Subject to Inquiry

Subject to Inquiry

THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group

Louis D. Greenstein

Photo of Louis D. Greenstein Louis is a member of the firm’s Financial Services & Securities Enforcement Department. For more than 20 years, Louis has represented financial services firms, corporations, their boards, officers, directors and employees in investigations by the SEC, FINRA, the United States Department of Justice, and state regulatory agencies. Louis also has substantial experience conducting internal investigations and counseling clients on corporate governance and disclosure issues, including strategies for avoiding potential regulatory issues through preventive remedial measures. Prior to entering private practice, Louis worked in the SEC’s Enforcement Division, where he conducted investigations to evaluate and enforce compliance with the federal securities laws. He also participated in the prosecution of civil and administrative enforcement actions.

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SEC Speaks 2024: In Defense of Enforcement’s Aggressive Agenda

Enforcement and Prosecution Policy and Trends
On April 2 and 3, 2024, U.S. Securities and Exchange Commission Chair Gary Gensler, Division of Enforcement Director Gurbir Grewal and other senior SEC officials convened at the SEC Speaks conference held in Washington, DC to discuss the SEC’s accomplishments in fiscal year 2023 and announce its priorities for 2024. … Continue Reading

SEC Speaks 2022: Ongoing Efforts to Restore Public Trust, Aggressive Enforcement Agenda

Enforcement and Prosecution Policy and Trends, Securities and Commodities
Securities and Exchange Commission officials highlighted a commitment to restoring trust in the agency and aggressive enforcement during the recent SEC Speaks conference. See our alert for analysis of their comments and stated enforcement priorities, which addressed crypto markets, aggressive use of remedies, creditworthy cooperation, the Wells process, aggressive litigation, disgorgement efforts, municipal securities, gatekeeper… Continue Reading

Congress Affirms and Extends SEC’s Disgorgement Powers

Securities and Commodities
On January 1, 2021, the United States Senate joined the House of Representatives in overriding President Trump’s veto, and the National Defense Authorization Act (NDAA) became law. The NDAA was passed chiefly to authorize appropriations for military activities of the Department of Defense. The NDAA also includes a provision codifying the U.S. Securities and Exchange… Continue Reading

The SEC Speaks 2020: Enforcement Panel Signals Full Speed Ahead Regardless of the Pandemic

Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities
Senior officials from the U.S. Securities and Exchange Commission Division of Enforcement convened at a virtual The SEC Speaks conference panel to discuss fiscal year 2020 enforcement results and report on enforcement priorities. To no one’s surprise, the impact of the pandemic on enforcement was a significant part of the discussion. Read our alert for… Continue Reading

Still Standing: SEC Disgorgement Survives with Limitations

Securities and Commodities
In Liu v. SEC, the Supreme Court answered the question that remained following its 2017 opinion in Kokesh v. SEC:  “whether, and to what extent, the SEC may seek ‘disgorgement’ in the first instance through its power to award ‘equitable relief’” in a federal district court action under Section 21(d)(5) of the Securities Exchange Act… Continue Reading

SEC Enforcement Co-Directors Issue Statement on Insider Trading

Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities
Under the leadership of U.S. Securities and Exchange Commission Chairman Jay Clayton, the SEC’s Division of Enforcement has made the protection of Main Street investors its overarching priority.  On March 23, 2020, Division of Enforcement Co-Directors Stephanie Avakian and Steven Peikin issued a statement to financial market participants re-emphasizing the SEC’s commitment to safeguard the… Continue Reading

The More Things Change, the More They Stay the Same –Joint Statement by FINRA and the SEC on the Customer Protection Rule and Digital Asset Securities

Financial Institution Regulation, Securities and Commodities
On Monday, July 8th, FINRA and the SEC took the unusual step of issuing a joint statement on broker-dealer custody of digital asset securities. In doing so, the Staffs of the SEC’s Division of Trading and Markets and of FINRA’s Office of General Counsel made clear that the SEC and FINRA will continue to apply… Continue Reading

Congressional Investigations: Beyond Sensational Headlines — Incoming House Leaders Announce Broad Investigative Priorities Targeting Business Community

Election and Political Law, Enforcement and Prosecution Policy and Trends
In the politically explosive atmosphere of Washington, the talk of the town is focused on congressional investigations: who will be called before Congress, and when. Newspaper headlines blare the latest controversy — from use of personal emails for government business, to numerous investigations alleging corruption of current and former government employees, including several cabinet secretaries,… Continue Reading

SEC Launches Self-Reporting Initiative for Investment Advisers

Enforcement and Prosecution Policy and Trends
In line with Chairman Jay Clayton’s oft-stated priority of protecting the long-term interests of Main Street investors, on Feb. 12, 2018, the Securities and Exchange Commission’s Division of Enforcement announced the launch of a new self-reporting initiative for investment advisers. This new initiative — the Share Class Selection Disclosure Initiative — aims to address undisclosed… Continue Reading

U.S. Supreme Court Rules Time Limits Apply to SEC Disgorgement Orders

Enforcement and Prosecution Policy and Trends, Securities and Commodities
A unanimous United States Supreme Court held Monday, in Kokesh v. Securities and Exchange Commission, that the five-year statute of limitations under 28 U.S.C. § 2462 applies to disgorgement sought by the Securities and Exchange Commission. Previously, the Circuits had been split on this issue. The issue in Kokesh was straightforward. Kokesh appealed a trial… Continue Reading

Just Admit It – SEC Requiring Admissions with Increased Frequency

Securities and Commodities
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

FY2015 SEC Enforcement Report

Enforcement and Prosecution Policy and Trends, Securities and Commodities
Late last week, the Securities and Exchange Commission (SEC) announced its enforcement results for fiscal year 2015, reporting a record number of enforcement actions and the highest amount of fines collected by the SEC to date. Through September 30, the SEC filed 807 enforcement actions − 507 federal securities law violations and 300 delinquent issuers… Continue Reading

SEC Proposes to Amend Rules Governing Administrative Proceedings

Securities and Commodities
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

SEC’s OCIE Issues a Second Cybersecurity Risk Alert

Compliance, Securities and Commodities
On Sept. 15, 2015, the Securities Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) published its second cybersecurity risk alert (the “2015 Risk Alert”). The 2015 Risk Alert is a follow up to the OCIE’s April 2014 cybersecurity initiative risk alert (the “2014 Risk Alert”) announcing a series of examinations to identify cybersecurity… Continue Reading

Second UBS Tax Investigation Shows the Continuing Allure of Whistleblower Law

Compliance, Fraud, Deception and False Claims
News leaked late last week that Swiss banking giant UBS is again under DOJ investigation for aiding tax fraud by U.S. clients. In 2009, UBS pled guilty to a criminal tax conspiracy charge, and received a deferred prosecution agreement. UBS admitted that thousands of unreported and untaxed accounts at the bank were controlled by U.S.… Continue Reading

How Does Your Firm Compare? Results from the SEC’s Cybersecurity Examinations

Securities and Commodities
On Feb. 3, 2015, the Securities and Exchange Commission (SEC) published a Risk Alert summarizing observations gleaned from a cybersecurity examination sweep of 57 registered broker-dealers (BDs) and 49 registered investment advisers (IAs). The examination sweep followed an April 2014 announcement that the SEC’s Office of Compliance Inspections and Examinations (OCIE) 2014 Examination Priorities included… Continue Reading

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

Securities and Commodities
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

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