The ruling: The Supreme Court significantly limited the SEC’s ability to seek disgorgement. Specifically, the Court held that any award must be limited to the wrongdoer’s “net profits” and be awarded “for victims.”...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)
Any firm marketing COVID related services, or that has applied for or obtained benefits under recently enacted legislation tied to the virus, should carefully examine their activities in this area in view of the regulatory...more
Regulation Best Interest, born of a long debate over the appropriate standard to govern recommendations by broker-dealers, is now the subject of an OCIE Risk Alert. The staff is preparing to launch its first inspection for...more
Inspections for compliance with Form CRS and its rules will begin after the June 30, 2020 filing date, according to an OCIE Risk Alert dated April 7, 2020. The Alert identifies key areas the staff will be examining regarding...more
The first quarter of 2020 ended with the markets plummeting to new lows and much of the country shuttered in an effort to avoid transmitting COVID-19. SEC Enforcement finished the quarter by not filing any new cases in the...more
On March 13, 2020, the Securities and Exchange Commission (SEC), indicating that it is closely monitoring the impact of coronavirus on investors, funds and advisers, announced regulatory relief for funds and investment...more
3/16/2020
/ Annual Meeting ,
Coronavirus/COVID-19 ,
Corporate Governance ,
Disclosure Requirements ,
Filing Deadlines ,
Filing Requirements ,
Investment Adviser ,
Investment Company Act of 1940 ,
Investment Funds ,
Registered Investment Companies (RICs) ,
Relief Measures ,
Securities and Exchange Commission (SEC) ,
Virtual Meetings
Liu v. SEC, No. 18-15-1, argued before the Court last week, is potentially one of the most important cases to be heard by the Supreme Court on SEC Enforcement. The question under consideration is whether the Securities and...more
3/12/2020
/ 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 SEC’s Office of Compliance Inspections and Examinations published a series of observations gleaned from thousands of exams over a period of years. While OCIE’s charge is the inspection of certain SEC registrants the...more
The Exam Priorities of the SEC’s Office of Inspections and Compliance or OCIE, announced on January 7, 2020 (the “Exam Priorities”), should be a key area of focus for every investment advisor and investment company. The Exam...more
1/15/2020
/ Bank Secrecy Act ,
Broker-Dealer ,
Compliance ,
Customer Due Diligence (CDD) ,
Cybersecurity ,
Data Protection ,
Financial Industry Regulatory Authority (FINRA) ,
FinTech ,
Investment Adviser ,
Libor ,
MSRB ,
Municipal Advisers ,
OCIE ,
Registered Investment Advisors ,
Retail Investors ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Suspicious Activity Reports (SARs)
The CFTC Division of Enforcement filed its Third Annual Report at the end of November 2019, reviewing the fiscal year. The Report is the typical mixture of goals, statistics, analysis and initiatives. Overall it offers...more
Earlier this year the SEC’s Enforcement Division published its annual report, reviewing FY 2019 which ended on September 30, 2019. As in the past, the Report reviewed not just the statistics from the year but also the entire...more
A key focus of SEC enforcement has been the retail investor. To that end the Division formed a special unit to focus on cases tied to those investors. Numerous cases have been brought. That focus may also be at least in part...more
Uneconomic trading in regulated markets is a key focus of market regulators such as the DOJ, SEC, CFTC and FERC. Traders at times, for example, take different positions in select markets which can result in losses in one...more
The Supreme Court granted certiorari in a case that may well have a very significant impact on the remedies available in Commission enforcement actions: Liu v. Securities and Exchange Commission, No. 18-1501 (Cert. granted...more
11/8/2019
/ 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
Crypto currency began with the notion of getting “off the grid” – escaping the regulators and not being regulated. Over time that notion has transmuted. Now platforms trading crypto assets proclaim that the “revolution needs...more
10/18/2019
/ Blockchain ,
CFTC ,
Commodities ,
Cryptocurrency ,
Digital Assets ,
Distributed Ledger Technology (DLT) ,
FinCEN ,
Investment Contract ,
Registration Requirement ,
Regulatory Oversight ,
Securities Act of 1933 ,
Securities Violations ,
Unregistered Securities ,
Virtual Currency
The remedy of choice for the SEC Enforcement Division has always been the statutory injunction. For many years the only remedy available to the Division was the obey-the-law statutory injunction....more
10/16/2019
/ Appeals ,
Broker-Dealer ,
Disgorgement ,
Enforcement Actions ,
Enforcement Authority ,
Injunctions ,
Kokesh v SEC ,
Penny Stocks ,
Pump and Dump ,
Remand ,
Remedies ,
Reversal ,
Securities and Exchange Commission (SEC) ,
Statute of Limitations
SEC Chairman Jay Clayton called for greater international cooperation in the enforcement of anti-corruption statutes such as the Foreign Corrupt Practices Act in remarks delivered before the Economic Club of New York on...more
Regulation Fair Disclosure was passed in 2002 to fill what many saw as a regulatory gap – the selective disclosure of material non-public information by issuers. Essentially the Regulation – now known as Reg FD – requires a...more
8/28/2019
/ Disclosure Requirements ,
Enforcement Actions ,
FDA Approval ,
Food and Drug Administration (FDA) ,
Form 8-K ,
Material Nonpublic Information ,
Non-Public Information ,
Pharmaceutical Industry ,
Publicly-Traded Companies ,
Regulation FD ,
Securities and Exchange Commission (SEC) ,
Securities Violations
The bribery provisions of Exchange Act Section 30A are one of the three critical components of the Foreign Corrupt Practices Act. The other two are the books and records and the internal control requirements....more
8/16/2019
/ Appeals ,
Books & Records ,
Bribery ,
Criminal Convictions ,
Criminal Prosecution ,
Foreign Corrupt Practices Act (FCPA) ,
Foreign Official ,
Internal Controls ,
Quid Pro Quo ,
Securities Exchange Act ,
United Nations
Traditionally the jurisdiction of the CFTC has been tied to the futures markets. Contracts for future delivery were within the reach of the agency and its regulatory regime....more
The Department of Justice and the Securities and Exchange Commission have repeatedly focused on corporate compliance in recent years as a way to mitigate liability. Neither the DOJ nor the SEC is about to recognize a...more
Crypto currency has been all the fashion. Most proponents that have been confronted by a regulator – the SEC or CFTC generally – have quickly resolved the matter. Few have tried to litigate with the agencies and those who...more
2/22/2019
/ Cryptocurrency ,
Discovery ,
Enforcement Actions ,
Howey ,
Initial Coin Offering (ICOs) ,
Motion for Reconsideration ,
Preliminary Injunctions ,
Rule 11 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Unregistered Securities
The SEC's Office of Compliance Inspections and Examinations (“OCIE” or the “Office”) announced its 2019 Examination Priorities just before Christmas and the current Government partial-shutdown (here). While nonemergency...more
1/10/2019
/ Anti-Money Laundering ,
Chief Compliance Officers ,
Compliance ,
Conflicts of Interest ,
Cybersecurity ,
Excessive Fees ,
Financial Industry Regulatory Authority (FINRA) ,
Government Shutdown ,
MSRB ,
OCIE ,
Portfolio Managers ,
Retail Investors ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC)
Individual responsibility and accountability became a critical issue in the wake of the great financial crisis. From Capitol Hill to the cross-streets of small-town America it frequently seemed that the question of the day...more
Cyber-security has become – or perhaps should be – a key area of concern for every enterprise. The risks are substantial for the firm, its shareholders, executives and customers as recent cases illustrate....more