Securities Updates

Read need-to-know updates, commentary, and analysis on Securities issues written by leading professionals.
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Company Liability for Insider Stock Ownership Reports

Earlier this month, the SEC announced charges against six public companies for contributing to their insiders’ failure to properly file Form 4s or for violating the Item 405 proxy disclosure requirements for late insider...more

A Reminder of the Importance of Internal Controls Under SOX

On July 30, 2014, the SEC announced charges against the CEO and the former CFO of a computer equipment company based in Florida for misrepresenting the state of the Company’s internal controls over financial reporting and...more

Securities Fraud: When Pennies Count

Most securities fraud cases involve significant thefts from individual victims, like the alleged $64 billion Ponzi scheme run by Bernie Madoff. However, some cases show that fraudulent conduct involving small amounts of money...more

SEC Advisory Committee Makes Recommendations on Disclosure of Preliminary Voting Results

The Investor as Owner Subcommittee of the SEC’s Investor Advisory Committee established pursuant to Section 911 of the Dodd-Frank Act has issued two recommendations on disclosure of preliminary voting results. The...more

SEC Advisory Committee To Consider Fee-Shifting Bylaws, But Why?

One agenda item for the upcoming meeting of the Investor Advisory Committee is a “Discussion of Issuer Adoption of Fee-Shifting Bylaws for Intra-Corporate Litigation”. This is indeed an interesting and timely topic in light...more

Investor Transparency Post AIFMD: What Have We Gained?

The Alternative Investment Fund Managers Directive (2011/61/EU) (the “Directive” or “AIFMD”) states in Recital 94 that its objective is: ...to ensure a high level of investor protection by laying down a common...more

Prudential Regulators and CFTC Re-Propose Margin Requirements for Non-Cleared Swaps

Federal banking regulators (the Prudential Regulators) have re-proposed regulations to require certain dealers and major participants in the swap and security-based swap markets to collect initial and variation margin for...more

Regulation AB II: Second Time’s the Charm?

On August 27, 2014, following years of preparation, speculation and comment, the Securities and Exchange Commission (SEC) adopted Regulation AB II (Reg AB II). Reg AB II represents a response to requirements of Sections 939A...more

SEC-USAO Halt Insider Trading Ring

Separating the source of the inside information from the trader with a buffer was supposed to shield everyone from the watchful eye of enforcement officials. If there were questions, research reports would be produced to...more

SEC Charges Investment Adviser for Misleading Performance Advertising

In a settled action, the SEC charged an investment adviser for false advertising and its chief compliance officer on related matters. The defendants did not admit or deny the charges....more

FINRA: 75 Years of a Sick-Chicken Survivor

FINRA celebrated its 75th Anniversary this September 18. It is the “largest independent regulator for all securities firms doing business in the United States,” with a notionally voluntary membership of over 4,100 securities...more

SEC Targets Corporate Insiders for Failing to Promptly Disclose Stock Transactions

The Commission has announced an unprecedented enforcement initiative against officers, directors, and major stockholders for violating beneficial ownership reporting requirements and against public companies for their roles...more

FCPA Compliance and Ethics Report-Episode 91, Internal Controls for Third Parties Under the FCPA, Part II [Video]

In this episode, I continue my exploration of internal controls around third parties in a FCPA compliance program, with Henry Mixon. ...more

Florida Regulator Promises Revision of Investment Adviser Rules – New Industry Group Forms

Officials from the Florida Office of Financial Regulation (“OFR”) met with representatives of the securities industry last month to discuss reform of regulations applicable to state-covered investment advisers. ...more

More Women on Boards: It’s the Economy, Stupid

Earlier this month, the editors of Bloomberg published “Companies Can’t Afford Not to Have Women on Boards,” an editorial that advocated the importance of increasing the number of women directors, contending that the paucity...more

Two Whistleblower Cases Show Major Contrast of How Cases Can Result

A couple of recent whistleblower cases that have received national attention show the large divide that still exists in the way that these cases can progress. The first case saw the SEC award a whistleblower $400,000 for...more

This Week In Securities Litigation

The Commission continued with broken windows this week. Twenty Rule 105 short selling cases were filed in a group. Last week another group of broken window type cases was filed based on the failure to file Form 4s and...more

SEC Sued to Implement Resource Extraction Rules

On July 2, 2013, the United States District Court for the District of Columbia vacated the SEC’s resource extraction rules which were mandated by the Dodd-Frank Act. Since that time, industry players have asked the SEC to...more

Texas District Court Denies Class Certification for Hedge Fund Investors on Numerosity and Predominance Grounds

In 2008, investors in the Parkcentral hedge fund lost as much as $3 billion dollars when Parkcentral’s investment in commercial mortgage-backed securities (“CMBS”) was devalued. The investors, limited partners of Parkcentral,...more

CFTC Votes to Re-Propose Margin Requirements for Uncleared Swaps

On September 17, 2014, the Commodity Futures Trading Commission (“CFTC”) voted to re-propose rules to impose initial and variation margin requirements on uncleared swaps entered into by swap dealers and major swap...more

SEC Charges Issuers, Corporate Insiders, and Other Significant Investors for Violating Laws Requiring Reporting of Transactions in...

On September 10, 2014, the U.S. Securities and Exchange Commission announced settlements with officers, directors, and significant shareholders for violating federal securities laws requiring information about their...more

Forum Selection Bylaws Are Best Considered On A Clear Day

“Exclusive forum” bylaws and charter provisions are a powerful tool for managing the risk of parallel corporate governance litigation against a company and its directors in multiple forums, allowing stockholders to bring such...more

Broker-Dealer Beat - September 2014

The SEC recently settled an enforcement action against brokerage firm Monness, Crespi, Hardt & Co. ("MCH") for deficient insider trading procedures. This case is an important reminder of some key elements of effective insider...more

When Do You Need Acquired Business Financials in a Prospectus?

General Rule: Your prospectus must include (or incorporate by reference) financial statements for a significant acquisition of a business that has closed 75 days or more before the offering. Significant means above 20% on any...more

SEC Institutes Proceeding Against High Speed Trader – But Not For Trading

High speed trading is a frequent topic of discussion in the securities markets. Books have been written about it such as Michael Lewis’ “Flash Boys” and Scott Patterson’s “Dark Pools.” Hearings have been held on Capitol Hill...more

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