Blog Archives

SEC Charges Deutsche Bank With Misleading Clients Re Order Routing

Automated trading, alternative trading venues, high speed trading, the proliferation of order types and dark pools have been discussed in news articles and popular literate. The Commission has brought enforcement actions involving dark pools, alternative trading venues and order types,

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This Week In Securities Litigation (Week ending December 16, 2016)

The Commission filed four actions last week. One action centered on a cherry picking scheme; a second focused on an adviser that failed to follow its own procedures regarding conflicts; a third involved an investment adviser who made repeated misrepresentations

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SEC Charges Adviser With Concealing True Value of Accounts

When investment advisers and brokers misrepresent the value of the account to a client it is frequently because something untoward has occurred – huge trading losses, misappropriation or other malfeasance. The Commission’s most recent case in this area however has

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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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This Week In Securities Litigation (Week ending December 9, 2016)

The Supreme Court handed down its much anticipated decision in Salman this week, essentially reaffirming its seminal decision on illegal tipping in Dirks. In affirming the Petitioner’s conviction the Court rejected his contention that the personal benefit to the tipper

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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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SEC, United Settle Internal Controls Case

When the Foreign Corrupt Practices Act was passed, a key portion of the statute centered on the books and records and internal control provisions written by the Commission. While the bribery provisions only apply to foreign officials, the books and

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This Week In Securities Litigation (Week ending December 2, 2016)

The focus this week was offering fraud actions. Three cases were brought. One involved a registered transfer agent. A second centered on claims that the defendant was an expert trader. The third was based on false claims regarding the defendant’s

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SEC Files Two More Offering Fraud Actions

Offering fraud actions are a staple of SEC Enforcement. While each action is different, yet typically each involves raising substantial amounts of cash from investors who are promised significant to outsized returns from a safe investment. Unfortunately the investments do

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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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SEC Charges Audit Firms With Unprofessional Conduct

When Congress created the PCAOB many commentators thought that actions against accounting firms and their professionals would be handled by the Board rather than the SEC. While the Board does conduct investigations and bring enforcement actions, the Commission has continued

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SEC Charges Sham Agreements, Round-Trip Transactions

The Commission brought a financial fraud action centered on misconduct seemingly drawn from its traditional cases in the area: sham agreements and round-trip transactions, all designed to artificially inflate the share price for a sale of securities. SEC v. Campion,

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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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SEC Charges Executive With Fraud in HP Acquisition

The SEC filed an action against the CEO of a U.S. subsidiary of a U.K firm who implemented a financial fraud at the behest of his superiors. The firm was eventually sold to a U.S. public company at an inflated

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SEC Prevails In Insider Trading Jury Trial

The Commission prevailed at trial against a corporate insider charged with tipping his friend prior to the announcement of favorable regulatory action on an application to market a drug. The friend not only traded but encouraged others to trade at

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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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SEC, USAO Charge Film Producer With Fraud

The Commission brought a fraud action against a movie producer who is alleged to have misappropriated client funds in two complex transactions. SEC v. Bergstein, Civil Action No. 1:16-cv-08701 (S.D.N.Y. Filed Nov. 9, 2016). The U.S. Attorney’s Office for the

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SEC Files Two Fraud Actions

The Commission filed two more “to good to be true” fraud actions yesterday. One centered on an offering fraud involving a recycling firm which repeatedly promised investors that it was about to obtain the financing that would move the company

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SEC Charges Adviser With Misappropriation

It is axiomatic that investment advisers have a fiduciary duty to use investor funds entrusted to them for the benefit of the investors. The duty applies to registered and unregistered investment advisers. The Commission’s latest action involving an unregistered investment

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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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Job Seekers Become Offering Fraud Victims

Unemployed professionals thought they were being requested to appear for a job interview. On arrival they were solicited to purchase shares in a group of companies. In the end the the unemployed professionals were the victims of an offering fraud.

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SEC Brings Two Proceedings Naming Auditors

The Commission initiated two proceedings involving auditors who improperly and repeatedly signed off on unqualified audit opinions. One action involved audits for a municipality and settled. In the Matter of Domenick F. Consolo, CPA, Adm. Proc. File No. 3-17654 (Oct.

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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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SEC’s Latest Insider Trading Action: A Question of Materiality

Earlier this month the Supreme Court head argument in Salman, perhaps the most significant insider trading case to be considered by the High Court in decades. The issue there centers on what constitutes a personal benefit and, more specifically, how

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This Week In Securities Litigation (Week ending Oct. 21, 2016)

The Commission filed another action in which admissions were required as part of the settlement. The proceeding named as Respondents a foreign bank and two of subsidiaries. Respondents variously acted as unregistered brokers and/or an unregistered investment adviser while taking

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SEC Charges Adviser With Improper Valuation

Sometimes it can be difficult to do the right thing. For example, in the SEC’s latest case involving an investment adviser, a valuation error was discovered. A correction was made. The investors were compensated. The adviser, however, failed to follow

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SEC Settles Earnings Fraud Action With Firm, Officers

One way to meet earnings targets is to accelerate the recognition of revenue. Another is to fabricate it. That is precisely what the defendants did in the Commission’s latest financial fraud action. SEC v. Lime Energy Co., Civil Action No.

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This Week In Securities Litigation (Week ending Oct. 14, 2016)

The Commission announced the filing of a record number of enforcement actions for the last fiscal year. The enforcement statistics highlight areas of concentration such as insider trading, investment advisers and private equity funds. The agency also brought three enforcement

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