Late last year, Securities and Exchange Commission (SEC) Chair Gary Gensler warned private fund managers that they should be prepared for increased regulatory scrutiny. Shortly thereafter, in February 2022, the SEC announced...more
Key Points -
The SEC and the FCA each publish annual reports, which can offer a useful insight into their enforcement actions.
The data in the reports only represents a snapshot of the regulators’ activities, but is...more
Key Points -
The SEC’s Division of Examinations published a risk alert that, in the context of a focus on MNPI, highlighted observed deficiencies related to the use of alternative data by private fund managers and other...more
The New Year Brings a New Enforcement Focus on Emerging Technology -
In 2021, newly confirmed members of the Biden administration set the stage for increased enforcement activity, surging resources to investigations and...more
Key Points -
The DOJ and CFTC have filed insider trading charges against a Houston-based energy trader for allegedly disclosing confidential information to a third party who then used the information to trade profitably....more
Private funds should be prepared for increased oversight from the Securities and Exchange Commission (SEC), following a landmark year of enforcement cases. In 2021, the Commission brought 159 enforcement actions against...more
2/3/2022
/ Enforcement Actions ,
Fiduciary Duty ,
Form PF ,
Fund Managers ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Policies and Procedures ,
Private Equity ,
Private Funds ,
Securities and Exchange Commission (SEC) ,
Securities Violations
Key Points -
The SEC has charged App Annie, Inc. and its former CEO with violations of Section 10(b) of the Exchange Act and Rule 10b-5, which constitute the primary mechanism for enforcing insider trading violations.
This...more
On August 30, 2021, the Securities and Exchange Commission announced three enforcement actions against registered investment advisers for alleged cybersecurity failures involving cloud-based email systems. All three actions...more
The U.S. Securities and Exchange Commission has a long history of adopting novel theories in litigation to convince the courts to expand the scope of the federal insider trading laws.
The SEC's latest effort comes in an...more
8/31/2021
/ Acquisitions ,
Confidential Information ,
Enforcement Actions ,
Insider Trading ,
Material Nonpublic Information ,
Misappropriation ,
Private Funds ,
Rule 10b-5 ,
Scienter ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
Last week, the U.S. Securities and Exchange Commission filed a complaint in federal court in California premised on the novel legal theory that the insider trading laws apply where an insider uses confidential information...more
8/25/2021
/ Acquisitions ,
Confidential Information ,
Enforcement Actions ,
Insider Trading ,
Material Nonpublic Information ,
Misappropriation ,
Private Funds ,
Rule 10b-5 ,
Scienter ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
Key Points -
The SEC and the FCA each publish annual reports on their enforcement actions.
Whilst enforcement data only shows a snapshot of the regulators’ activities, there is much to be learned from these reports,...more
In the last three weeks, the Division of Enforcement of the U.S. Securities and Exchange Commission has filed several complaints and resolved a number of open enforcement actions involving investment advisers. At first...more
Amendments Come on the Heels of Supreme Court Decisions on SEC Disgorgement -
On January 1, 2021, Congress passed the National Defense Authorization Act (NDAA). Embedded in the NDAA’s more than 1,400 pages is Section...more
- On June 23, 2020, the SEC and OCIE issued its latest Risk Alert describing common deficiencies it has observed in recent examinations of registered investment advisers that manage private equity funds or hedge funds.
-...more
7/6/2020
/ Conflicts of Interest ,
Enforcement Actions ,
Fees ,
Hedge Funds ,
Investment Management ,
Non-Public Information ,
OCIE ,
Policies and Procedures ,
Private Equity Funds ,
Registered Investment Advisors ,
Risk Alert ,
Securities and Exchange Commission (SEC)
- In Liu v. SEC, No. 18-1501, the Supreme Court upheld the SEC’s ability to obtain disgorgement as a form of equitable relief in civil actions in federal court, pursuant to 15 U.S.C. § 78u(d)(5).
- However, the Court...more
6/30/2020
/ 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)
- Market participants should review and assess their compliance procedures to prevent and detect insider trading risks associated with COVID-19.
- Companies should increase their vigilance regarding cybersecurity threats...more
4/1/2020
/ CFTC ,
Coronavirus/COVID-19 ,
Cybersecurity ,
Department of Justice (DOJ) ,
Enforcement Actions ,
Financial Crimes ,
Insider Trading ,
Investors ,
Phishing Scams ,
Pump and Dump ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
U.S. Treasury ,
Wire Fraud
Key Points:
The 2nd Circuit has issued a landmark decision for insider trading enforcement that will make it significantly easier for the government to prosecute insider trading in criminal cases.
The decision may also...more
• The Supreme Court will review whether the SEC has the authority to obtain disgorgement in actions to enforce the federal securities laws.
• Since the Supreme Court’s decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017),...more
11/12/2019
/ Administrative Authority ,
Certiorari ,
Disgorgement ,
Enforcement Actions ,
Equitable Relief ,
Kokesh v SEC ,
Lack of Authority ,
Liu v Securities and Exchange Commission ,
Penalties ,
Petition for Writ of Certiorari ,
Regulatory Agencies ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Split of Authority ,
Statute of Limitations
• The United States Supreme Court held that a disseminator of a false statement with intent to defraud can be held liable under subsections (a) and (c) of Rule 10b-5, §10(b) of the Exchange Act and §17(a)(1) of the Securities...more
4/2/2019
/ Appeals ,
Enforcement Actions ,
False Statements ,
Fines ,
Intent to Defraud ,
Investment Banks ,
Lorenzo v SEC ,
Material Dissemination ,
Misleading Statements ,
Reaffirmation ,
Rule 10b-5 ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Suspensions
• The SEC issued guidance in the form of a rare “21(a) report” this week after investigating a series of email frauds impacting 9 unnamed companies.
• These email-based frauds, referred to as “CEO scams” or “vendor scams,”...more
10/19/2018
/ Accounting Controls ,
Business E-Mail Compromise (BEC) ,
CEOs ,
Corporate Finance ,
Cyber Crimes ,
Cybersecurity ,
Data Breach ,
Email ,
Enforcement Actions ,
Internal Controls ,
New Guidance ,
Policies and Procedures ,
Popular ,
Publicly-Traded Companies ,
Scams ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Spoofing ,
Wire Fraud
• The CFTC has filed a new “insider trading” enforcement action involving the energy markets—the agency’s third energy market insider trading case since 2015.
• The CFTC also created an Insider Trading and Information...more
10/3/2018
/ Anti-Fraud Provisions ,
Asset Management ,
Breach of Duty ,
CFTC ,
Commodities ,
Confidential Information ,
Electricity ,
Energy Market ,
Energy Sector ,
Enforcement Actions ,
FERC ,
Insider Trading ,
Market Manipulation ,
Natural Gas ,
Oil & Gas ,
Risk Mitigation ,
Securities Fraud
• The U.S. Securities and Exchange Commission (SEC) staff made official statements regarding when a token may or may no longer be a security
• The SEC continued to bring actions related to cryptocurrency offerings against...more
9/24/2018
/ Anti-Money Laundering ,
Banking Sector ,
Bitcoin ,
Broker-Dealer ,
CFTC ,
Commodities ,
Counter-Terrorist ,
Cryptocurrency ,
Customer Due Diligence (CDD) ,
Digital Currency ,
Disclosure Requirements ,
Enforcement Actions ,
Exchange-Traded Products ,
FATF ,
Financial Institutions ,
FinTech ,
Income Taxes ,
Initial Coin Offering (ICOs) ,
Investment Adviser ,
Investment Company Act of 1940 ,
IRS ,
Jurisdiction ,
Motion to Dismiss ,
National Futures Association ,
Popular ,
Reporting Requirements ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Token Sales ,
Trading Platforms ,
U.S. Treasury ,
Unregistered Securities ,
Virtual Currency ,
Websites
As the U.S. Securities and Exchange Commission (SEC) stated previously, it is continuing to scrutinize and commence enforcement actions against companies, advisors and investors involved in the offering of cryptocurrencies...more
9/19/2018
/ Bitcoin ,
Blockchain ,
Broker-Dealer ,
CFTC ,
Cryptocurrency ,
Department of Justice (DOJ) ,
Digital Currency ,
Distributed Ledger Technology (DLT) ,
Enforcement Actions ,
False Statements ,
Financial Industry Regulatory Authority (FINRA) ,
Financial Services Industry ,
Fraud and Abuse ,
Hedge Funds ,
Initial Coin Offering (ICOs) ,
Investors ,
Misleading Statements ,
Publicly-Traded Companies ,
Registration Statement ,
Securities Act ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Shareholder Litigation ,
Token Sales ,
Virtual Currency
• SEC ALJs are “Officers of the United States” within the meaning of the Appointments Clause and therefore must be appointed directly by the SEC. The Court’s decision may permit litigants in prior and pending administrative...more
6/26/2018
/ Administrative Agencies ,
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)
• A New York federal judge held that virtual currencies are commodities within the meaning of the Commodity Exchange Act.
• This marks the first court decision to assess and to adopt the CFTC’s position that virtual...more
3/14/2018
/ CFTC ,
Commodities ,
Commodity Exchange Act (CEA) ,
Consumer Protection Act ,
Cryptocurrency ,
Currency Manipulation ,
Enforcement Actions ,
Fraud ,
Jurisdiction ,
Preliminary Injunctions ,
Securities and Exchange Commission (SEC) ,
Virtual Currency