Thomas Gorman

Thomas Gorman

Dorsey & Whitney LLP

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Merrill Lynch Settles SEC Market Access Charges

The Commission has brought a series of cases under Exchange Act Section 15(c)(3) and Rule 15c3-5, its market access rule. That rule requires that broker-dealers with market access establish risk management controls to prevent...more

9/27/2016 - Broker-Dealer Electronic Trading Enforcement Actions Goldman Sachs Merrill Lynch Morgan Stanley Risk Management SEC

This Week In Securities Litigation

The Commission filed its first action against an auditor for lack of independence based on a romantic relationship this week. The agency also filed an action alleging insider trading against long time hedge fund operator,...more

9/23/2016 - Auditor Independence Australia Criminal Prosecution Enforcement Actions Ernst & Young FCPA Insider Trading Nu Skin Offering Fraud SEC

SEC Charges Hedge Fund Executive Cooperman with Insider Trading

Later this year the Supreme Court is expected to hand down what may well be the most significant insider trading case in years when U.S. v. Salman, No. 15-628 (S.Ct.) is decided. The decision has the potential to end the...more

9/22/2016 - Hedge Funds Illegal Tipping Insider Trading Investment Adviser Popular SEC US v Newman US v Salman

Lack of Due Diligence Re China Sub Yields FCPA Charges for Parent

Doing business in high risk areas of the world requires additional diligence to avoid corruption issues. The SEC’s latest FCPA settlement is an example of an action where the parent company took proactive steps, but they...more

9/21/2016 - Accounting Controls Charitable Donations Corporate Counsel Enforcement Actions FCPA MLM Industry Popular SEC Subsidiaries

SEC Charges EY in First Auditor Independence Actions Based on Personal Relationships

The SEC has long stressed auditor independence. The agency has brought a series of cases over the years to reinforce the point. Two settled actions involving accounting giant Ernst & Young LLP and others are the first,...more

9/20/2016 - Auditors Cease and Desist Orders Disgorgement Enforcement Actions Ernst & Young SEC

Insider Trading Before the Supreme Court: Dirks and Salman, Part III

This is the third part of an occasional series examining the issues in Salman v. U.S., No. 15-628, which will be argued before the Supreme Court on October 5, 2016. Petitioner’s Reply Brief centers on two themes: 1) The...more

9/19/2016 - Dirks v SEC Illegal Tipping Insider Trading Personal Benefit SCOTUS SEC US v Salman

This Week In Securities Litigation

The Commission prevailed in a jury trial this week against the City of Miami and its budget director in an action centered on three bond offerings. Cases brought by the agency this week also included: one against a firm and...more

9/16/2016 - Ameriprise Financial Auditors Business Valuations Conflicts of Interest Enforcement Actions FCPA Foreign Issuers Hong Kong Securities and Futures Commission (HKSFC) Jury Trial Municipal Bonds Offering Fraud SEC

SEC Wins Jury Verdicts Against City of Miami, Budget Director

The SEC prevailed at trial in an action against the City of Miami and its former budget director, Michael Boudreaux centered on three bond offerings. Specifically, the jury returned verdicts in favor of the Commission as to...more

9/15/2016 - Enforcement Actions Financial Reporting Municipal Bonds Presumption of Reliance SEC

SEC Position on SOX 304 Clawbacks Adopted by Ninth Circuit

Under Section 304 of the Sarbanes Oxley Act the Commission can seek to clawback certain discretionary CEO and CFO compensation and trading profits if there is a restatement of the issuer’s financial statements based on...more

9/14/2016 - Accounting Fraud Clawbacks Corporate Officers Sarbanes-Oxley SEC

Insider Trading Before the Supreme Court: Dirks and Salman, Part II

In Part I of this occasional series, the background to U.S. v. Salman and the arguments advanced by the Petitioner-defendant in his opening brief before the Supreme Court were examined. In this segment of the series, the...more

9/13/2016 - Dirks v SEC Insider Trading Material Nonpublic Information Personal Benefit SEC US v Salman

This Week In Securities Litigation

In the two weeks spanning the Labor Day weekend, the Commission continued bring cases arising from its inspection program. Two new actions alleging inadequate procedures regarding the disclosure of additional trading away...more

9/9/2016 - Bank Fraud CFTC Criminal Prosecution Enforcement Actions Memorandum of Understanding Offering Fraud REIT SEC Securities Fraud Whistleblower Awards

SEC Charges Promoters of Notes Backed by Gold Mine, U.S.

When it is to good to be true, it almost always is. But returns of 53% to 120%, backed by millions of ounces of gold and bonds from the U.S. and Bank of America? Too hard to resist. Investors paid their cash; the promoters...more

9/8/2016 - Bank of America Bonds Misappropriation Permanent Injunctions Promissory Notes SEC Securities Fraud

An SEC Offering Fraud, An Attorney and NFL and NBA Players

The SEC filed another offering fraud action which in part targeted current and former professional athletes. Investors in the scheme included NFL and NBA players. The attorney defendant claims to have tried to purchase a...more

9/7/2016 - Athletes Enforcement Actions Offering Fraud SEC Securities Exchange Act

SEC Charges Firm, Promoters With Offering Fraud

The SEC brought another offering fraud action centered on false projections by an issuer regarding its expected performance. Unlike the action filed early last week, this one did not settle and is headed for litigation. SEC...more

8/29/2016 - Enforcement Actions Offering Fraud SEC

This Week In Securities Litigation

Numbers were the focus this week as the Commission filed 81 administrative proceedings (must be near fiscal year end) and two civil injunctive actions. Seventy-one of the actions involved municipal issuers who self-reported...more

8/26/2016 - Cooperation Agreement Disclosure Requirements Enforcement Actions Material Misstatements Municipal Bonds Offering Fraud Price Manipulation SEC Unregistered Brokers

SEC Settles With 71 Municipal Issuers

The Commission’s Municipalities Continuing Disclosure Cooperation Initiative has been a significant success. Under the Initiative the agency has filed settled enforcement actions against firm’s representing 96% of the market...more

8/25/2016 - Enforcement Actions Municipal Bonds Municipal Securities Issuers Municipalities SEC Self-Reporting

SEC Charges Private Equity Advisers With Inadequate Disclosure

The Commission has brought a series of cases against private equity centered on undisclosed fees and conflicts of interest – key areas of interest during OCIE exams. The latest proceeding in this string of cases involves four...more

8/24/2016 - Conflicts of Interest Enforcement Actions Hidden Fees Private Equity Funds SEC

SEC Files Settled Offering Fraud Action

Offering fraud actions continue to be a staple of SEC enforcement. The Commission’s most recent action is this stream of cases involved a limited liability company that never engaged in business. SEC v. Jones, Civil Action...more

8/23/2016 - Enforcement Actions Limited Liability Companies Offering Fraud Permanent Injunctions SEC

Insider Trading: Is Stewart the Way Forward for the Government?

The Government’s insider trading conviction last week in U.S.v. Stewart, No. 1:15-cr-00287 (S.D.N.Y.) is being hailed by some as the way forward for the DOJ and the SEC in a post-Newman world. Perhaps. But consideration of...more

8/22/2016 - Enforcement Actions Insider Trading Personal Benefit SEC

This Week In Securities Litigation

An investment banker who repeatedly tipped his father on about pending mergers was found guilty of insider trading by a jury this week. The Commission brought another action based on the whistleblower protections where the...more

8/19/2016 - Administrative Hearings Australia Books & Records Criminal Prosecution Enforcement Actions Health Net Hong Kong Stock Exchange Insider Trading Investment Funds Misrepresentation Mortgage-Backed Securities Penny Stocks Price Manipulation SEC Whistleblower Awards

SEC Charges Adviser With Fraud Tied to “Death Puts”

The Commission’s enforcement division and inspectors at OCIE continue to work closely and have developed a series of cases in recent months. One of the more unusual proceeding spawned through this relationship is the action...more

8/18/2016 - Enforcement Actions Hedge Funds Management Fees OCIE SEC Securities Fraud

SEC Files Another Action To Protect Whistleblowers

Undermining the protections of Exchange Act Section 21E which protect whistleblowers was the subject of a recent, settled enforcement action. Now the Commission has brought a similar action, again centered on provisions in...more

8/17/2016 - Enforcement Actions Health Net SEC Securities Exchange Act Severance Agreements Whistleblower Awards

Stock Manipulation – A Family Affair

Sometimes it is all in the family. In this case it certainly appears to be all in the family – or at least largely. Jason, John, Jared and Derek Galanis teamed with Gary Hirst, Ymer Shahini and Gavin Hamels to manipulated the...more

8/16/2016 - Criminal Conspiracy Criminal Prosecution Price Manipulation Securities Fraud

SEC Halts Scheme By IM Who Bilked Off-Shore Investment Manager

It can happen to anybody. The SEC has brought what seems like an almost endless string of investment fund and offering fraud actions. Typically small, unsophisticated investors, often known to the fraudster, are targeted with...more

8/15/2016 - Asset Management Cayman Islands Enforcement Actions Investment Advisers Act of 1940 Investment Fraud Investment Management Misappropriation Offering Fraud Offshore Funds SEC Securities Act of 1933 Securities Exchange Act Securities Violations

This Week In Securities Litigation

The D.C. Circuit handed down the first circuit court decision ruling on the Appointments Clause question concerning the retention of SEC ALJs. The court concluded that there was no violation of the Clause....more

8/12/2016 - ALJ Appointments Clause Books & Records Confidential Information Confidentiality Agreements Enforcement Actions FCPA FINRA Hong Kong Insider Trading Internal Controls Investment Fraud Offering Fraud SEC Securities Litigation Severance Agreements Whistleblower Awards Whistleblowers

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