Thomas Gorman

Thomas Gorman

Dorsey & Whitney LLP

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This Week In Securities Litigation

In a holiday shortened week the Commission brought actions centered on: a transfer agent and one of its owners who conducted a fraudulent offering for another company and then sold unregistered shares into the market; a...more

5/26/2016 - De-Risking Enforcement Actions Financial Conduct Authority (FCA) FINRA Hong Kong Market Manipulation Material Misrepresentation Misrepresentation Offering Fraud Schedule 13D SEC Securities Act of 1933 Securities Exchange Act UK

SEC – A Computer and Twenty-Seven Minutes To Profit

The SEC’s latest stock manipulation case might be titled “How to make (almost) over $400,000 in just 27 minutes.” The key is to use Williams Act filings not to alert the market and issuer to a potential take-over but to fake...more

5/25/2016 - Asset Freeze EDGAR Market Manipulation Merger Agreements Pakistan Schedule 13D SEC Securities Act of 1933 Securities Exchange Act Takeovers Williams Act

The SEC, CCOs and Compliance Programs

Compliance programs, Chief Compliance Officers and liability have been the subject of a great deal of debate in recent months. Members of the Commission, for example, debated charging decisions regarding CCOs last year in...more

5/24/2016 - Chief Compliance Officers Code of Conduct Compliance Corporate Culture DOJ Due Diligence FCPA SEC Third-Party Tone At The Top Training

Broker, Compliance Officer Fined For AML Failures

Money laundering continues to be a key focus of regulators. Recently, for example, FINCEN Director Jennifer Shasky Calvery discussed money laundering through real estate transactions. Earlier this year the SEC brought an...more

5/19/2016 - Anti-Money Laundering Broker-Dealer Chief Compliance Officers Customer Identification Program (CIP) Due Diligence Enforcement Actions FinCEN Fines FINRA Foreign Financial Institutions (FFI) Risk Assessment Sanctions SEC

SEC Charges State Street Employee For Fraudulent Fees

Transition Management is a service offered by securities professionals to pension funds and other investment managers who are changing fund managers, investment managers or making similar transitions and need to make...more

5/18/2016 - Broker Commissions Criminal Prosecution Fees Fiduciary Duty Financial Conduct Authority (FCA) Fraudulent Charges Markups SEC State Street UK

Supreme Court: The Reach of Exchange Act Section 27

Exchange Act Section 27 gives federal district courts exclusive jurisdiction of all suits “brought to enforce any liability or duty created” by the Act. The critical question was the scope and reach of that exclusive...more

5/17/2016 - 28 USC 1331 Exclusive Jurisdiction Federal Jurisdiction Financial Institutions Merrill Lynch Merrill Lynch v Manning Regulation SHO SCOTUS Securities Exchange Act

SEC Charges Attorneys Who Implemented Fraud Scheme

Two attorneys, with fiduciary duties to their clients by virtue of their role as escrow agents, served not as the protector of client funds, but enablers of a fraudulent scheme. The plot was uncovered by OCIE during an...more

5/16/2016 - Attorney Malpractice Escrow Accounts Fiduciary Duty OCIE Securities Fraud

This Week In Securities Litigation

Deputy AG Sally Yates defended the DOJ corporate cooperation policy she with which she is identified in remarks this week. That policy requires business organizations to identify individuals and furnish the evidence regarding...more

5/13/2016 - Class Action Cooperation DOJ Enforcement Actions Misappropriation Money Laundering Price Manipulation SEC UK

Is the Sky Falling? DOJ and Cooperation

Is the sky falling or are we on our way to a new normal when it comes to earning cooperation credit from the Department of Justice? These questions were raised in remarks by Deputy Attorney General Sally Yates in remarks...more

5/12/2016 - Antitrust Division Cooperation DOJ FCPA Federal Pilot Programs Individual Accountability Internal Investigations White Collar Crimes Yates Memorandum

Trends In Accounting Class Action Filings

Last year the number of securities class actions filed with accounting allegations exceeded the average over the last ten years. Likewise, the number of accounting cases filed last year alleging internal control violations...more

5/11/2016 - Accounting Class Action Internal Controls Securities Litigation Settlements

After Manipulating 40 Stocks, Caught On A Wire Tap

Gregg Mulholland pleaded guilty to charges based the manipulation of the securities of 40 different firms over a four year period, beginning in 2010. The manipulations yielded over $250 million in trading profits which were...more

5/10/2016 - Broker-Dealer FATCA Investment Adviser Market Manipulation Money Laundering SEC

SEC Charges Provider of “Premier” Advisory Services with Fraud

Professional athletes and high net worth individuals who seek concierge type advisory services can become the victims of the advisers they trust to manage their affairs. One such case was SFX Financial Advisory Management...more

5/9/2016 - Financial Adviser Investment Adviser Misappropriation SEC

SEC Files Offering Fraud Action Centered on Warrants From Private Firm

The SEC filed another offering fraud action, a current staple of the agency. This scheme centered on two former executives of a privately held software manufacturer and a marketer who sold investors interests in various...more

5/5/2016 - Disgorgement Enforcement Actions Investment Advisers Act of 1940 Offering Fraud Penalties Privately Held Corporations SEC Securities Act of 1933 Securities Exchange Act Settlement Warrants

SEC Prevails In Jury Trial Against Former CEO of Drug Firm

The SEC prevailed at trial against the former CEO of a biopharmaceutical company on claims that he made false and misleading statements regarding the regulatory approval status of the firm’s only drug. Following a two week...more

5/4/2016 - CEOs Clinical Trials Enforcement Actions False Statements FDA Insider Trading Jury Trial Misleading Statements Pharmaceutical Industry SEC Securities Exchange Act Summary Judgment

SEC Settles Insider Trading Action With Corporate Executive

Insider trading has long been a staple of SEC enforcement. The agency has brought a number of actions against corporate executives who have abused their position by using inside information entrusted to them for personal gain...more

5/3/2016 - Acquisitions Disgorgement Enforcement Actions Insider Trading Permanent Injunctions SEC Securities Exchange Act Tender Offers

SEC Sanctions Audit Firm, Partner Tied to Custody Rule

Custody Rule cases are rapidly becoming a staple of SEC enforcement. Rule 206(4)-2 requires registered investment advisers with custody of client funds or securities to implement certain controls to protect those assets....more

5/2/2016 - Audits Cease and Desist Orders Custody Rule Disgorgement Enforcement Actions Investment Advisers Act of 1940 Material Misstatements Misappropriation PCAOB Penalties Registered Investment Advisors SEC

This Week In Securities Litigation

The SEC requested comment on the development of a consolidated audit trail this week, a concept long discussed. The audit trail would enable regulators to track trading activity in the U.S. markets. Enforcement initiated...more

4/29/2016 - Audits Books & Records Comment Period Enforcement Actions False Statements FINRA GAAP Internal Controls Investment Fraud Investment Funds Market Manipulation Misrepresentation PCAOB Pump and Dump SEC Spoofing

Dorsey Anti-Corruption Digest - April 2016

Welcome to Dorsey & Whitney’s monthly Anti-Corruption Digest. In this digest, we draw together news of enforcement activity throughout the world and aim to reduce your information overload. Our London, Minneapolis, New York...more

4/28/2016 - Alstom Anti-Corruption Avon Brazil Bribery Compliance Cooperation Deferred Prosecution Agreements DOJ Egypt Enforcement Actions FCPA Federal Pilot Programs Federal Sentencing Guidelines Kuwait Novartis Remediation SEC Self-Reporting Serbia Serious Fraud Office Turkey UK Voluntary Disclosure Wells Fargo White Collar Crimes

SEC Complaint: How To Create A Manipulation Vehicle

Microcap fraud has long been a focus of SEC enforcement. Many of the cases start with a public shell followed by a reverse merger in which the promoters end up with large portions of the stock. The transaction culminated with...more

4/28/2016 - Enforcement Actions FINRA Form S-1 Initial Public Offerings Market Manipulation OTCBB Pump and Dump SEC Securities Act of 1933 Securities Exchange Act Shell Corporations

Class Certification: Halliburton II and Basic

The predicate for many securities class actions is the fraud-on-the-market theory, adopted by the Supreme Court in Basic, Inc. v. Levinson, 485 U.S. 224 (1988). There the Court held that a securities law plaintiff could...more

4/27/2016 - Basic v Levinson Best Buy Class Action Class Certification False Statements Fraud-on-the-Market Halliburton v Erica P. John Fund Presumption of Reliance Rebuttable Presumptions SCOTUS Stock Prices

Forex Investment Scheme Results in Criminal Charges

Investment fund fraud and Ponzi schemes have become a staple of SEC enforcement. The investment fraud schemes often cross from securities into other areas such as the currency markets. In such instances either the CFTC or the...more

4/26/2016 - CFTC Criminal Prosecution Disgorgement Enforcement Actions Foreign Currency Forex Investment Fraud Investment Funds Popular Wire Fraud

SEC Settles With Apple Stock Day Trader

Apple stock is well known and popular among investors. It is also attractive to fraudsters who focus on the high tech giant’s shares for schemes. One scheme, for example, brought down New York brokerage Rochdale Securities...more

4/25/2016 - Apple Asset Freeze Disgorgement Enforcement Actions Guilty Pleas Investment Fraud Obstruction of Justice Perjury Permanent Injunctions Restitution SEC Securities Fraud

This Week In Securities Litigation

The Commission prevailed at trial in a market manipulation case. The trial followed a series of settlements and a grant of summary judgment in the Commission’s favor as to one defendant. The remaining defendant, a former NFL...more

4/22/2016 - Audits Cherry Picking Enforcement Actions Hong Kong Hong Kong Securities and Futures Commission (HKSFC) Internal Controls Investment Adviser Investment Fraud Jury Trial Market Manipulation Misrepresentation PCAOB SEC Securities Fraud Swaps

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