Blog Archives

This Week In Securities Litigation (Week ending January 13, 2017)

FCPA enforcement was a key priority this week. The Commission filed two settled actions. Once involved a recidivist in which the firm made admissions in resolving the matter with the DOJ. Those admissions were essentially adopted by the SEC in

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This Week In Securities Litigation (Holiday edition – period from December 23, 2016 to January 6, 2017)

Questions regarding the validity of SEC ALJs continue to be a key focus for SEC enforcement. The Tenth Circuit concluded that the retention of SEC ALJs violated the Constitution’s Appointment Clause, setting up a potential conflict in the circuits that

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This Week In Securities Litigation (Week ending December 23, 2016)

As the Christmas and holiday season approaches, the SEC brought a series of actions. Those included two settled FCPA actions filed in tandem with the DOJ, one of which also involved foreign regulators and the payment of about $3.5 billion.

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DOJ, SEC, Foreign Authorities Settle FCPA Claims with Brazilian Firms For $3.5 Billion

Braskem S.A., a Sao Paulo based producer of petrochemicals and thermoplastic product whose ADRs are traded on the NYSE, and its controlling shareholder, Odebrecht S.A., a privately held Brazilian international construction firm, resolved FCPA bribery charges with the SEC, the

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SEC Claims 2,000 Exchange Listed Stocks Manipulated 23,000 Times

Stock manipulations often take place in the over-the-counter markets which are less regulated than major exchanges such as the New York Stock Exchange and NASDAQ. Frequently the manipulations are raw pump-and-dumps where the promoters hold a large or even a

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The Supreme Court Reaffirms Dirks In Salman

The Supreme Court handed down its first decision on insider trading in years, affirming the conviction of Bassam Salman for insider trading in violation of Exchange Act Section 10(b). Salman v. United States, No. 15-628 (December 6, 2016). The unanimous

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SEC Charges IT Specialist With Hacking His Firm To Insider Trade

The critical questions about insider trading currently being debated focus on the elements of tipping. Those elements are being considered by the Supreme Court in U.S. v. Salman. Sometimes, however, insider trading is simpler, more straight forward. The Commission’s most

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This Week In Securities Litigation (Week ending Nov. 25, 2016)

In a holiday shortened week, the SEC brought actions involving: a financial fraud naming against the president of the firm who, assisted by two other officers named as defendants in an earlier Commission enforcement action, used sham agreements were used

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This Week In Securities Litigation (Week ending Nov. 18, 2016)

SEC Chair Mary Jo White announced that she will step down when the new administration takes over. That will leave the Commission with two sitting Commissioners unless there are confirmation hearings during the lame duck session which seems highly unlikely.

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This Week In Securities Litigation (Week ending Nov. 11, 2016)

In a week that began with a focus on the election and ended with the commemoration of veterans day, the SEC brought a series of actions including: one that centered on the sale of unregistered securities in the form of

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Financial Executive Sentenced to Four Years in Prison

Former financial executive Andrew Caspersen was sentenced to serve four years in prison after defrauding investors of over $38 million followed by three years of supervised release. Restitution will be determined by the court at a later date. U.S. v.

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This Week In Securities Litigation (Week ending Nov. 4, 2016)

The Commission brought actions this week centered on the failure to properly conduct audits, an offering fraud and for acting as an unregistered broker. FINRA sanctioned eight firms for failing to adequately supervise the sale of a complex investment product.

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This Week In Securities Litigation (Week ending Oct. 28, 2016)

The Commission, along with the DOJ, filed a settled FCPA action against aircraft manufacturer Embraer. The action centered on bribes paid in multiple countries to facilitate the sale of aircraft. The agency also brought an insider trading action against a

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Embraer Settles FCPA Charges with DOJ, SEC

“Two out of three ain’t bad” was the refrain of a well known song by rock star Meatloaf some years back. While Meatloaf probably was not thinking about government investigations, sometimes the notion applies as aircraft manufacturer Embraer S.A. recently

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Insider Trading Before the Supreme Court: Dirks and Salman, Part IV

This is the fourth part of an occasional series examining the issues in Salman v. U.S., No. 15-628, which was argued before the Supreme Court on October 5, 2016. Part I is here, Part II here, and Part III here.

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This Week In Securities Litigation (Week ending Sept. 23, 2016)

The Commission filed its first action against an auditor for lack of independence based on a romantic relationship this week. The agency also filed an action alleging insider trading against long time hedge fund operator, Leon Cooerman and another insider

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This Week In Securities Litigation (Two Weeks ending Sept. 9, 2016)

In the two weeks spanning the Labor Day weekend, the Commission continued bring cases arising from its inspection program. Two new actions alleging inadequate procedures regarding the disclosure of additional trading away fees incurred by customers in wrap fee programs

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This Week In Securities Litigation (Week ending August 26, 2016)

Numbers were the focus this week as the Commission filed 81 administrative proceedings (must be near fiscal year end) and two civil injunctive actions. Seventy-one of the actions involved municipal issuers who self-reported under the Municipalities disclosure initiative. Another ten

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Insider Trading: Is Stewart the Way Forward for the Government?

The Government’s insider trading conviction last week in U.S.v. Stewart, No. 1:15-cr-00287 (S.D.N.Y.) is being hailed by some as the way forward for the DOJ and the SEC in a post-Newman world. Perhaps. But consideration of the jury instructions in

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This Week In Securities Litigation (Week ending August 19, 2016)

An investment banker who repeatedly tipped his father on about pending mergers was found guilty of insider trading by a jury this week. The Commission brought another action based on the whistleblower protections where the firm’s severance agreements impinged on

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Stock Manipulation – A Family Affair

Sometimes it is all in the family. In this case it certainly appears to be all in the family – or at least largely. Jason, John, Jared and Derek Galanis teamed with Gary Hirst, Ymer Shahini and Gavin Hamels to

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SEC Halts Scheme By IM Who Bilked Off-Shore Investment Manager

It can happen to anybody. The SEC has brought what seems like an almost endless string of investment fund and offering fraud actions. Typically small, unsophisticated investors, often known to the fraudster, are targeted with sales pitches of extravagant returns.

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SEC Files Another Excessive Fee Case

The Commission brought another in a series of civil and criminal actions centered on charging excessive, undisclosed fees to clients transitioning their portfolios. SEC v. Place, Civil Action No. 2:16-c-4291 (E.D.Pa. Filed Aug. 8, 2016) is an action which names

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Insider Trading Before the Supreme Court: Dirks and Salman, Part I

One of the most closely watched cases of the coming Supreme Court term is Salman v. U.S., No. 15-628, the Ninth Circuit’s insider trading decision penned by Judge Rakoff. The issue for decision is the meaning of the “personal benefit”

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This Week In Securities Litigation (Week ending August 5, 2016)

The SEC prevailed on summary judgment in an action centered on an offering fraud. The principals of the scheme were found to have violated the antifraud provisions while a codefendant was determined to have acted as an unregistered broker. Two

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Steak And A Small Kickback — An Insider Trading Personal Benefit

What constitutes a personal benefit that results in a breach of duty for insider trading may be resolved by the Supreme Court in the coming term when U.S. v. Salman, 792 F. 3d 1087 (9th Cir. 2015) is decided. In

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SEC Resolves FCPA Action With LAN Airlines

The SEC resolved another FCPA action centered on the entry of LAN Airlines S.A. into Argentina. Previously, the Commission settled with the CEO of the company who agreed to the entry of a cease and desist order based on Exchange

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This Week In Securities Litigation (Week ending July 22, 2016)

Investment advisers were at the center of a number of actions brought by the Commission this week . Two proceedings involved a registered adviser and its COO that were involved in an unregistered and fraudulent offering; two other actions centered

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Career Securities Law Violator Pleads Guilty To Manipulation

The Manhattan U.S. Attorney’s Office secured a guilty plea in a stock manipulation case from a career securities law violator. The guilty plea is the fourth conviction for defendant John Galanis. U.S. v. Galanis, No. 1:15-cr-00643 (S.D.N.Y.). The case centers

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Compliance, Cooperation Mitigates FCPA Liability with DOJ-SEC

Well designed compliance systems coupled with solid internal controls can be instrumental in preventing violations of the FCPA. Despite best of efforts, there is no doubt that even a well-constructed compliance system can be circumvented. Johnson Controls, a global firm

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Effective SEC Enforcement – Built on Fundamental Fairness

How effective is the SEC enforcement program at deterrence? With the adoption of the “broken windows” theory of enforcement the agency adopted a theory of market policing borrowed from the New York City police department. It is built on the

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