In a burst of post-Labor Day energy, the SEC filed a number of significant actions. Those include a series of actions arising out of the audit failure by BDO; actions centered on a financial fraud at an on-line lender; cases...more
9/11/2015
/ Advertising ,
Audits ,
CFTC ,
Consumer Lenders ,
Disclosure Requirements ,
Enforcement Actions ,
Executive Compensation ,
False Advertising ,
Financial Institutions ,
Foreign Corrupt Practices Act (FCPA) ,
Foreign Official ,
Fraud ,
Insider Trading ,
Investment Adviser ,
Investment Funds ,
Misrepresentation ,
Offering Fraud ,
PCAOB ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Unregistered Securities
The Sixth Circuit last week concluded that Morrison, which held that Section 10(b) does not have extraterritorial reach, is inapplicable to Advisers Act Section 10(b). The DC Circuit, on rehearing, reaffirmed its prior...more
8/28/2015
/ Appeals ,
Charles Schwab ,
Conflict Mineral Rules ,
Disclosure Requirements ,
Dodd-Frank ,
EB-5 ,
Enforcement Actions ,
Extraterritoriality Rules ,
False Statements ,
Financial Industry Regulatory Authority (FINRA) ,
First Amendment ,
Fraud ,
Insider Trading ,
Investment Adviser ,
Misappropriation ,
NAM ,
NAM v SEC ,
Net Capital Rule ,
Offering Fraud ,
Securities and Exchange Commission (SEC)
The SEC and the Department of Justice announced insider trading charges against a former investment banker and his long time friend centered on two deals. The SEC’s complaint also named a third person alleged to have been a...more
In Morrison v. National Australia Bank, Ltd., 561 U.S. 247 (2010) the Supreme Court held that the reach of Exchange Act Section 10(b) is the water’s edge of the United States. Specifically, the court held that the Section...more
8/24/2015
/ Bermuda ,
Fraud ,
Hedge Funds ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Morrison v National Australia Bank ,
RICO ,
Rule 10(b) ,
SCOTUS ,
Securities Exchange Act ,
Wire Fraud
Failure to disclose conflicts of interest and/or to comply with firm procedures are the predicates for a series of SEC enforcement actions involving regulated entities. The most recent example of these trends is an action...more
The Government filed its long awaited Petition for a Writ of Certiorari with the Supreme Court in the Newman insider trading case. The Petition presents three key issues which were generally presaged in the request for...more
8/3/2015
/ Criminal Prosecution ,
Dell ,
Hedge Funds ,
Illegal Tipping ,
Insider Trading ,
Investment Adviser ,
Material Nonpublic Information ,
NVIDIA ,
Personal Benefit ,
Petition for Writ of Certiorari ,
Securities and Exchange Commission (SEC) ,
US v Newman
The Commission has brought a series of cases focused on undisclosed conflicts of regulated entities. A number of those cases centered on undisclosed fee and compensation arrangements. In its most recent case the agency went...more
When does a 180 day deadline not mean that in 180 days time is up? Answer: When the SEC says so and the DC Circuit gives the conclusion Chevron deference. That is the holding of Montford and Company, Inc. v. SEC, No. 14-1126...more
When the SEC announced it financial fraud task force and a related data initiative to facilitate the identification of situations where the company “cooked the books,” many dubbed the data program “Robocop.” While the SEC may...more
The SEC brought another custody rule action this week – against the outside auditors alleging that one examination was insufficient and the others incomplete thereby causing the client to violate the surprise audit...more
6/26/2015
/ Auditors ,
Australia ,
Australian Securities and Investments Commission ,
Brokers ,
EB-5 ,
Enforcement ,
Enforcement Actions ,
Investment Adviser ,
Investment Fraud ,
Securities and Exchange Commission (SEC) ,
Unregistered Brokers
SEC Commissioner Daniel Gallagher published a statement explaining his dissent in two recent enforcement actions in which the Chief Compliance Officer of an investment adviser was charged, noting that the trend in such...more
The SEC filed two actions centered on an advisory firm that serves on high net worth individuals, primarily current and former professional athletes. The actions are based on the theft of client funds and a failure to...more
The question of forum selection by the SEC was a key issue this week. While to date suits challenging the SEC’s right to bring an action as an administrative proceeding rather than in federal court have had little success –...more
6/13/2015
/ Administrative Hearings ,
Administrative Law Judge (ALJ) ,
Appointments Clause ,
Article II ,
Australia ,
Australian Securities and Investments Commission ,
Broker-Dealer ,
Brokers ,
CFTC ,
Delegation Doctrine ,
Department of Justice (DOJ) ,
Derivatives ,
Enforcement Actions ,
False Statements ,
Forum Selection ,
Injunctions ,
Insider Trading ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Investment Funds ,
Investment Management ,
Rule 105 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Settlement ,
Seventh Amendment
The SEC charged another investment professional with fraud and self-dealing. SEC v. Ahmed, Civil Action No. 3:15-cv-00675 (D. Conn. Filed May 5, 2015). Defendant Iftikar Ahmed is an investment professional who was a partner...more
The SEC announced its first whistleblower award in a retaliation case this week. The agency also brought an insider trading case, an action against an investment adviser, its general counsel and auditor based on a conflict, a...more
5/1/2015
/ Australia ,
Banks ,
Books & Records ,
Conflicts of Interest ,
Criminal Prosecution ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Insider Trading ,
Investment Adviser ,
Retaliation ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Whistleblower Awards ,
Whistleblowers
Conflicts of interest are a central focus for the SEC. Indeed, conflicts are at the core of many of the actions brought against regulated entities. And, an undisclosed conflict was at the center of actions brought against a...more
Conflicts of interest involving market professionals continue to be a focus of SEC enforcement. In many cases the conflict is uncovered by the inspection staff, OCIE. This time, however, the information came from an article...more
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 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Litigation ,
Serious Fraud Office (SFO)
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 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Waivers ,
WKSIs
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 ,
Securities and Exchange Commission (SEC) ,
Short Sales ,
UK
Recently Julie M. Rieve, Co-chief, Asset Management delivered remarks titled Conflicts, Conflicts Everywhere to the IA Watch 17th Annual IA Watch Compliance Watch Conference (Feb. 26, 2015)(here). Conflicts are in fact the...more
Yesterday’s article reviewed the remarks of SEC Chair Mary Jo White and Commissioner Kara M. Stein at SEC Speaks. The article today reviews the remarks at the conference of Commissioners Michael S. Piwowar and Daniel M....more
The Commission recently filed an amicus brief defending its Dodd-Frank whistleblower rules. Those rules specify that the anti-retaliation provisions of those amendments to the Exchange Act protect those who chose not to...more
2/20/2015
/ Anti-Retaliation Provisions ,
Bid Rigging ,
Bitcoin ,
Dodd-Frank ,
Insider Trading ,
Investment Adviser ,
Investment Funds ,
Misappropriation ,
Municipal Securities Market ,
Oppenheimer & Co. ,
Pyramid Schemes ,
Securities and Exchange Commission (SEC) ,
Whistleblowers
The SEC and FINRA announced the priorities for their examination programs from 2015 this week. The SEC priorities build in several respects on those from the prior year. They are divided into four areas which, to some extent,...more
The SEC claims that an individual that controlled several entities including an investment fund created phony consumer loans to funnel investor cash to his faltering financial operations rather than investing the money in...more