgment approving a $285 million settlement between the U.S. Securities and Exchange Commission (SEC) and Citigroup. In 2011, the SEC alleged that Citigroup created and sold mortgage bond investments without disclosing that the people assembling… Continue Reading
Compliance, Corporate Compliance, Ethics Investigations, FCPA Investigations, FERC Investigation, SEC Enforcement, Securities Fraud, Securities Litigation, Uncategorized

Avoiding Waiver When Disclosing Facts to the Government

All but a handful of courts find that companies disclosing privileged communications or protected work product to the government waive both of those protections. Courts properly analyzing waiver rules also recognize that disclosing historical facts does not cause a waiver – because historical facts are not privileged. In two related cases, Judge Francis of the… Continue Reading
Compliance, Financial Regulation, Market Manipulation, SEC, Securities Litigation, Uncategorized

An Update on Rule 105 Enforcement

In September, we wrote about the SEC’s enforcement actions against 23 investment firms for violations of Rule 105 of Regulation M (“Rule 105”) in an effort to crack down on the potential manipulation of offering prices of follow-on and secondary offerings. In the last two months, the SEC has furthered Co-Director of Enforcement Andrew Ceresney’s… Continue Reading
Enforcement Actions, News, SEC, Securities Litigation

“Where Does He Get Those Wonderful Toys!” SEC Update on Technology and Enforcement

You may recall this line from the original Batman movie, where Jack Nicholson, playing the role of Joker/Jack Napier in a Golden Globe-nominated performance, shouted in awe at the various gadgets employed by the Caped Crusader. I am not suggesting that the SEC has a Batmobile or Batarang at its disposal, but comments made by… Continue Reading
Broker-Dealer Defendants, Compliance, Corporate Compliance, Enforcement Actions, Financial Crimes, Financial Regulation, FINRA, SEC, SEC Enforcement, Securities Litigation, Uncategorized

New Year Brings New Enforcement Efforts Targeting Broker-Dealers

On Dec. 23, SEC spokesman John Nester announced a new task force for scrutinizing broker-dealers. This task force, which began development in November 2013, will work with the SEC’s national exam program and FINRA. According to the agency’s 2013 Financial Report, the task force will focus on current practices within the broker-dealer community and develop… Continue Reading
Compliance, Dodd-Frank, SEC, SEC Enforcement, Securities Fraud, Securities Litigation, Whistleblowers

A New Era of Openness, or Open Season on Hedge Funds?

In a recent speech before the Managed Funds Association, U.S. Securities & Exchange Commission (SEC) Chair Mary Jo White discussed what she called a “new era of transparency and openness” for the private funds industry, including hedge funds. Her address largely provided an overview of two significant pieces of legislation, namely, the Dodd-Frank Act, which… Continue Reading
SEC Enforcement, Securities Litigation

SEC Settlement of Regulation FD Action Against Individual Sends Signal to Companies

Recently, the Securities and Exchange Commission (SEC) instituted cease-and-desist proceedings against Lawrence D. Polizzotto, former head of investor relations at First Solar, Inc., charging him with violating Section 13(a) of the Securities and Exchange Act of 1934 (Exchange Act) and Regulation FD, for selectively disclosing material nonpublic information to certain analysts and investors before public… Continue Reading
SEC Enforcement, Securities Fraud, Securities Litigation, White Collar Crime

In A First, SEC Sanctions Employee For Misleading Chief Compliance Officer

Former portfolio manager Carl Johns agreed to pay more than $350,000 to settle charges that he failed to comply with his firm’s code of ethics and misled the chief compliance officer (CCO), the SEC announced on Tuesday, Aug. 27. This is the first administrative proceeding under Rule 38a-1(c) of the 1940 Investment Company Act, which… Continue Reading