Blog Archives

This Week In Securities Litigation (Week ending March 24, 2017)

The number of settlements in securities class actions increased last year, according to Cornerstone Research. That fact, along with a finding that the amount of those settlements also increased, is detailed in the firm’s latest report on securities class actions.

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Securities Class Action Settlements: Dollars, Numbers Are Up

The trends in securities class actions are up. The number of cases filed last year was up as previously reported. The number of settlements in 2016 was up. The amount of those settlements was up. The number of mega settlements

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Securities Law Recidivist Pleads Guilty in Offering Fraud Case

The Commission and the DOJ have recently brought a number of securities fraud cases in which a key person in the misconduct concealed a prior criminal conviction for securities related offenses from investors. Another case in this series was announced

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This Week In Securities Litigation (Week ending March 17, 2017)

The Commission brought two insider trading cases this week, one which is being litigated and another that settled prior to filing. The agency also brought a financial fraud action against five firm executives who essentially devised a series of schemes

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SEC Brings Two Insider Trading Cases

The Commission filed two insider trading cases in the last two days where the person with access to the inside information traded and profited. One case is being litigated in federal district court. SEC v. Alpert, Civil Action No. 1:17-cv-01876

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SEC Charges Trader, Broker In Spoofing – Cross-Market Manipulation

The Commission’s latest market manipulation action centers on a foreign trading firm with an undisclosed owner and a U.S. broker-dealer where the undisclosed owner was imbedded as a registered representative, facilitating the scheme. The foreign trading firm became the broker’s

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SEC Charges Five Senior Executives With Financial Fraud

Five executives took advantage of their employer’s weak internal controls to repeatedly misappropriate funds, causing a loss of over $11 million over a four year period beginning in 2008. The scheme was discovered when a firm executive reported it to

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Ninth Circuit Widens Split on Dodd-Frank Whistleblower Provisions

The Ninth Circuit joined the Second Circuit in concluding that the Dodd-Frank whistleblower provisions protect from retaliation those who report internally at the company but not to the SEC, despite the literal language of the statute. In reaching this conclusion

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This Week In Securities Litigation (Week ending March 10, 2017)

This week the Commission brought three actions. One, a financial fraud case, centered on one of Mexico’s largest home builder that inflated sales numbers. A second was brought against an investment adviser who failed to disclose certain conflicts arising from

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The SEC, Financial Fraud and Restatements

Financial fraud actions have long been a staple of SEC Enforcement. Following Arthur Levitt’s famous “Numbers Game” speech in 1997 for example, the Commission brought a series of blockbuster financial fraud actions that spurred the passage of The Sarbanes-Oxley Act

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Sky Pilot Replaces SEC’s RoboCop

The SEC has become “Sky Pilot” (borrowed from the rock song sung by Eric Burden and The Animals) in an effort to fret out financial fraud. In the past evidence of financial fraud may have come from a whistleblower. Staff

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This Week In Securities Litigation (Week ending March 3, 2017)

The Commission prevailed in another trial. The action centered on fraud in connection with a securities lending transaction. The agency also brought another suspicious trading case this week. The action centered on the acquisition by Softbank of Fortress Investments in

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Insider Trading Conviction Upheld by First Circuit

Salman v. U.S., 136 S.C. 899 (2016) presented issues regarding the personal benefit test and gifting in the context of an insider trading tipping case. Ultimately the High Court focused on the question of gifting material non-public information concluding that

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SEC Prevails in Another Trial

The Commission prevailed in another trial last week with a jury finding in its favor and against the defendant. This action centered on misrepresentations made by a borrower to a broker in connection with margin loans. SEC v. Hall, Civil

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This Week In Securities Litigation (Week ending Feb. 24, 2017)

NERA issued a report this week on Canadian class actions. Although the number of those actions filed last year increased compared to the year before, over the last several years the number of securities class actions filed in Canada has

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The Filing of Canadian Securities Class Actions Increased in 2016

The filing of securities class actions increased significantly last year in the U.S. In Canada the number of such actions filed also increased last year. Over the last two years in Canada however, the number of securities class actions filed

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SEC Secures Split Decision in Insider Trading Trial

The SEC received a split decision from a jury in an insider trading case that spawned three separate enforcement actions and ten different traders. The jury found in favor of the Commission and against one first tier tippee – one

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Were SEC ALJs Appointed In Violation of the Constitution?

Challenges to the SEC’s authority to move its enforcement program in-house before Administrative Law Judges and out of the federal courts just took a new turn. While the SEC had one win on challenges to the appointment of its ALJs

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Happy Presidents’ Day!

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This Week In Securities Litigation (Week ending Feb. 17, 2017)

Morgan Stanley settled another case with the Commission this week. This time its brokerage unit resolved an action centered on the improper sales of ETFs, admitting the facts in the Order. The Commission also brought another suspicious trading case last

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Exchange Act Sections 13(d), 14(d) and 16(a): A New SEC Focus?

The Exchange Act requires that certain disclosures be made by significant shareholders and those seeking to make a tender offer. Section 13(d), for example, requires those acquiring a stake of 5% or more to make certain disclosures. Section 14(d) governs

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SEC Sanctions Broker For No Procedures and then Inadequate Procedures

The Commission has brought an increasing number of enforcement actions focused on either a failure to comply with firm procedures or for inadequate procedures. In many instances the actions arise from inspections by OCIE. The SEC’s latest case in this

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SEC Wins Freeze of $29 Million in Alleged Insider Trading Profits

Insider trading is a key enforcement priority as well as a controversial topic. The U.S. Attorney’s Office in Manhattan and the SEC have brought a series of highly successful and high profile insider trading cases. As those cases unfolded controversy

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This Week In Securities Litigation (Week ending Feb. 10, 2017)

Three of the six actions filed this week by the Commission were against registered investment advisers. One involved the misappropriation of funds, another centered on the failure to disclose a related party transaction and a third was based on the

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IA Sanctioned Based On Risk Areas In OCIE Alert

The Commission’s inspection staff – OCIE – issued an Alert about its national inspection program earlier this week, highlighting risk areas for investment advisers. Any adviser facing an inspection would do well to review the alert (here). That point is

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SEC’s OCIE Issues Alert on Key Compliance Issues

A Risk Alert regarding its National Exam Program was issued by the SEC’s Office of Compliance Inspections and Examinations or OCIE. Drawing from its prior exam experience, OCIE identified five key areas of risk for investment advisers. Each point is

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SEC Drops Market Crisis Case When Faced With Retrial

The Commission dropped an action against two senior executives of Thornburg Mortgage, Inc. rather than retry the market crisis era case. In the initial trial a jury found in favor of the two executives on a number of counts but

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Jury Fails To Convict JPMorgan Analyst of Insider Trading

Prosecutors, and perhaps the SEC, received a set back last in their war on insider trading as former J.P. Morgan Securities LLC analyst Ashish Aggarwal was found not guilty on 26 counts based on an insider trading scheme. The jury

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This Week In Securities Litigation (For the week ending Feb. 3, 2017)

The SEC is an agency in transition. There are three open slots on the agency waiting to be filled by the President and the Senate. Many of the senior staff positions are also now open including the Director of the

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Securities Class Action Filings Increased Significantly in 2016

There was a significant increase in the number of securities class actions filed in 2016. It is the second straight year of increased filings, according to reports prepared by Cornerstone Research and NERA Economic Consulting. While each firm reports slightly

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SEC: Plan to Invest in Hamilton Tickets a Fraud

People are always searching for the next great thing; the next great innovation; the next great adventure; and the next great investment. Often it is the search for that safe, sure thing return; the one where the investment can’t be

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