Insider trading is generally viewed through one of two lenses. The first is the classic model. There a company insider learns information which constitutes material non-public information about his or her employer and either...more
The Commission frequently increases the rate at enforcement actions are filed in advance of the September 30th fiscal year end. That fiscal year end is followed by Congressional budget hearings where statistics are at least...more
In recent years the SEC has brought a series of investment and offering fraud actions. Typically those actions center on schemes which promise to-good-to-be-true returns in which investors lose substantial sums. In what may...more
This week the SEC brought six actions tied to the failure of a rapidly growing enterprise to maintain the proper internal controls. The agency also brought two proceedings tied to municipal bond offerings and one insider...more
3/11/2016
/ Enforcement Actions ,
False Statements ,
Insider Trading ,
Internal Controls ,
JPMorgan Chase ,
Misappropriation ,
Municipal Bonds ,
Offering Statements ,
Securities and Exchange Commission (SEC) ,
Securities Litigation ,
Unregistered Brokers ,
Wells Fargo
The SEC prevailed at trial, winning a jury verdict is an unusual insider trading case against a former Capital One Financial Corporation employee. SEC v. Huang, Civil Action No. 15-cv-269 (E.D. Pa. Filed Jan. 22, 2015)....more
The Commission closed out the week before the holidays with a joint press conference with the Manhattan U.S. Attorney. The U.S. Attorney and the Director of Enforcement announced actions against former hedge fund manager and...more
The SEC’s apparent preference for administrative proceedings as a venue for its enforcement actions continues to draw criticism. H.R. 3798 is now pending in the House of Representatives. The bill is tilted the “Due Process...more
10/30/2015
/ Administrative Authority ,
Administrative Hearings ,
Australia ,
Best Execution ,
Cease and Desist Orders ,
CFTC ,
Conflicts of Interest ,
Due Process ,
Enforcement Actions ,
Failure To Disclose ,
Fraud ,
Hong Kong ,
Insider Trading ,
Investment Funds ,
JOBS Act ,
Mary Jo White ,
Misappropriation ,
Offering Fraud ,
Price Manipulation ,
Rating Agencies ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
The scheme was perfect. Broker Vladimir Eydelman of Oppenheimer & Co. would place the trades; law school graduate Steven Metro, a clerk at Simpson Thatcher, would misappropriate the inside information; mortgage broker Frank...more
The Manhattan U.S. Attorney announced the filing of motions to dismiss the insider trading conviction of Michael Steinberg, formerly a portfolio manager at SAC Capitol, and six others in the wake of the Second Circuit’s...more
10/23/2015
/ Australia ,
CFTC ,
Discounts ,
Enforcement Actions ,
Enforcement Statistics ,
Failure To Disclose ,
Financial Industry Regulatory Authority (FINRA) ,
Forum Selection ,
Insider Trading ,
Misappropriation ,
Motion to Dismiss ,
Offering Fraud ,
Securities and Exchange Commission (SEC)
The Commission filed another action in which admissions were required as part of the settlement. The action centeres on an investment adviser who misappropriated just under $2 million from his clients. As part of the...more
The SEC prevailed on two summary judgment motions. One centered on a manipulation action. The other was against an attorney who facilitated a prime bank fraud.
The Commission also filed: An action against UBS tied to its...more
10/16/2015
/ Administrative Proceedings ,
Australia ,
Bank Fraud ,
Board of Directors ,
Broker-Dealer ,
Cease and Desist Orders ,
Corporate Governance ,
Crisis Management ,
Disclosure Requirements ,
Disgorgement ,
Enforcement Actions ,
Fraud ,
Hong Kong ,
Insider Trading ,
Investment Advisers Act of 1940 ,
Investment Funds ,
Market Manipulation ,
Misappropriation ,
Misrepresentation ,
PCAOB ,
Penalties ,
Permanent Injunctions ,
Pump and Dump ,
Registered Investment Advisors ,
Risk Management ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Fraud ,
Securities Litigation ,
Serious Fraud Office (SFO) ,
Shareholders ,
UK
September 30th Madness dominated this week. The drive for stats was evident as the Commission stacked up cases like cord wood at a pace seldom seen. Twenty-two municipal bond actions were filed in one swoop; an insider...more
10/2/2015
/ Accounting Fraud ,
CFTC ,
Enforcement Actions ,
False Statements ,
Foreign Corrupt Practices Act (FCPA) ,
Insider Trading ,
Investment Funds ,
Misappropriation ,
Municipal Bonds ,
Offering Fraud ,
PCAOB ,
Price Manipulation ,
Pyramid Schemes ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Self-Dealing ,
Whistleblower Awards
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 Commission chose to appeal the decision in Hill v. SEC in which the Court held that the manner in which SEC Administrative Law Judges are retained violates the Appointment Clause of the Constitution. While the Court...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
This week Senator Elizabeth Warren forwarded a 13 page letter to SEC Chair White regarding her performance in office. The letter highlighted what it calls a “significant gap” between the promises of Ms. White at the time she...more
6/6/2015
/ CFTC ,
Dodd-Frank ,
Fraud ,
Hong Kong ,
Insider Trading ,
Investment Funds ,
Market Manipulation ,
Mary Jo White ,
Misappropriation ,
Misrepresentation ,
Offering Fraud ,
Securities and Exchange Commission (SEC) ,
Serious Fraud Office (SFO) ,
UK
This is the fourth segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases.
Post Newman SEC Actions (continued) -
2. Administrative proceedings...more
6/3/2015
/ Administrative Hearings ,
Enforcement Actions ,
Illegal Tipping ,
Insider Trading ,
Material Nonpublic Information ,
Misappropriation ,
Personal Benefit ,
SCOTUS ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Tender Offers ,
US v Newman
The Commission filed and insider trading case in tandem with the Manhattan U.S. Attorney’s Office against a father and son based on repeated trades in advance of deal announcements even after FINRA initiated an investigation...more
The debate over waivers WKSI waivers and other similar provisions continued this week. The Commission granted a WKSI waiver to Deutsche Bank despite a guilty plea to criminal felony charges but only over the dissent of...more
5/8/2015
/ Australia ,
Banks ,
CFTC ,
Deutsche Bank ,
Enforcement ,
Enforcement Actions ,
EU ,
Financial Institutions ,
Hong Kong ,
Investment Funds ,
JPMorgan Chase ,
Mining ,
Misappropriation ,
PCAOB ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
WKSIs
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)
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 ,
Financial Industry Regulatory Authority (FINRA) ,
Hong Kong ,
Illegal Tipping ,
Insider Trading ,
Internal Controls ,
Kraft ,
Misappropriation ,
Personal Benefit ,
Petition For Rehearing ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
UK ,
US v Newman ,
Whistleblowers
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
Insider trading cases are built on two basic theories. Under the traditional, classic model, a corporate insider uses material, non-public information obtained from his or her employer to trade in shares of the company –...more
Four SEC Commissioners addressed the annual SEC Speaks Conference, reviewing recent agency initiatives and tracing potential paths for the future. The SEC also brought another FCPA action, a misappropriation case and an...more
2/27/2015
/ Anti-Corruption ,
Australia ,
Bribery ,
Broker-Dealer ,
Compliance ,
Enforcement ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Fraud ,
Goodyear ,
Investment Funds ,
Mail Fraud ,
Misappropriation ,
Penny Stocks ,
Ponzi Scheme ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Unregistered Securities ,
Wire Fraud
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