Crowdfunding is a popular and controversial form of selling securities using the internet. Prior to the passage of the JOBS Act, which was designed to facilitate capital formation for small companies, such sales generally...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
Rochdale Securities LLC, at one time a small Commission registered broker-dealer based in Stamford, Connecticut, is perhaps best known as the firm where a registered representative and his customer placed orders for over 1.6...more
The SEC took the unusual step of citing the inadequacy of the books and records of the firm for “adversely impacting” its investigation and “causing unreasonably prolonged uncertainty concerning” the company’s historic...more
A continuing focus of SEC enforcement is compliance by entities with their disclosed procedures. The Commission’s latest action in this regard resulted in the payment of $6 million by a Credit Rating Agency that not only...more
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)
Self-dealing and undisclosed conflicts are a central theme of many of the enforcement actions brought recently by the SEC. Those themes are the predicate for the Commission’s action which centers on an investment manager who...more
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 brought another enforcement action predicated on the failure of the firm to comply with its operating documents. In this instance the advisers to a fund failed to inform investors that it effectively changed the...more
The Commission accepted a settlement offer from one of three Respondents in an offering fraud action. It was based in part on cooperation and an undertaking to appear and testify for the staff in the future. In resolving 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
Broken Windows – the SEC initiative cloned from the NYC Police Department which prosecutes every case large and small based on the a deterrence theory – is alive and well in the form of the Rule 105 Initiative. This week the...more
The Commission brought its first case tied to inadequate disclosure regarding structured notes. The complex instruments, a debt security linked to a derivative tied to the performance of other products, are frequently...more
10/14/2015
/ Banking Sector ,
Cease and Desist Orders ,
Debt Securities ,
Derivatives ,
Disgorgement ,
Enforcement Actions ,
Failure To Disclose ,
Prejudgment Interest ,
Securities and Exchange Commission (SEC) ,
Structured Financial Products ,
UBS
The SEC prevailed on summary judgment motions in two fraud actions. One is a pump-and-dump manipulation scheme. The other is a prime bank fraud. First, SEC v. Farmer, Civil Action No. 4:14-cv-02345 (S.D. Tx. Filed August 14,...more
The PCAOB filed a settled action involving an auditing firm in which the consent order of settlement was based on admissions of facts. The approach is similar to the one adopted by the SEC in which the Commission requires...more
10/9/2015
/ Accounting Fraud ,
Auditors ,
Bristol-Myers Squibb ,
Consent Order ,
Disclosure ,
Enforcement Actions ,
Financial Conduct Authority (FCA) ,
Foreign Corrupt Practices Act (FCPA) ,
Insider Trading ,
Misrepresentation ,
PCAOB ,
Price Manipulation ,
Related Parties ,
Spoofing ,
UK ,
Whistleblowers
The SEC’s Asset Management Unit continues to review and analyze fees, expenses and the related disclosure at private equity firms. The Unit has encouraged advisers to self-report these issues. The most recent action emanating...more
Since at least the market crisis there has been a clamor to convict senior corporate officials of federal felonies – or at least name them in a civil law enforcement action by the SEC or another agency. For years the...more
10/7/2015
/ C-Suite Executives ,
Cooperation ,
Corporate Management ,
Corporate Misconduct ,
Corporate Officers ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Government Investigations ,
Law Enforcement ,
White Collar Crimes ,
Yates Memorandum
The SEC filed another action centered on a restatement resulting from improper accounting and internal controls. In this instance the firm lacked procedures for dealing with related party transactions despite contrary...more
10/7/2015
/ Accounting Controls ,
Audit Committee ,
Cayman Islands ,
Cease and Desist Orders ,
Enforcement Actions ,
GAAP ,
Internal Controls ,
Mortgage Servicers ,
Related Parties ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
FCPA procedures, internal controls and travel, entertainment and gifts were at the center of the SEC’s latest FCPA action. The action names as a Respondent Bristol-Myers Squibb Company and focuses on its efforts to sell...more
10/6/2015
/ Bristol-Myers Squibb ,
China ,
Civil Monetary Penalty ,
Consent Order ,
Disgorgement ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Internal Controls ,
Meals-Gifts-and Entertainment Rules ,
Pharmaceutical Industry ,
Prejudgment Interest ,
Securities and Exchange Commission (SEC)
Suits challenging the SEC’s forum selection decisions continue to proliferate. As the trend has unfolded the Commission posted a memo on its website discussing the issue of forum selection and has proposed modifications to...more
10/5/2015
/ Administrative Hearings ,
Administrative Law Judge (ALJ) ,
Administrative Procedure Act ,
Bebo v SEC ,
Chevron Deference ,
Dismissals ,
Dodd-Frank ,
Due Process ,
Enforcement Actions ,
Equal Protection ,
Fifth Amendment ,
Forum Selection ,
Investment Adviser ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
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 SEC filed a settled insider trading case which names as defendants two attorneys, an accountant and two other individuals. The action is based on information misappropriated from a corporate director by his personal...more
When the bond market collapsed in Puerto Rico many clients at UBS Financial Services Incorporated of Puerto Rico had significant losses. Many had purchased shares of UBS PR closed-end funds or CEFs. UBSPR had been selling...more
9/30/2015
/ Arbitrage ,
Banks ,
Bonds ,
Cease and Desist Orders ,
Closed-End Funds ,
Corporate Fines ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Fraud ,
Internal Investigations ,
Letter of Credit ,
Puerto Rico ,
Securities and Exchange Commission (SEC) ,
UBS
The SEC filed a settled FCPA books and records and internal controls action centered on a firm which used a subsidiary partially owned by a foreign political party to influence the award of government contracts. Specifically,...more
9/29/2015
/ Books & Records ,
Due Diligence ,
Energy Market ,
Enforcement Actions ,
Foreign Corrupt Practices Act (FCPA) ,
Hitachi ,
Internal Controls ,
Lobbying ,
Permanent Injunctions ,
Political Parties ,
Power Plants ,
Securities and Exchange Commission (SEC) ,
Shareholders' Agreements ,
Subsidiaries