Thomas Gorman

Thomas Gorman

Dorsey & Whitney LLP

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This Week In Securities Litigation

Investment advisers were at the center of a number of actions brought by the Commission this week . Two proceedings involved a registered adviser and its COO that were involved in an unregistered and fraudulent offering; two...more

7/22/2016 - Conflicts of Interest Criminal Prosecution Enforcement Actions Investment Advisers Act of 1940 Misappropriation Offering Fraud Price Manipulation SEC

Career Securities Law Violator Pleads Guilty To Manipulation

The Manhattan U.S. Attorney’s Office secured a guilty plea in a stock manipulation case from a career securities law violator. The guilty plea is the fourth conviction for defendant John Galanis. U.S. v. Galanis, No....more

7/21/2016 - Bribery Criminal Conspiracy Criminal Prosecution Fraudulent Inducement Guilty Pleas Investment Adviser Market Manipulation Recidivism Securities Fraud Securities Violations

Barred Securities Professional Charged By SEC

The Commission brought an action against a hedge fund operator who had previously been barred from the securities business and his son. The case centers on undisclosed conflicts and preferential withdrawal rights for the two...more

7/20/2016 - Conflicts of Interest Disclosure Requirements Enforcement Actions Fee Disclosure Hedge Funds Investment Advisers Act of 1940 SEC Securities Act of 1933 Securities Exchange Act Securities Violations Suspensions & Debarments

SEC – Phoenix Settle Accounting Errors Action

Financial reporting cases are a key focus of SEC enforcement. In some instances the actions result from fraudulent schemes such as those where executives falsify the numbers to obtain a bonus. In other instances the actions...more

7/19/2016 - Accounting Fraud Administrative Proceedings Audited Financial Statements Cease and Desist Orders Civil Monetary Penalty Enforcement Actions Financial Reporting Financial Restatements Form 10-K Penalties SEC

SEC Offering Fraud Built on Duty to Disclose Omissions

The Commission filed another offering fraud action in what has become virtually a continuous stream of these cases. Its latest action centers on the sale of interests in a payday lending business operated in partnership with...more

7/18/2016 - Duty to Disclose Enforcement Actions Fiduciary Duty Management Agreements Offering Fraud Omissions SEC Securities Act of 1933 Securities Exchange Act

This Week In Securities Litigation

The SEC filed a settled FCPA action in which the employees in the China subsidiary of the firm designed and adopted a bribery scheme to circumvent the compliance procedures the company had installed as a result of an earlier...more

7/15/2016 - Administrative Proceedings Bitcoin Bribery Broker-Dealer China Citigroup Electronic Blue Sheets Enforcement Actions FCPA Hong Kong Insider Trading Investment Advisers Act of 1940 Offering Fraud PCAOB Popular Registered Investment Advisors Regulation M Rules of Practice SEC Serious Fraud Office UK

SEC Announces Amendments To Rules For Administrative Proceedings

The Commission announced the adoption of amendments to its Rules of Practice which govern administrative proceedings. Previously, the SEC had issued proposed amendments which had been the subject of a number of comments....more

7/14/2016 - Administrative Proceedings Amended Regulation Corporate Counsel Depositions Evidence Foreign Jurisdictions Rules of Practice SEC Service of Process Young Lawyers

SEC Requires Admissions To Settle Another Blue Sheet Case

Blue sheets are an important tool for the SEC. Named for the fact that the form at one time was printed on blue paper, the information request requires the immediate production of key information regarding a securities...more

7/13/2016 - Admissions of Liability Broker-Dealer Cease and Desist Orders Citigroup Electronic Blue Sheets Enforcement Actions FINRA Penalties SEC Securities Exchange Act

Compliance, Cooperation Mitigates FCPA Liability with DOJ-SEC

Well designed compliance systems coupled with solid internal controls can be instrumental in preventing violations of the FCPA. Despite best of efforts, there is no doubt that even a well-constructed compliance system can be...more

7/12/2016 - Books & Records Bribery Cease and Desist Orders China Compliance Cooperation Corporate Misconduct Declination Disgorgement DOJ FCPA Internal Controls Multinationals SEC Securities Exchange Act Self-Reporting Vendors Whistleblower Hotlines

Effective SEC Enforcement – Built on Fundamental Fairness

How effective is the SEC enforcement program at deterrence? With the adoption of the “broken windows” theory of enforcement the agency adopted a theory of market policing borrowed from the New York City police department. It...more

7/11/2016 - Administrative Proceedings Broken Windows DOJ Enforcement Actions Insider Trading SEC Securities Violations Takeovers

This Week In Securities Litigation

Just prior to the July 4th holiday a legend of the federal securities bar passed away. Irving Pollock, or Irv as he was known, was the father of the SEC’s Enforcement Division. A New Mexico jury handed the Commission a...more

7/9/2016 - BaFin Criminal Prosecution Enforcement Actions Financial Crisis Form 10-K Germany Jury Verdicts Margin Calls Mortgage-Backed Securities Offering Fraud Private Equity SEC Securities Fraud Whistleblower Hotlines Whistleblower Protection Policies Whistleblowers

Wall Street Executive Pleads Guilty In Investment Fraud

Andrew Caspersen, a former managing principal of Blackstone Group, and a partner at Park Hill Group which raises capital for private equity, pleaded guilty to one count of securities fraud and one count of wire fraud. U.S. v....more

7/7/2016 - Enforcement Actions Guilty Pleas Investment Fraud Misrepresentation SEC Securities Fraud Shell Corporations Wire Fraud

Jury Rejects SEC’s Key Claims While Deadlocking on Others

A jury rejected most counts brought by the SEC against two senior executives of Thornburg Mortgage, Inc., the second largest independent mortgage company in the country. The charges centered on a market crisis era scheme in...more

7/6/2016 - Aiding and Abetting Enforcement Actions Form 10-K Jury Verdicts Margin Calls Misrepresentation Mortgage Lenders SEC Securities Fraud

The Father of Modern Securities Regulation and SEC Enforcement

Former SEC Commissioner Irving Pollock passed away on July 1, 2016. Irving Pollock is a central figure is the history of the U.S. Securities and Exchange Commission and modern securities regulation. He served on the staff of...more

7/5/2016 - Enforcement SEC

This Week In Securities Litigation

In the week leading up to the July 4th holiday weekend the SEC filed an action alleging insider trading centered on the acquisition of a firm by Apple based largely on circumstantial evidence and outsized trading. Another...more

7/1/2016 - Apple Australia China Electronic Blue Sheets Enforcement Actions Excessive Fees FINRA Insider Trading Misrepresentation NYSE Offering Fraud PCAOB Proposed Regulation SEC Self-Dealing Unregistered Brokers

SEC Files Two Proceedings Against Investment Advisers

The Commission filed two proceedings centered on investment advisers. One is based on improper fee and trading practices. The second is based on the misappropriation of funds from pooled investment vehicles by the adviser....more

6/29/2016 - Enforcement Actions Investment Advisers Act of 1940 Misappropriation Misrepresentation Pooled Investment Vehicles Registered Investment Advisors SEC

SEC Charges Another China Based Firm With Fraud

The key to China based Longwei Petroleum Investment Holding Limited’s business was its storage facilities for oil, gas, fuel oil and solvents, claimed to be the largest in the area. While the firm repeatedly made...more

6/28/2016 - China Delisting Enforcement Actions Fraud Misrepresentation SEC Securities Act of 1933 Securities Exchange Act Shareholders

SEC Charges Business Media Star With Fraud

The Frack Master was a media star with frequent appearances on CNBC, CNN International, Fox Business news, the BBC and a weekly radio talk show in Dallas, all discussing oil-and-gas topics. He marketed interests in oil and...more

6/28/2016 - Enforcement Actions Fraud Investors Misappropriation Oil & Gas SEC Securities Act of 1933 Securities Exchange Act

This Week In Securities Litigation

Merrill Lynch was at the center of actions brought by the SEC and FINRA this week. One action charged the firm with violations of the customer protection rule tied to using customer cash and failing to protect their...more

6/24/2016 - Books & Records CFTC Cherry Picking DOJ Enforcement Actions FCPA FINRA Insider Trading Internal Controls Merrill Lynch Misappropriation Municipal Bonds Non-Prosecution Agreements Russia SEC Securities Litigation Unregistered Brokers Unregistered Securities

SEC – Charter School CEO Settle Muni Bond Charges

The Commission resolved its second action arising out of undisclosed conflicts tied to a municipal bond offering used to fund construction for charter schools. SEC v. Rangel, Civil Action No. 1:16-cv-06391 (N.D. Ill. Filed...more

6/23/2016 - Charter Schools Conflicts of Interest Disclosure Requirements Enforcement Actions Municipal Bonds Municipal Securities Issuers SEC Securities Act of 1933

DOJ - SEC Resolve FCPA Actions – Consider Cooperation

A Massachusetts based medical imaging company resolved FCPA charges with the DOJ and the SEC stemming from actions taken by its Danish subsidiary and its CFO. The actions center on about 180 suspicious transactions in Russia...more

6/22/2016 - Cooperation Corporate Criminal Fines DOJ Enforcement Actions FCPA Internal Investigations Non-Prosecution Agreements SEC

Repeated, Small Insider Trades Draws SEC Sanctions

Repeated insider trading, no matter how small the amounts, is likely to be found by the SEC’s big data approach to surveillance. A former vice president of a retail chain learned this lesson the hard way. SEC v. Hammon, Civil...more

6/21/2016 - Big Data Disgorgement Enforcement Actions Insider Trading Penalties Permanent Injunctions Prejudgment Interest SEC Surveillance

D.C. Circuit Rejects Challenge to SEC Regulation A+

The Commission prevailed in the D.C. Circuit which rejected a challenge to Regulation A+. Petitioners, the chief security regulators for Massachusetts and Montana argued that the SEC’s rules were contrary to the Supreme...more

6/20/2016 - Chevron v NRDC Investor Protection JOBS Act Preemption Proposed Regulation Qualified Purchaser Registration Requirement Regulation A SEC

This Week In Securities Litigation

Insider trading was a key focus this week. Two actions were brought based on information secured from the FDA and CMS by former employees who were employed by and investment adviser. Another case centered on tips by a...more

6/17/2016 - Bank of New York (BNY) Mellon Bribery Conflicts of Interest EB-5 Regional Centers Enforcement Actions Financial Conduct Authority (FCA) Guilty Pleas Insider Trading Internal Controls Mining Money Laundering Obstruction of Justice Offering Fraud Proposed Regulation SEC Spoofing UK Unregistered Brokers Venezuela

USAO, SEC Charge Insider Trading Based on FDA/CMS Information

The Manhattan U.S. Attorney’s Office and the SEC continued their war on insider trading with additional actions against portfolio managers. In their most recent cases they allege that the two traders obtained inside...more

6/16/2016 - Insider Trading Investment Advisers Act of 1940 Portfolio Managers SEC Securities Exchange Act

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