Thomas Gorman

Thomas Gorman

Dorsey & Whitney LLP

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SEC Charges Former CEO, Firm Based On Concealed Perks

The former President and CEO of a public company repeatedly charged personal expenses to the firm largely by falsifying documents and records. Although the executive admitted certain misdeeds to internal investigators...more

4/1/2015 - C-Suite Executives Enforcement Actions Falsified Documents Internal Controls SEC

Star Investment Manager, Advisers Charged With Fraud by SEC

The SEC issued an Order which charged investment manager Lynn Tilton, known as the Diva of Distressed Debt according to news reports, and her entities with fraud. Specifically, the Order Instituting Proceedings issued by the...more

3/31/2015 - Collateralized Loan Obligations Enforcement Actions Fraud Investment Advisers Act of 1940 Investment Management SEC Securities Fraud

Underwriter, Two Employees Charged By SEC

The SEC brought another case tied to Chinese reverse mergers. This one differs from many earlier actions which focused on the company and or the executives. This action names as defendants one broker-dealer and two of its...more

3/30/2015 - Broker-Dealer C-Suite Executives China Coal Industry Material Misstatements Reverse Mergers SEC

This Week In Securities Litigation

The Supreme Court handed down the Omnicare decision on Securities Act Section 11 liability for opinion statements this week. In a judgment joined by all nine Justices the Court reversed the Sixth Circuit, concluding that...more

3/27/2015 - Issuers Material Misstatements Omnicare Omnicare v Laborers District Council Registration Statement SCOTUS Section 11 Securities Act of 1933

More Class Actions Claim GAAP Violations, Less Paralleled by SEC Case

Last year the number of securities class action cases settled remained largely constant compared to the prior year, according to a report by Cornerstone Research. At the same time the number of cases alleging GAAP violations...more

3/26/2015 - Class Action Enforcement Statistics GAAP SEC Securities Litigation

Omnicare: Section 11 Liability and Opinions

The Supreme Court defined the circumstances under which liability can be imposed for opinion statements under Securities Act Section 11. Specifically, the Court held that such liability could be imposed on two theories: One...more

3/25/2015 - False Statements Omnicare v Laborers District Council SCOTUS Section 11 Securities Act of 1933 Statement of Facts Statement of Opinion

Manhattan U.S. Attorney Prevails in Securities Fraud, RICO Case

The SEC has brought a series of investment fund fraud and Ponzi schemes. Indeed, the Commission has brought so many of these cases in recent years they have become a staple....more

3/24/2015 - Auto Insurance Criminal Prosecution Gambling RICO Securities Securities Fraud

Priorities For the SEC’s Enforcement Division

Last week SEC Enforcement Division Director Andrew Ceresney,testified before Congress regarding the efforts of the Division and its requested for additional funding, highlighting its priorities....more

3/23/2015 - SEC Strategic Enforcement Plan

This Week In Securities Litigation

The broken windows approach to enforcement continued this week. The Commission bundled together eight settled administrative proceedings centered on going private transactions in which the Respondents failed to update their...more

3/20/2015 - Australia Broken Windows Conflicts of Interest Criminal Prosecution Enforcement Actions Fraud Hong Kong SEC Securities

SEC Obtains Freeze Order In Microcap Manipulation Action

Microcap fraud is an on-going enforcement priority of the Commission. In SEC v. Craven, Civil Action No. 15-cv-1820 (S.D.N.Y. Filed March 11, 2015), the Commission brought a manipulation action against a father and son team,...more

3/19/2015 - Enforcement Actions Price Manipulation SEC Securities Securities Fraud

Portfolio Manager in SEC Investigation Makes a Bad Day Worse

Portfolio manager Steven Hart made a difficult situation worse. He was under investigation by the SEC. That inquiry focused on whether he had made a series of matched trades. The investigation resulted in an SEC enforcement...more

3/18/2015 - Enforcement Actions Portfolio Managers SEC

Broken Windows Continues: SEC Brings Group of Actions Centered on Section 13(d)(2) Violations

The “broken windows” approach to enforcement is alive, well and continuing. This time the Commission bundled together three groups of actions and eight proceedings, all centered on a failure to update disclosures tied to...more

3/18/2015 - Broken Windows Disclosure Requirements Enforcement Actions Going-Private Transactions SEC

The Disqualification Provisions and the SEC’s Use of Wavers

One key debate regarding current SEC enforcement policy centers on the application of the so-called “bad actor” provisions. Previously the Commissioners split over the nature, use and application of those provisions. ...more

3/17/2015 - Bad Actors Disqualification Enforcement Actions Investment Adviser Mary Jo White Regulation D Rule 506 SEC Securities Act of 1933 Waivers WKSIs

This Week In Securities Litigation

The SEC filed one new action this week – an administrative proceeding involving the principal of an investment adviser and undisclosed conflicts of interest. The Commission also amended a complaint in an insider trading...more

3/17/2015 - Australia Australian Securities and Investments Commission Breach of Duty Criminal Prosecution Enforcement Actions False Advertising Fund Managers HKEx Hong Kong Injunctive Relief Insider Trading Investment Adviser Investment Fraud Mary Jo White Misappropriation Ponzi Scheme Sanctions SEC Short Sales UK

Two Former Capital One Employees Who Traded On Customer Data, Consent to Preliminary Injunction

Insider trading cases are built on two basic theories. Under the traditional, classic model, a corporate insider uses material, non-public information obtained from his or her employer to trade in shares of the company –...more

3/16/2015 - Capital One Insider Trading Misappropriation Preliminary Injunctions SEC

SEC Continues to Focus on Conflicts By Advisers

Recently Julie M. Rieve, Co-chief, Asset Management delivered remarks titled Conflicts, Conflicts Everywhere to the IA Watch 17th Annual IA Watch Compliance Watch Conference (Feb. 26, 2015)(here). Conflicts are in fact the...more

3/12/2015 - Asset Management Conflicts of Interest Investment Adviser Investment Advisers Act of 1940 SEC

SEC Commissioner Stein On Capital Formation

Capital formation is one of the primary missions of the SEC. Commissioner Kara Stein recently discussed this basic SEC mission in remarks delivered at the Stanford Rock Center for Corporate Governance, Stanford Law School...more

3/10/2015 - Capital Formation Entrepreneurs JOBS Act Regulation A SEC Startups Venture Capital

SEC Charges Tipping Without A Newman – Dirks Personal Benefit

The U.S. Attorney’s Office in Manhattan is trying to have the Second Circuit’s decision in U.S. v. Newman, No. 13-1837, 13-1917 (2nd Cir. Decided December 10, 2014 ) reheard and reversed. In seeking that rehearing the...more

3/9/2015 - Construction Industry Contractors Enforcement Actions Illegal Tipping Insider Trading Material Nonpublic Information Personal Benefit SEC Securities Securities Fraud US v Newman

This Week In Securities Litigation

The SEC continued Operation Shell-Expel this week, suspending trading in the shares of 128 OTC issuers bringing its total for the program to about 8% of the shares traded in that market. The Commission also announced another...more

3/6/2015 - Accounting Controls CFTC Enforcement Actions Kickbacks Price Manipulation SEC Shareholder Litigation Shareholders Suspensions Unregistered Securities US v Yates Whistleblowers

SOX, the Destruction of Evidence And Dr. Seuss: Is a Fish A Tangible Object?

Section 1519 was passed as part of the Sarbanes-Oxley Act in the wake of Enron’s massive accounting fraud. The section was designed to fill a gap in the law by preventing corporate document-shredding to conceal evidence of...more

3/5/2015 - Conservation Destruction of Evidence Evidence Fishing Industry Intangible Property Sarbanes-Oxley SCOTUS US v Yates

SEC Staples: Trading Suspensions, Market Manipulation and Ponzi Schemes

Trading suspensions, market manipulation and Ponzi scheme actions – staples of SEC enforcement. The Commission suspended trading for 128 dormant shell companies this week while bringing a market manipulation action involving...more

3/4/2015 - Enforcement Actions Market Manipulation Ponzi Scheme SEC Strategic Enforcement Plan

M&A Deals Continue To Be Challenged In Shareholder Litigation

The percentage of M&A deals challenged by shareholder suits remained largely constant last year while the number of suits filed against each deal declined slightly, according to a recent report by Cornerstone Research (here)....more

3/3/2015 - Acquisitions Buyouts Mergers Settlement Agreements Shareholder Litigation

Cooperation By Broker Mitigates SEC Sanctions

Cooperation was a key factor in the resolution of an action involving a minority owner of a broker-dealer that is alleged to have facilitated a fraudulent scheme to conceal losses at a major Japanese company. In the Matter of...more

3/2/2015 - Broker-Dealer Duty to Cooperate Enforcement Actions SEC

This Week In Securities Litigation

Four SEC Commissioners addressed the annual SEC Speaks Conference, reviewing recent agency initiatives and tracing potential paths for the future. The SEC also brought another FCPA action, a misappropriation case and an...more

2/27/2015 - Anti-Corruption Australia Bribery Broker-Dealer Compliance Enforcement Enforcement Actions FCPA Fraud Goodyear Investment Funds Mail Fraud Misappropriation Penny Stocks Ponzi Scheme SEC Securities Fraud Unregistered Securities Wire Fraud

Goodyear Settles SEC FCPA Charges

Goodyear Tire and Rubber Company settled FCPA books and records and internal control charges with the SEC. The settlement reflects the extensive cooperation and remedial efforts of the company. In the Matter of Goodyear Tire...more

2/26/2015 - Acquisitions Bribery Compliance Corruption Due Diligence FCPA Foreign Subsidiaries Goodyear SEC Subsidiaries

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