This Week In Securities Litigation (Week of October 18, 2021)
It is back to the future for the Division of Enforcement. Going forward the Division will focus on rebuilding trust, long a goal of the program, according to recent comments of its new Enforcement Director (here). One key element of that effort will be based on a return to the use of admissions as part of the settlement process. The standards were not identified. Another goal appears to be a refocusing on gatekeepers, an idea that traces to the founding of the Division. Participation by staff in Wells meetings will only involve the Director and his deputy when there are novel questions of law or fact involved (here). Finally, rumors suggest the staff will return to the Commission offices in January,
Whistleblowers: The Commission awarded two whistleblowers a total of $40 million, according to an October 15, 2021 announcement.
Comment: The agency reopened the comment period for listing standards tied to the recovery of erroneously awarded compensation. The reopening permits interested parties to comment on the Dodd-Frank Act rule regarding clawbacks of incentive-based compensation. The rule was initially proposed in 2015.
Be careful, be safe this week
SEC Enforcement – Filed and Settled Actions
Last week the Commission filed no civil injunctive actions and one administrative proceeding, exclusive of tag-along and other similar proceedings.
Offering fraud: SEC v. Trikantzopoulos, Civil Action No. 1:20-cv-11156 (D. Mass.) is a previously filed case which named as defendants Vassillkos Trkiantzopoulos and his firm, Navis Ventures LLC. The complaint, filed in June 2020, alleges a scheme centered on real estate ventures that investors were solicited to invest in. The funds were not used as promised, however. To the contrary, the Court earlier concluded that the promised use of the funds was not accurate and the represented returns were not paid. On October 15, 2021 the Court entered final judgments that imposed permanent injunctions prohibiting future violations of Exchange Act Section 10(b) and Securities Act Section 17(a). Defendant Trikantzopoulos was also directed to pay disgorgement of $109,139, prejudgment interest of $17, 841 and a penalty of $195,046. See Lit. Rel. No. 25243 (October 15, 2021).
Internal controls: In the Matter of Amyris, Inc., Adm. Proc. File No. 3-20624 (October 15, 2021) is a proceeding which names the publicly traded firm as a respondent. In the first two quarters of 2018 Respondent improperly recognized certain royalty payments. As a result, the financial statements for those two quarters to being materially inaccurate. The error occurred because the firm lacked the necessary resources and procedures to ensure that certain items related to the royalty payments were internally communicated to the appropriate section and staff. The Order alleges violations of Exchange Act Section 13(a), 13(b)(2)(A) and 13(b)(2)(B). Since the conduct alleged in the Order, the company has hired multiple, experienced accounting personal, including a CFO, and retained an external consultant to help design and test its internal controls for financial reporting. To resolve the matter Respondent consented to the entry of a cease-and-desist order based on the Sections cited in the Order. Respondent will also pay a penalty of $300,000.
Anti-corruption: The Department announced the initiation of a new hotline for tips to help combat corruption in the northern triangle – El Salvador, Guatemala and Honduras — on October 15, 2021 (here).
Report: The agency issued a report on ransomware trends in Bank Secrecy Act Data. The report, issued pursuant to the Anti-Money Laundering Act of 2020, focuses on pattern and trend information tied to ransomware, according to the October 15, 2021 release (here).
Report: The Australian Securities and Investment Commission published its 2020-21 Annual Report on October 15, 2021 (here).
Environment: The Green and Sustainable Finance Cross-Agency Steering Group announced its support for Hong Kong’s Climate Action Plan 2050, announced in a release on October 11, 2021.The plan details a vision for zero carbon emissions and sustainable development. It also details strategies and targets for combating climate change and achieving carbon neutrality (here).
Statement: The Monetary Authority of Singapore announced its Monetary Policy Statement, in a release dated October 14, 2021 (here).