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Category Archives: Securities and Commodities

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Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities

SEC Describes Recent Efforts to Combat Pyramid Schemes and Affinity Frauds

Over the past two years, the Securities and Exchange Commission (SEC) has stepped up enforcement actions against pyramid schemes and related affinity frauds. Last week, in a speech at the University of Illinois at Chicago, Andrew Ceresney, director of the SEC’s Enforcement Division, addressed his division’s most recent efforts to combat these frauds. In particular,… Continue Reading
Anti-Bribery and Corruption, Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

Key Takeaways From This Year’s Early FCPA Enforcement Actions

February has been a big month for U.S. Foreign Corrupt Practices Act (FCPA) enforcement. It started with the U.S. Securities and Exchange Commission (SEC) quietly resolving a string of relatively small matters.  Then, at the end of last week, the SEC and U.S. Department of Justice (DOJ) entered into a global resolution with VimpelCom in… Continue Reading
Financial Institution Regulation, Securities and Commodities

FINRA Issues Sweep Letter on Firms’ Cultural Values

On February 18, 2016, Financial Industry Regulatory Authority (FINRA) announced that it had issued a targeted exam letter, or sweep, to firms seeking information about how firms establish, communicate and implement cultural values.  FINRA’s stated goal “is to better understand industry practices and determine whether firms are taking reasonable steps to properly establish and implement… Continue Reading
Compliance, Securities and Commodities

PCAOB Adopts Audit Engagement Partner Disclosure

On December 15, 2015, the Public Company Accounting Oversight Board (PCAOB) continued its pursuit of providing investors with improved audit transparency and audit accountability by adopting new rules requiring auditors to disclose: the name of the engagement partner; the name, location and extent of participation of any other accounting firm participating in the audit whose… Continue Reading
Securities and Commodities

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
Compliance, Financial Institution Regulation, Securities and Commodities

SEC Provides Guidance on 2016 Examination Areas of Focus

On Monday, January 11, 2016, the Securities and Exchange Commission (SEC) announced its Office of Compliance Inspections and Examinations’ (OCIE) areas of focus for 2016, which include: protecting retail investors and investors for retirement; assessing issues related to market-wide risks; and use of its ability to analyze data to identify and examine registrants that may… Continue Reading
Securities and Commodities

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
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities

First Guilty Verdict for Dodd-Frank “Spoofing” Violations

On November 2, 2015, Law360.com reported that Michael Coscia became the first individual to be convicted for the crime of “spoofing” under the Dodd-Frank Act of 2010. The Dodd-Frank Act amended section 4c(a)(5) of the Commodities Exchange Act, making it unlawful to engage in any trading or practice that “is, is of the character of,… Continue Reading
Anti-Bribery and Corruption, Securities and Commodities

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 and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

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
Securities and Commodities

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, Securities and Commodities

SEC’s OCIE Issues a Second Cybersecurity Risk Alert

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
Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

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
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims, Securities and Commodities

Reflections on a Sentence: Spooking the City

Tom Hayes emerges from his trial at Southwark Crown Court for Libor manipulation as a very considerable loser, who took some very bad decisions in the course of the SFO investigation and trial (and perhaps deserves his long sentence for the level of stupidity displayed alone, although the Judge specifically stated that he took no… Continue Reading
Compliance, Fraud, Deception and False Claims, Securities and Commodities

SEC’s Whistleblower Program Awards Over $3 million to Company Insider

On Friday, July 17, the Securities and Exchange Commission (SEC) announced that it will award more than $3 million to a company insider who helped the SEC “crack a complex fraud.” The SEC’s whistleblower program was adopted under the Dodd-Frank Act of 2010. It rewards high-quality, original information that results in enforcement actions exceeding $1… Continue Reading
Anti-Bribery and Corruption, Compliance, Securities and Commodities

China’s Focus on Combatting Commercial Bribery Is a Wake-Up Call

Earlier this month, six former employees of Tencent Holdings (Tencent), including Liu Chunning, a now high-level executive of Alibaba Group, were detained by Chinese authorities as part of a bribery investigation relating to payments made by online video content providers to employees of Tencent, including Liu. In addition to showcasing the continued fight against graft… Continue Reading
Compliance, Securities and Commodities

Broker-Dealer Audits: PCAOB Disciplinary Orders and Extraordinary Cooperation Credit

Despite a decreased budget in 2015, Public Company Accounting Oversight Board (PCAOB) Chairman James R. Doty believed there would be enough resources to continue with the PCAOB’s strategic plan to serve as the oversight body Congress envisioned. As we reported back in February, Doty noted that the 2015 budget would allow for 75 inspections of… Continue Reading
Compliance, Securities and Commodities

SEC Division of Investment Management Issues Cybersecurity Guidance for Investment Funds and Advisers

The U.S. Securities and Exchange Commission’s (“SEC”) Division of Investment Management (“Division”) recently released a Guidance Update (“Guidance”) highlighting the importance of cybersecurity for registered investment companies (“funds”) and registered investment advisers (“advisers”). In the Guidance, the Division identified a number of measures for funds and advisers to consider in addressing cybersecurity risk and rapid… Continue Reading
Securities and Commodities

SEC Charges Group of Unregistered Broker-Dealers Trading in Corporate Bond Market

Last week, the Securities and Exchange Commission (SEC) charged more than 20 individuals and companies with violations of the Securities Exchange Act of 1934 (the Exchange Act) related to the buying and selling of investment-grade corporate bonds. The SEC charged the respondents with trading in corporate bonds without first registering as broker-dealers. Two respondents, Global… Continue Reading
Compliance, Fraud, Deception and False Claims, Securities and Commodities

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-Bribery and Corruption, Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims, Securities and Commodities

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, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities

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 and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

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

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