David Smyth

David Smyth

Brooks Pierce

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SEC Says No More Mr. Nice Guy on Investment Adviser Cybersecurity

Over the last couple years, the SEC’s cybersecurity bark has been worse than its bite. Its Office of Compliance, Inspections, and Examinations issued examination priorities in 2014. Commissioner Aguilar warned public...more

9/23/2015 - Broker-Dealer Brokers Cybersecurity Industry Examinations Investment Adviser OCIE Regulation S-P SEC Security and Privacy Controls

Nothing to See in This Story about the Electronic Communications Privacy Act

Check out this story. In it, we learn this: "Andrew Ceresney, director of the Division of Enforcement at the Securities and Exchange Commission, [told] the Senate’s Committee on the Judiciary at a hearing on Wednesday...more

9/21/2015 - Administrative Authority ECPA Electronic Communications Email Enforcement Google Government Investigations Law Enforcement Proposed Amendments SEC Yahoo!

Second Circuit Expands Scope of Dodd-Frank Anti-Retaliation Provisions, Sets up Chance for Supreme Court Review

Once upon a time, Daniel Berman was the finance director of Neo@Ogilvy LLC, a subsidiary of the publicly-traded WPP Group USA, Inc. He did not find a handsome prince or princess there. According to the allegations of a...more

9/14/2015 - Accounting Fraud Adverse Employment Action Dodd-Frank GAAP Hiring & Firing Internal Reporting Retaliation Sarbanes-Oxley SEC Whistleblower Protection Policies Whistleblowers

Executive Assistant Embezzles $1 Million from Hewlett Packard; as yet, SEC Doesn’t Care

Surely you remember the SEC’s case against Polycom from this spring. In it, the SEC alleged that Polycom CEO Andrew Miller had “created hundreds of false expense reports with bogus business descriptions for his personal use...more

9/8/2015 - Criminal Prosecution DOJ Embezzlement Fraud Hewlett-Packard Internal Controls SEC

SEC Comments on Whistleblower Anti-Retaliation Provisions/Internal Reporting

In the wake of Dodd-Frank’s passage in July 2010, many companies and corporate organizations lobbied the SEC on its upcoming whistleblower rules. One of their specific goals was to require whistleblowers, to be eligible for...more

8/24/2015 - Anti-Retaliation Provisions Dodd-Frank Employer Liability Issues Internal Reporting Publicly-Traded Companies Rule 21F SEC Whistleblower Awards Whistleblower Protection Policies

The SEC's Investment Management Division Has Some Things to Tell You about Cybersecurity

Lots of agencies and organizations want to boss you around about cybersecurity. In April, the SEC and the Justice Department published more directions on the issue. We’ll cover the very brief guidance issued by the SEC’s...more

7/27/2015 - Best Practices Cybersecurity DOJ Investment Adviser Investment Management New Guidance Risk Assessment SEC

You Can Settle Your Insider Trading Case with a Negligence-based Charge

This is almost certainly not true anymore. But it was true once! Maybe only once. Back in October 1991, the SEC sued Shared Medical Systems, a Pennsylvania health care information services company and three of its officers...more

7/23/2015 - Cease and Desist Enforcement Actions Insider Trading SEC Securities Act of 1933 Securities Exchange Act Settlement

Vivek Ranadivé and Wisconsin IA Both Big into Cherrypicking, According to Sources

Here’s a thing I think I know about billionaires: They’ve made piles and piles of money doing something someone somewhere surely advised them not to do because it was a dumb idea. Then later, actually dumb ideas come along...more

7/2/2015 - Enforcement Actions Exchange-Traded Products Investment Adviser SEC

Why Did BHP Billiton Settle an FCPA Case Including 7+ Year-Old Conduct?

Remember the Water Cube from the 2008 Olympics in Beijing? BHP Billiton has probably had reason to think about it recently. On Wednesday it settled an FCPA case with the SEC arising out of the company’s sponsoring the...more

5/22/2015 - Books & Records Bribery Enforcement Actions FCPA Foreign Official Internal Controls Olympics SEC Statute of Limitations

Insider Trading Recklessness and Kevin Love’s Shoulder

A couple of weeks ago I expressed skepticism about the ultimate impact of Judge Rakoff’s recent opinion in SEC v. Payton. In it, he held that for purposes of a motion to dismiss, the SEC had adequately alleged insider...more

5/6/2015 - Illegal Tipping Insider Trading Intent Judge Rakoff Personal Benefit SEC SEC v Payton

The SEC Doesn’t Love Secret Perks for Executives

If you find yourself as the CEO of a public company, you’ll probably find pluses and minuses. You’ll have to work really hard, but it can be lucrative, too. You can get paid a lot of money. And your company can pay you...more

4/28/2015 - C-Suite Executives CEOs Enforcement Actions Executive Compensation Internal Controls Publicly-Traded Companies SEC

Two Regulatory Crises

It strikes me that two civil regulators are facing dire attacks on aspects of their enforcement programs – both in different U.S. Courts of Appeals – at the same time. Both of these attacks arise out of generalized statutes...more

4/21/2015 - Appeals Cybersecurity Data Breach Enforcement Actions FTC FTC v Wyndham Illegal Tipping Insider Trading SEC Unfair or Deceptive Trade Practices US v Newman

A Non-Insider Trading Case in the District of Massachusetts

Insider trading prosecutions can be difficult. Because of the haphazard and tortuous growth of insider trading law itself, the prosecutions involve proving lots of different pesky elements. Fiduciary duties, materiality,...more

4/20/2015 - C-Suite Executives Confidential Information Criminal Prosecution FINRA Insider Trading Mail Fraud Retailers SEC Supply Chain Wire Fraud

Three Thoughts about the SEC’s First “Pretaliation” Case

I was on a flight last Wednesday when the SEC released the first of what whistleblower chief Sean McKessy has dubbed “pretaliation” cases against KBR, Inc. When I landed I had several emails from colleagues, asking, “Did you...more

4/10/2015 - Confidentiality Agreements Corporate Counsel Enforcement Actions Internal Investigations KBR (formerly Kellogg Brown & Root) Rule 21F SEC Securities Exchange Act Whistleblower Protection Policies Whistleblowers

SEC Releases Results of Cybersecurity Exam Sweep

We’re a bit behind on this, but better (a little bit) late than never. Last month the SEC’s Office of Compliance, Inspections and Examinations released the first results of its Cybersecurity Examination Initiative, announced...more

3/17/2015 - Broker-Dealer Compliance Cybersecurity FFIEC FinCEN Industry Examinations Investment Adviser NIST OCIE SAR SEC

The SEC Will Be Your Employment Law Agency, Too

The nature of the SEC’s business a regulator of public companies lends a certain expansive aspect to its jurisdiction. That is, when your job as a government agency is to be sure public companies are making complete and...more

3/3/2015 - Employer Liability Issues Jurisdiction Publicly-Traded Companies SEC Severance Agreements Whistleblowers

In Ordering Disgorgement in SEC Cases, Courts Have Discretion, but Not That Much Discretion

When defendants argue in federal court against the SEC’s calculation of a disgorgement figure, they hear a lot of this: “A district court has broad discretion to order disgorgement of profits obtained through...more

2/24/2015 - Burden of Proof Disgorgement SEC Securities Fraud

One Good Thing and One Bad Thing about SEC Administrative Proceedings

One of my favorite lines from my kids’ books involves a cat named Pickles who’s having something of an identity crisis. Pickles doesn’t really have an owner, but does have a temporary caretaker, who tells him, “Pickles,...more

2/19/2015 - Administrative Hearings Enforcement Actions SEC

The SEC Totally Cares about Its Injunctions

Last week I wrote a post discussing the injunctions the SEC typically obtains against defendants in federal court. I noted the oddity of these obey-the-law injunctions and wondered aloud why the Commission never pursues...more

1/27/2015 - Civil Monetary Penalty Contempt Enforcement Actions Injunctions Permanent Injunctions SEC

The SEC Does Not Care about Its Injunctions

It won’t surprise you to learn that the U.S. Code includes this provision: “A court of the United States shall have power to punish by fine or imprisonment, or both, at its discretion, such contempt of its authority . . . as...more

1/20/2015 - Civil Monetary Penalty Disgorgement Enforcement Actions Injunctions SEC

Does SEC Enforcement Treat Bigger Companies Differently?

I’m stealing the title of this post from Broc Romanek, who asked this question on January 2nd. He was responding to a study authored by Jonas Heese, an assistant professor at Harvard Business School who has authored a study...more

1/8/2015 - Enforcement Actions Enforcement Statistics Publicly-Traded Companies SEC

Second Circuit Limits Insider Trading Law for Remote Tippees

Matt Levine is a big jerk. He just sits there at Bloomberg following events in finance and securities enforcement, and then writes interesting things about those events really quickly and with insight that no one else has...more

12/12/2014 - Appeals Dell Indictments Insider Trading Material Nonpublic Information Nvidia Reversal SEC US v Newman

Caution: Aggressive Interpretation of Broker-Dealer Registration Provisions Could Be Hazardous to Your Ability to Stay out of...

Let’s do some compare and contrast, starting with a fairly unremarkable case the SEC filed in the Northern District of Texas on November 20th. In that action, the Commission sued the father-son duo of Paul and Jeffrey Downey...more

12/2/2014 - Broker-Dealer Mineral Leases Oil & Gas Registration SEC Securities Fraud

Proposed “Fair Fund” for CR Intrinsic Case Stirs Dustup among SEC’s Commissioners

In the right kind of enforcement action, the SEC can take the money it’s generated and set up what’s called a Fair Fund to redistribute that money to harmed investors. But what is the right kind of case? This procedure was...more

11/13/2014 - Enforcement Enforcement Actions Sarbanes-Oxley SEC

SEC and FINRA Issue Risk Alert on Penny Stock Companies

I’m not your legal advisor. And I’m definitely not your investment adviser. But the first rule of penny stock companies should be: do not invest in penny stock companies. I mean, does that seem like a smart thing to do? ...more

11/12/2014 - EDGAR FINRA Investors OTC SEC Stocks

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