This Week In Securities Litigation (Week of January 16, 2024)

The Commission filed two new cases last week. One was based on market manipulation. The second centered on the FCPA.

Be careful, be safe this week.

SEC Enforcement – Filed and Settled Actions

Statistics: This week the Commission filed 1 new civil injunctive action and 1 new administrative proceeding, excluding tag-along actions and those that present a conflict for the author.

Manipulation: SEC v. Huang, Civil Action No. 24 Civ.028 (S.D.N.Y. Filed January 11, 2024) is an action which names as defendant Shanchun Huang, a resident of London and the CEO of Future FinTech Group, Inc., a firm whose shares are listed for on Nasdaq. Over a four-month period, beginning in 2020, Defendant placed very large, multiple trades in the shares of Future FinTech to push up the price. For example, at times he placed repeated limit orders with escalating prices. The point was to ensure that the share price would stay at $1 or more, the minimum price required by Nasdaq for a listing. In fact, Defendant did cause the share price to rise as a result of the trading. The complaint alleges violations of Exchange Act Sections 9(a)(2), 10(b) and 16(a). The case is pending. See Lit. Rel. No. 25924 (January 11, 2024).

Insider trading: SEC v. Schottenstein, Civil Action No. 1:22-CV-10023 (D. Mass. Filed January 6, 2024) is an action which named as defendant David Schottenstein. The complaint alleged that Mr. Schottenstein traded on inside information in three transactions. The information was furnished to him by a relative who was a corporate insider. The Court entered a final judgment enjoining Mr. Schottenstein from future violations of Exchange Act Sections 10(b) and 14(e). The judgment also provides that Defendant’s obligation to pay disgorgement in the amount of $536,752.90 and prejudgment interest of $67,933.16 will be deemed satisfied by an order of forfeiture in the parallel criminal case. See Lit. Rel. No. 25923 (January 11, 2024).

FCPA: In the Matter of SAP SE, Adm. Proc. File No. 3-21824 (January 10, 2024) is a proceeding which names as respondent the global software company that is based in Waldorf, Germany. Beginning in 2014, and continuing through the end of 2018, the company used third-party intermediaries and consultants to make improper payments to government officials to obtain and retain business in South Africa, Greater Africa and Indonesia. In addition, an employee in Azerbaijan furnished gifts to a government official to obtain and retain business in that country in January 2022. The firm also failed to maintain accurate books and records. To resolve the proceedings, Respondent consented to the entry of a cease-and-desist order based on Exchange Act Sections 30A, 13(b)(2)(A) and 13(b)(2)(B). Respondent also agreed to pay disgorgement of $85,046,035 and prejudgment interest of $13,405,149. Respondent will receive a disgorgement offset of up to $59,455,779 based on the U.S. dollar value of any payments made or to be made to the Government of South Africa or a South African state-owned entity.