Blog Archives

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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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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This Week In Securities Litigation (For the period Jan. 13 – 27, 2017)

During a two week period divided by the Inauguration, the Commission filed just under 40 actions. Chair Mary Jo White stepped down from her position at the agency after delivering her departing remarks at the New York Economic Club. In

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SEC Charges BD, COO With Failing to File SARs

The Commission has long focused on microcap fraud by, among other things, bringing manipulation actions centered on penny stocks. OCIE and FINRA have also issued guidance for compliance departments on red flags to watch for which may suggest such a

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SEC Sanctions Citi, Morgan Stanley Tied To Forex Trading Program

The SEC has continued to closely scrutinize disclosures related to trading in the markets. Its most recent cases involved Citigroup and Morgan Stanley. The actions are based on not disclosing that models used to market a product contained assumptions that

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SEC Settles Another Action Involving Whistleblowers

The SEC has brought a series of actions concerning whistleblowers. A number of those cases center on provisions in severance agreements which either directly preclude being a whistleblower required the departing employee to maintain the confidentiality of firm information or

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SEC – GM Settle Internal Controls Action

Effective internal controls are critical to any organization. The Commission has focused on these controls, brining enforcement actions in recent months tied to internal control issues. Its latest case in this area names General Motors Company as a Respondent. In

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SEC – BlackRock Settle Whistleblower Claim

The protection of whistleblowers has been a recurrent theme in recent SEC enforcement actions. The agency has brought a series of actions designed to protect the right of employees to report wrong doing to the Commission unimpeded by their employer.

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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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SEC – Government Contracts Firm Settle Internal Controls Action

Internal controls has been at the center of a number of Commission enforcement actions in recent months. Its most recent action in this area focuses on a firm that recognized revenue in a manner that was inconsistent with its own

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NY-NJ Port Authority Admits Violating Federal Securities Laws

The Port Authority of New York and New Jersey is a significant participant in the capital markets with about $20 billion in debt outstanding. Tracing its history to 1921 when the two states entered into an interstate compact approved by

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SEC, USAO Charge IA Who Covered-up Referral Fee

The cover-up is virtually always worse than the underlying conduct. History is replete with instances where improper or even wrongful conduct was severely aggravated by an effort to conceal the conduct. That is precisely the case of former investment adviser

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SEC: Firm’s IC Failure Equals Liability For Subsequent Acquirer

The books, records and internal control provisions are an integral part of the FCPA. The Commission’s most recent action involving those provisions, however, centers on a claimed internal control failure by a firm when retaining a foreign agent and imposes

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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 Sanctions Another Firm For Restricting Whistleblowers

Whistleblowers are an important source of information for the Commission’s enforcement program. This is reflected by the periodic monetary awards handed out by the agency. It is also evidenced by the increasing number of actions brought by the SEC to

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