Thomas Gorman

Thomas Gorman

Dorsey & Whitney LLP

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This Week In Securities Litigation

Microcap fraud, misappropriation by investment advisers and offering fraud cases were the focus of SEC enforcement this week. The Commission filed a microcap fraud action centered on blank check companies involving ten...more

4/17/2015 - CFTC Congressional Investigations & Hearings Disclosure Requirements Enforcement Actions Investment Adviser Mary Jo White Misappropriation PCAOB SEC Securities Securities Fraud Securities Litigation Serious Fraud Office

SEC Files Financial Fraud Action Against Japan Based Controller

The Commission filed a financial fraud action against a former senior accounting officer and controller of Molex Japan Co., Ltd., the Japanese based subsidiary of publically traded Molex Inc. The scheme, which took place in...more

4/16/2015 - Books & Records C-Suite Executives Foreign Subsidiaries Fraud Japan Popular SEC Securities Exchange Act Securities Fraud

SEC Files Offering Fraud and Ponzi Scheme Cases

A staple of SEC enforcement in recent years has been offering fraud and Ponzi scheme cases. This week the Commission filed two more of these actions, one an offering fraud targeting military personnel and a second and...more

4/15/2015 - Enforcement Actions Investment Advisers Act of 1940 Investment Funds Military Service Members Offerings Ponzi Scheme SEC Securities Securities Act of 1933 Securities Fraud

SEC Files Offering Fraud Action

The Commission filed another offering fraud action tied to the sale of interests in the development of oil and gas wells prior to the recent downturn in the price of oil. Beginning in 2010 the defendants raised about $4.4...more

4/14/2015 - Enforcement Actions Joint Venture Oil & Gas Public Offerings SEC Securities Securities Act of 1933 Securities Fraud

Insider Trading: Does Payton Begin the Erosion of the Newman Tipping Test?

The Second Circuit’s decision in U.S. v. Newman, 773 F. 3d 438 (2nd Cir. 2014) regarding the personal benefit test in insider trading either radically altered the law or just reaffirmed the Supreme Court’s decision in Dirks...more

4/13/2015 - Illegal Tipping Insider Trading Judge Rakoff Material Nonpublic Information Personal Benefit SEC v Payton Securities Fraud US v Newman

This Week In Securities Litigation

The SEC filed another FCPA action, this time against the company that financed a “world tour” as part of the bribes paid by employees to secure business. Previously, the Commission filed an action against the employees. ...more

4/10/2015 - Enforcement Actions Enforcement Statistics FCPA SEC Securities

SEC Files Fraud Action Tied To Sale of Cellular Licensing

The sale of spectrum to operate cell phones can yield millions of dollars in profits. This notion was at the center of an action brought by the SEC against six individuals and eleven entities. Investors who purchased...more

4/9/2015 - Cell Phones Enforcement Actions FCC SEC Securities Act of 1933 Securities Exchange Act Wireless Industry

The SEC on Capital Formation: Graded Incomplete – Commissioner Gallagher

Last year the IPO market was overheating – a record number of initial offerings were conducted. Nevertheless, SEC Commissioner Daniel Gallagher gives the SEC a grade of “incomplete” in the area of capital formation in recent...more

4/8/2015 - Capital Formation IPO JOBS Act Public Offerings Regulation A Regulation D SEC

The SEC’s New Whistleblower Action: Is It Counterproductive?

The SEC brought its first enforcement action centered on corporate restrictions which could impact employee whistleblowers, deterring them from reporting to the agency. ...more

4/7/2015 - Confidentiality Agreements Enforcement Actions Internal Investigations KBR (formerly Kellogg Brown & Root) SEC Whistleblower Protection Policies Whistleblowers

This Week In Securities Litigation

The Second Circuit rejected a petition for rehearing by the U.S. Attorney’s Office in the Newman case. There the Court reversed and dismissed the insider trading actions against two traders based on the failure of the court...more

4/6/2015 - Books & Records CFTC Enforcement Actions FINRA Hong Kong Illegal Tipping Insider Trading Internal Controls Kraft Misappropriation Personal Benefit Petition For Rehearing SEC Securities Fraud UK US v Newman Whistleblowers

Accounting Cases – An SEC Priority, But The Cases Being Filed are Class Actions

Accounting and financial fraud cases are an SEC priority. The cases, however, are being brought by the private bar as class actions. The number of accounting class actions filed last year increased by 47% compared to the...more

4/2/2015 - Accounting Fraud Class Action Fraud SEC Securities Fraud Securities Litigation Strategic Enforcement Plan

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

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