David Smyth

David Smyth

Brooks Pierce

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Give Me That Old-Time Insider Trading

Recently I had a question that required me to review Don Langevoort’s comprehensive insider trading treatise. It got me thinking about the roots of insider trading law. Specifically, the pre-SEC, pre-10b-5 insider trading...more

4/11/2014 - Business Torts Corporate Officers Insider Trading Rule 10b-5 Securities Litigation Shareholders

Two Thoughts about Dewey LeBoeuf and Parallel Proceedings

You’ve probably read about the Manhattan district attorney’s office’s indictment of executives at former Big Law giant Dewey LeBoeuf. According to the WSJ Law Blog, the crux is this: “[F]ormer Dewey Chairman Steven...more

3/20/2014 - Enforcement Enforcement Actions Parallel Claims SEC

For Municipal Bond Issuers, SEC’s New Cooperation Initiative Could Be a Good Idea (Unless It’s a Bad Idea)

You know how every few years libraries will offer an amnesty program and give delinquent borrowers a chance to bring in their old books without prohibitive late fines? The SEC is sort of trying out that approach with its new...more

3/14/2014 - Bonds Disclosure Requirements Municipal Bonds SEC

The SEC Will Take “Your” Money, Thanks

So let’s say you work for a hedge fund or some other financial institution that engages in proprietary trading , and you’re inclined to do some insider trading on your employer’s behalf. You make your trades, but you’re a...more

3/11/2014 - Compliance Insider Trading Proprietary Trading SEC Securities Exchange Act

Two Thoughts about the Jury Verdict in SEC v. Steffes

As you may have heard by now, on January 27th a jury in the Northern District of Illinois sided with the defendants and against the SEC in an aggressive insider trading case. Here were the facts as alleged by the SEC and...more

2/19/2014 - Acquisitions Insider Trading SEC

SEC Not Kidding about Subpoena Enforcement Actions, Obtains Coronati’s Arrest

Here’s one of the questions I get from some individual clients when they receive subpoenas from the SEC: Could I get arrested over this? Well, no. First things first – The SEC has civil authority, not criminal authority. ...more

2/12/2014 - Contempt Enforcement Actions SEC Securities Fraud Subpoenas

SEC Charges Hao He with Insider Trading, for Some Reason or Another

Here are two things about insider trading law: First, it’s hard to know exactly what the parameters are. The United States doesn’t have a specific statute prohibiting it. It grows out of the general anti-fraud provisions...more

2/10/2014 - Fraud Insider Trading SEC Securities Act of 1933 Securities Exchange Act

S.D.N.Y. Prosecutors Get Martoma, but Probably No Closer to Steve Cohen

Lst Thursday, a jury in the Southern District of New York convicted Mathew Martoma in what is in dollar terms the largest insider trading case in captivity. As we’ve discussed before, Martoma had been accused of paying a...more

2/10/2014 - Insider Trading Martoma SAC Capital Steve Cohen Wyeth

Congress Slashes SEC’s Technology Budget

This isn’t a political post, I assure you. We don’t do that sort of thing at Cady Bar the Door. I’m just saying that the Washington Post reported a couple of weeks ago that Congress had taken away half of the $50 million...more

1/31/2014 - Automation Systems Daniel Gallagher Federal Funding SEC

Prosecutors Trying to Get Martoma Wackiness into Evidence By Hook or by Crook

So I’m at my desk the other day, minding my own business, when I read on the Twitter, “Ex-SAC Trader Expelled from Harvard Law School” or some such. The article explained the 1999 expulsion of Mathew Martoma, who is...more

1/16/2014 - Evidence Fraud Insider Trading Rule 404(b) Rule 608

“The World’s Largest Ponzi Scheme”

Regarding my last post on whistleblowers and tipsters at the SEC, I wanted to make one more related point. Many people like to yell at the SEC for not grasping the gravity of Harry Markopolos’s complaints about Bernie...more

1/15/2014 - Bernie Madoff Fraud Ponzi Scheme SEC Whistleblowers

“Whistleblowers” and Tipsters at the SEC

I was thinking my disgorgement post would be the last one of the year but, you know, it’s hard to stop. On Christmas Eve, the Boston Globe published a nice profile of Paul Levenson, the newly installed head of the SEC’s...more

12/31/2013 - Compliance Investment Management SEC Whistleblowers

Thinking about SEC Disgorgement

Upon starting work at on SEC enforcement cases – on either side – one quickly learns that the SEC isn’t authorized to seek money damages in its cases. Instead, the SEC seeks disgorgement of what it contends is a defendant’s...more

12/24/2013 - Disgorgement Enforcement Equitable Relief SEC

Accountants Have to Follow the Custody Rule, Too

I don’t want to keep harping on the investment adviser custody rule. Look, I mean, SEC CustodyFest was fun, but we’re not going back in that depth. Someday maybe, but not today. But I’m going to harp a little bit. Because...more

12/20/2013 - Accountants Custody Rule SEC

Back to the Future with Lloyd Cutler

One of the best lawyers I know was packing and unpacking some boxes recently and re-found an article she had read a number of years ago. The Role of the Private Law Firm was written by Lloyd Cutler – a founder of the...more

12/16/2013 - Compliance Legal Ethics

Admit-Deny Placeholder

First, the kerfuffle surrounding the Citi matter has wholly obfuscated the SEC staff’s achievement. Understand that these structured products cases are extremely complicated. Even when assisted by whistleblowers, the facts do...more

12/10/2013 - Citigroup Compliance FCPA SEC Whistleblowers

SEC CustodyFest Vol. 3: Jason Returns

In this last chapter of SEC CustodyFest, we visit Knelman Asset Management Group. For this case, I’m mostly interested in discussing a change to the SEC’s custody rule, Rule 206(4)-2, from 2010....more

12/6/2013 - Compliance Custody Rule Enforcement GAAP PCAOB SEC

SEC CustodyFest Vol. 2: Electric Boogaloo

I know you’ve been eagerly awaiting the return of SEC CustodyFest. Let’s turn to the second matter brought by the SEC on October 28th: Further Lane Asset Management. This case actually did not revolve around the investment...more

12/2/2013 - Asset Management Hedge Funds SEC

One Week, Three Subpoena Enforcement Actions

I know you’re ready to get back to volumes 2 and 3 of SEC CustodyFest. Believe me, we all are. And I assure you, we will. But for those looking for evidence that the SEC is taking a new, tough turn under Mary Jo White, I...more

11/15/2013 - Compliance Enforcement Actions SEC Subpoenas

SEC Whacks GW & Wade for Rule 12b-1 Fees, Too

Before turning back to SEC CustodyFest, volumes 2 and 3, I’d like to focus for a bit on another aspect of the SEC’s October administrative case against GW & Wade. In addition to the custody rule issues, the SEC found that the...more

11/13/2013 - Compliance Enforcement Actions Rule 12b-1 Plans SEC

SEC CustodyFest Vol. 1: A New Beginning

Imagine being Andrew Bowden. As director of the SEC’s Office of Compliance, Inspections and Examinations, you know you don’t have enough staff to conduct reasonably regular exams of registered investment advisers. You also...more

11/12/2013 - Books & Records Custody Rule Customer Funds Protection Fraud Investment Adviser SEC

Commercial Bribery on the Table in Diebold FCPA Actions

Last week the SEC and Justice Department brought parallel FCPA enforcement actions charging Ohio-based Diebold, Inc., a global provider of ATMs and bank security systems. From the SEC’s press release: “[S]ubsidiaries...more

10/31/2013 - Bribery Compliance Enforcement Actions FCPA SEC

SEC Sues McGinn Smith Gatekeepers

If you’re the SEC’s Enforcement Division, suing primary violators is one thing. Bring cases against “gatekeepers”, or professionals who allow access to securities markets, can be quite another. Theories of liability are not...more

10/23/2013 - Enforcement Actions Fraud SEC

SEC Hits TD Bank for Rothstein Ponzi Scheme

Running a bank is fraught with risk. Its loans could go bad, devolving into a pool of what is euphemistically called “non-performing assets.” East European hackers could steal its customers’ identities, and ultimately their...more

10/16/2013 - Banks Loans Ponzi Scheme SEC

Three Thoughts about the SEC’s Third Whistleblower Award

On October 1st, the SEC announced its third award paid under the Dodd-Frank whistleblower provisions. This time, it was a big one. The SEC paid the whistleblower in question more than $14 million after this person gave...more

10/8/2013

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