Ever since the creation of Bitcoin in the late 2000s, the SEC has warned that, depending on the circumstances, “initial coin offerings” (ICOs) involving digital tokens or coins may be subject to regulation under the federal...more
The number of public company and accounting fraud cases filed under SEC Chair Jay Clayton has declined. The SEC, however, continues to selectively pursue these types of cases. In the latest example, in aggressive parallel...more
On September 17, 2020, the SEC announced the imposition of a cease-and-desist order against private equity firm Welsh, Carson, Anderson & Stowe (Welsh Carson), an SEC-registered investment manager, in connection with alleged...more
On September 25, 2020, the SEC filed a civil injunctive action against a microcap company, Arrayit Corp., and its President and Chief Science Officer for falsely stating in March-April 2020 that Arrayit had developed a...more
On September 28, 2020, the U.S. Securities and Exchange Commission (the “SEC”) announced two settlements against public companies and individual charges against the former controller and chief accounting officer and the...more
Recently, the U.S. Securities and Exchange Commission (the “SEC”) charged a dually registered firm and its Chief Compliance Officer (“CCO”) with multiple violations of the Investment Advisers Act of 1940 (“Advisers Act”). The...more
What’s New, and Comings & Goings at the SEC -
What’s New: The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) recently issued a Risk Alert titled “Select COVID-19 Compliance Risks and Considerations for...more
8/27/2020
/ Broker-Dealer ,
Business Continuity Plans ,
Compliance ,
Enforcement ,
Fees ,
Financial Transactions ,
Investment Fraud ,
Investors ,
OCIE ,
Risk Alert ,
Securities and Exchange Commission (SEC) ,
Supervision
While the U.S. Supreme Court’s decision in Liu v. SEC limited the SEC’s disgorgement power, it also left open certain complicated issues that are now subject to interpretation. As we previously summarized, in an 8–1 vote, the...more
8/27/2020
/ 15 U.S.C. § 78u(d)(5) ,
Administrative Authority ,
Business Expenses ,
Calculation of Damages ,
Corporate Misconduct ,
Disgorgement ,
Enforcement Actions ,
Equitable Relief ,
Kokesh v SEC ,
Lack of Authority ,
Liu v Securities and Exchange Commission ,
Net Profits ,
Remedies ,
SCOTUS ,
Securities and Exchange Commission (SEC)
In a pair of settlements announced on July 28, 2020, the SEC charged VALIC Financial Advisors (the “Firm”) with two separate sets of violations that allowed the Firm to obtain millions of dollars in fees without providing...more
8/27/2020
/ Advisors Act ,
Cash Solicitation Rule ,
Disclosure Requirements ,
Enforcement ,
Financial Adviser ,
Internal Revenue Code (IRC) ,
Investment Adviser ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Violations ,
Share Classes ,
Teachers ,
Unions
SEC Chairman Jay Clayton has repeatedly touted his focus on “Main Street.” In doing so, he unleashed the Division of Enforcement’s Asset Management specialty unit on the investment advisory industry and finalized and...more
On June 22, 2020, the U.S. Supreme Court decided Liu v. Securities and Exchange Commission, holding the SEC may recover disgorgement as a form of equitable relief in a civil enforcement action for securities fraud, provided...more
6/25/2020
/ 15 U.S.C. § 78u(d)(5) ,
Administrative Authority ,
Business Expenses ,
Calculation of Damages ,
Corporate Misconduct ,
Disgorgement ,
Enforcement Actions ,
Equitable Relief ,
Kokesh v SEC ,
Lack of Authority ,
Liu v Securities and Exchange Commission ,
Net Profits ,
Remedies ,
SCOTUS ,
Securities and Exchange Commission (SEC)
From mid-March to mid-May, the SEC received more than 4,000 tips, complaints, and referrals. This, according to one of the SEC Co-Directors of the Division of Enforcement, represented a 35% increase over the same period last...more
As we described several weeks ago, the SEC across the agency is going to be vigilant in its efforts to regulate, examine and enforce the federal securities laws regarding coronavirus/COVID-19. More recently, the SEC Division...more
As we noted earlier this month, the SEC has sought to proactively combat fraud related to the coronavirus/COVID-19 pandemic and related economic crisis by suspending the trading of at least eleven different companies since...more
The SEC has suspended the trading of eleven companies for issues related to the COVID-19 pandemic since February 7, 2020. Of those eleven suspensions, seven have come since April 3rd. Most of the suspensions follow the recent...more
As the world is navigating through COVID-19 and as we are focused on our health and well-being as we self-quarantine and engage in social distancing to do our part to stop the spread, our markets remain open, active, and...more
On March 3, 2020, the Supreme Court heard arguments in the case of Liu v. SEC, No. 18-1501. This article summarizes what transpired at the hearing, in which the arguments centered on a challenge to the ability of the U.S....more
3/21/2020
/ Administrative Authority ,
Certiorari ,
Disgorgement ,
Enforcement Actions ,
Equitable Relief ,
Lack of Authority ,
Liu v Securities and Exchange Commission ,
Penalties ,
Petition for Writ of Certiorari ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Split of Authority ,
Statute of Limitations
The SEC and DOJ have long prioritized insider trading prosecutions. Moreover, insider trading cases frequently involve parallel investigations in which the SEC and DOJ share information and coordinate efforts to collect...more
2/26/2020
/ Civil Liability ,
Criminal Investigations ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Enforcement Authority ,
Federal Agency Taskforce ,
Information Reports ,
Insider Trading ,
Legislative Agendas ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Violations ,
Willful Violations
According to a White House budget issued on February 10, 2020, the White House is considering transferring the authority of the Public Company Accounting Oversight Board (PCAOB or Board) to the SEC by 2022 in order to...more
On June 21, 2018, the Supreme Court decided Wisconsin Central Ltd. v. United States, No. 17-530, holding that a railroad company’s employee stock options are not taxable “compensation” under the Railroad Retirement Tax Act...more
6/22/2018
/ Appeals ,
Compensation & Benefits ,
Employee Stock Purchase Rights ,
Internal Revenue Code (IRC) ,
Non-Taxable Income ,
Payment-In-Kind ,
Railroad Retirement Tax Act (RRTA) ,
Remand ,
Remuneration ,
Reversal ,
SCOTUS ,
Stock Options ,
Taxable Income ,
Wisconsin Central Ltd v United States
On June 21, 2018, the Supreme Court of the United States decided Lucia v. Securities and Exchange Commission, No. 17-130, holding that the Securities and Exchange Commission’s administrative law judges are subject to the U.S....more
6/22/2018
/ Administrative Law Judge (ALJ) ,
Administrative Proceedings ,
Appeals ,
Appointments Clause ,
Constitutional Challenges ,
Enforcement Actions ,
Final Written Decisions ,
Lucia v SEC ,
Officers of the United States ,
Remand ,
Reversal ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Special Trial Judges (STJs)
Though they have become a hot topic in the past year, cryptocurrencies still occupy something of an untamed frontier in the financial trading and investment ecosystem — but a coordinated, international effort by regulators to...more
On February 21, 2018, the U.S. Supreme Court clarified and narrowed the definition of “whistleblowers” who, under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, are eligible for bounties and protected...more
On June 5, 2017, the Supreme Court of the United States decided Kokesh v. SEC, No. 16-529, holding that disgorgement claims must be commenced within five years of the claims’ accrual because such claims operate as...more
The Securities and Exchange Commission (SEC) has issued two orders challenging employee confidentiality agreements and indicating that companies must not condition employees’ receipt of severance payments and other...more