Subject to Inquiry

Subject to Inquiry

White Collar, Congressional, SEC, Energy Enforcement & Other Government Inquiries

Government, Regulatory & Criminal Investigations Group

Category Archives: Securities Litigation

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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 Litigation

Don’t Sell Yourself Short: Rule 105 Compliance

Yesterday, the Securities and Exchange Commission (SEC) announced 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. Twenty-two of the actions settled, resulting in more than $14 million in sanctions. … 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
SEC Enforcement, Securities Litigation

SEC Requires Admission of Liability in Settlement with Falcone and Harbinger Capital Partners

On Aug. 19, 2013, the Securities and Exchange Commission (SEC) announced that it filed a proposed settlement in which hedge-fund adviser Philip Falcone and his advisory firm, Harbinger Capital Partners, agreed to admit to wrongdoing, to pay more than $18 million and to be barred from the securities industry for at least five years. In … Continue Reading
SEC Enforcement, Securities Litigation

Potential Changes to Auditing Standards?

On Aug. 13, 2013, the PCAOB proposed two new auditing standards for public comment. 1)  The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion This standard would supersede portions of AU sec. 508, Reports on Audited Financial Statements. The proposed standard retains the pass/fail model, but aims to … Continue Reading
Anti-Corruption, FCPA, SEC Enforcement

Self-Reporting Leads to SEC Entering its First Non-Prosecution Agreement Regarding FCPA Violations

On April 22, 2013, the SEC announced that it had entered into a non-prosecution agreement (NPA) with Ralph Lauren Corporation (RLC), allowing RLC to avoid prosecution for violations of the Foreign Corrupt Practices Act (FCPA). This is the first NPA the SEC has entered involving FCPA violations. From 2005 to 2009, RLC’s Argentine subsidiary paid … Continue Reading
CFPB, Securities Fraud

“Responsible Conduct”: CFPB Considerations Concerning Enforcement

Similar to that of her more established, older siblings — the Securities and Exchange Commission and the Department of Justice (and even the PCAOB) — the relatively new-kid-on-the-block Consumer Financial Protection Bureau (CFPB or Bureau) has now provided certain factors it will consider when evaluating enforcement actions by  issuing CFPB Bulletin 2013-06  “Responsible Business Conduct: … Continue Reading
SEC Enforcement, Securities Litigation

Update: SEC Modifies Settlement Policy

SEC Chairman Mary Jo White recently announced further changes to the SEC’s settlement policy. Under the new policy, as a condition of settlement in a limited type of cases, the SEC intends to require admissions of liability. Historically, the SEC settled matters on a neither-admit-nor-deny basis. That practice has come under fire from various critics … Continue Reading
CFPB, Dodd-Frank, SEC Enforcement, Securities Fraud, Securities Litigation, Whistleblowers, White Collar Crime

CFPB Refers First Case for Criminal Prosecution

On May 1, 2013, federal prosecutors in the Southern District of New York brought the first criminal case based on a referral from the Consumer Finance Protection Bureau (CFPB) in United States v. Mission Settlement Agency. In the recently unsealed indictment, federal authorities charge Mission Settlement Agency (Mission) and four of its employees—including Mission’s principal, … Continue Reading
SEC Enforcement, Securities Fraud, Securities Litigation

During Testimony on SEC’s Budget, Mary Jo White Comments on “No Admit, No Deny” Policy

In testimony to the House Appropriations Committee, recently appointed SEC Chairman Mary Jo White stated that she continues to support the SEC’s practice of settling cases without requiring defendants to admit wrongdoing. As we reported here at the time, in November 2011 a federal judge refused to sign off on a $285 million settlement agreement … Continue Reading
Broker-Dealer Defendants, SEC Enforcement, Securities Fraud, Securities Litigation

PCAOB Issues First Policy Statement Regarding Treatment of “Extraordinary Cooperation” in Investigations

In its first public Policy Statement regarding the treatment of cooperation in investigations, the Public Company Accounting Oversight Board (PCAOB or Board) provided guidance on how it will consider a firm’s or associated person’s “extraordinary cooperation,” which goes above the level of cooperation that is otherwise legally required, in determining the outcome of an investigation. … Continue Reading
Anti-Corruption, FCPA, SEC Enforcement, Securities Litigation, White Collar Crime

Extractive Industry Continues to be a Focus of Anticorruption Enforcement

Companies and practitioners alike can keep the mining, drilling and extractive industry on the hot list for bribery and corruption enforcement. Earlier this week, Houston-based Parker Drilling Company entered into a deferred prosecution agreement with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to settle allegations that the company violated the … Continue Reading
Anti-Corruption, FINRA, SEC Enforcement, Securities Fraud, Securities Litigation, White Collar Crime

Despite Public Perception, Financial Institutions Have Not Received Favored Treatment

Following a slew of significant corporate settlements over the last several months — none involving criminal charges being brought against corporations or individuals — federal regulators and law enforcement have heard an increasing outcry over the lack of criminal prosecutions of financial institutions and their executive leadership. Congress, irked by the perceived “Too Big to … Continue Reading
SEC Enforcement, Securities Fraud, Securities Litigation, White Collar Crime

U.S. Supreme Court Narrows SEC’s Ability to Seek Civil Penalties in Enforcement Actions

On Feb. 27, 2013, the U.S. Supreme Court issued an opinion that narrows the SEC’s ability to seek civil penalties in its enforcement actions. In Gabelli v. SEC, the Supreme Court held that the SEC cannot use the “discovery rule” to extend the five-year statute of limitations on the government’s claims for civil penalties. Given … Continue Reading
SEC Enforcement, Securities Litigation, White Collar Crime

Avoiding Waiver of the Attorney-Client Privilege: Why it’s Necessary to Take Precautions in Responding to Government Subpoenas and Discovery Requests

SEC v. Welliver, Civil No. 11-CV-3076 (D. Minn. October 26, 2012) serves as a useful reminder to take precautions when responding to government subpoenas and discovery requests to avoid waiving the attorney-client privilege. The Welliver court held that defendants intentionally disclosed and, therefore, waived their attorney-client privilege over communications they introduced as exhibits during a … Continue Reading
SEC Enforcement, Securities Litigation

SDNY Finds No Duty to Disclose Wells Notices

Public companies being investigated by the SEC often face difficult decisions about whether, when, and to what extent they should disclose the government inquiry.  This is especially true in deciding whether to disclose the receipt of “Wells Notices,” which notify recipients that the Enforcement Staff may recommend that the Commission pursue formal charges against the … Continue Reading