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Category Archives: Securities and Commodities

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

PCAOB Update: 2015 Budget and Broker-Dealer Audits

On Feb. 4, 2015, Public Company Accounting Oversight Board (PCAOB) Chairman James R. Doty provided an update on the Board’s 2015 budget at the Securities and Exchange Commission’s (SEC’s) Open Meeting in Washington, D.C. Even though the Board saw a $7.5 million decrease from last year’s budget, Doty reported that this year’s $250.9 million budget… Continue Reading
Compliance, Fraud, Deception and False Claims, Securities and Commodities

Revisiting the Conflicts Minerals Rule

Companies listed in the U.S. are required by Section 1502 of the Dodd-Frank Act to report whether they manufacture products that incorporate so called conflict minerals (defined as gold, tin, tungsten and tantalum coming from the Democratic Republic of Congo and its neighboring countries). McGuireWoods partners Yves Melin and Alex Brackett, along with Estelle Levin –… Continue Reading
Securities and Commodities

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

Law Enforcement Bliss: The SEC As Policeman, Judge and Jury

New York’s Southern District Court Judge Jed Rakoff is always worth listening to.  He expresses trenchant views about the rule of law elegantly and politely.  He is fearlessly independent. Prosecutors in the US, who are normally prone to swagger just a bit, probably find his comments and rulings rather irritating. In a speech to the… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims, Securities and Commodities

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 Institution Regulation, Securities and Commodities

One Year Later: SEC Sanctions Under Rule 105 of Regulation M

On September 16, 2014, the Securities and Exchange Commission announced enforcement actions against 19 firms and an individual trader for short sales in violation of Rule 105 of Regulation M. The SEC’s latest crackdown on short-selling violations in advance of stock offerings came one day shy of the one-year anniversary of enforcement actions against 23… Continue Reading
Fraud, Deception and False Claims, Securities and Commodities

SEC Announces Record-Breaking Award for Foreign Whistleblower in the Wake of Liu v. Siemens

Recently, the SEC announced its largest whistleblower award to date − an expected award of $30-35 million − to be issued to a foreign resident. Notably, the award would have been even larger if the tipster had not unreasonably delayed in reporting the violations. This award to a foreign resident is of particular interest because… Continue Reading
Fraud, Deception and False Claims, Securities and Commodities

Second Circuit Decides Dodd-Frank Does Not Apply Extraterritorially, Skips Addressing Whistleblower Protection for Internal Reporting

The Dodd-Frank Act prohibits employers from retaliating against employees who act as whistleblowers by providing information related to a violation of the securities laws to the Securities and Exchange Commission (SEC) in a manner established by the SEC. Dodd-Frank Act, 15 U.S.C. § 78u-6(h)(1). The jurisdiction and scope of this law have been tested recently… Continue Reading
Anti-Bribery and Corruption, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

Going Inside for Insider Trading

It is always assumed that sentences in the US for any crime are significantly higher than they are in the UK, but nowhere is this more starkly exemplified than in white collar crime.  The recent sentence of 9 years in prison for Mathew Martoma for insider trading is the latest proof of the truth of… Continue Reading
Compliance, Financial Institution Regulation, Securities and Commodities

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 Institution Regulation, Securities and Commodities

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

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
Enforcement and Prosecution Policy and Trends, Securities and Commodities

All Relief Sought by SEC Subject to 5-Year Statute of Limitations

As we reported last year, the U.S. Supreme Court’s decision in Gabelli v. SEC precludes the SEC from using the “discovery rule” to extend the five-year statute of limitations on the government’s claims for civil penalties available under 28 U.S.C. § 2462. In Gabelli, the Supreme Court expressly declined to address whether the statute of… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

Still in Its Sights: The SEC Continues Its Increased Scrutiny of Hedge Funds

As we have previously reported, the SEC is increasingly scrutinizing hedge funds and other private funds and has suggested that it will pursue enforcement actions against advisers to such funds as appropriate. The SEC’s increased scrutiny flows in large part from Dodd-Frank’s elimination of the private adviser exemption, which has meant that most investment advisers… Continue Reading
Anti-Bribery and Corruption, Compliance, Election and Political Law, Energy Enforcement, Securities and Commodities, 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, Fraud, Deception and False Claims, Securities and Commodities

Who is Protected by the Sarbanes-Oxley and Dodd-Frank Whistleblower Anti-Retaliation Provisions? The Supreme Court and SEC Weigh In.

The Sarbanes-Oxley Act (“Sarbanes-Oxley”) and Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) whistleblower anti-retaliation provisions have been the subject of great debate as to what categories of individuals and activities are protected. These issues have developed significantly in recent weeks with the Supreme Court’s decision in Lawson v. FMR LLC, involving the application… Continue Reading
Compliance, Financial Institution Regulation, Securities and Commodities, 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
Fraud, Deception and False Claims, Securities and Commodities

Court Holds That Dodd-Frank Whistleblowers Have No Right to Jury Trial

A federal district court recently held that employees bringing whistleblower suits under the Dodd-Frank Wall Street Reform and Consumer Protection Act are not entitled to a trial by jury. The decision in Pruett v. BlueLinx Holdings, Inc., if followed by other courts, is likely to benefit companies facing whistleblower suits, who no longer need be… Continue Reading
Enforcement and Prosecution Policy and Trends, Securities and Commodities

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

The 2013 Dodd-Frank Whistleblower Program Annual Report

In November, the SEC Office of the Whistleblower (“OWB”) released its 2013 Annual Report on the Dodd-Frank Whistleblower Program (the “Report”). The Report details the number of whistleblower tips and complaints received and the amount of whistleblower awards made during fiscal year 2013.  Whistleblower Complaints and Tips FY 2013 According to the Report, the SEC… Continue Reading
Anti-Bribery and Corruption, Compliance, Securities and Commodities

SEC Comments Bring Commercial Bribery Clearly into FCPA Scope

Commercial bribery is prohibited by many anticorruption laws throughout the world, including notable examples such as the UK Bribery Act (UKBA). However, the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act (FCPA) focus on official bribery, leaving commercial bribery to be pursued by U.S. law enforcement, if at all, under a variety of federal… Continue Reading
Compliance, Financial Institution Regulation, Securities and Commodities

The SEC and CFTC Joint Identity Theft Red Flags Rule

Introduced in 2003 by amendment to the Fair Credit Reporting Act of 1970 (FCRA), the identity theft red flags rule (Red Flags Rule) required the Federal Trade Commission (FTC) to issue rules that require certain regulated entities to implement programs designed to detect against, prevent and mitigate identity theft. In 2007, the FTC released the… Continue Reading

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