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Category Archives: Securities and Commodities

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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
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
Securities and Commodities

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

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
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

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

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

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