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This Week In Securities Litigation (Week ending April 10, 2015)

The SEC filed another FCPA action, this time against the company that financed a “world tour” as part of the bribes paid by employees to secure business. Previously, the Commission filed an action against the employees. The SEC also filed four actions centered on offering frauds, a case centered...

SEC Files Offering Fraud Action

The Commission filed another offering fraud action tied to the sale of interests in the development of oil and gas wells prior to the recent downturn in the price of oil. Beginning in 2010 the defendants raised about $4.4 million from 60 investors through a nationwide offering. The defendants largely...

SEC Files Offering Fraud and Ponzi Scheme Cases

A staple of SEC enforcement in recent years has been offering fraud and Ponzi scheme cases. This week the Commission filed two more of these actions, one an offering fraud targeting military personnel and a second and investment fund fraud case which virtually told investors it was a Ponzi scheme. SEC...

SEC Files Financial Fraud Action Against Japan Based Controller

The Commission filed a financial fraud action against a former senior accounting officer and controller of Molex Japan Co., Ltd., the Japanese based subsidiary of publicly traded Molex Inc. The scheme, which took place in Japan but impacted the books and records of the U.S. parent, was discovered after...

This Week in Securities Litigation (Week ending April 17, 2015)

Microcap fraud, misappropriation by investment advisers and offering fraud cases were the focus of SEC enforcement last week. The Commission filed a microcap fraud action centered on blank check companies involving ten individuals. Two new actions focused on misappropriation by investment advisers while...

SEC Files Two Offering Fraud Actions Tied to a Horse Farm

The Commission filed two settled offering fraud actions centered in part around an entity engaged in the purchase and sale of thoroughbred horses called Raintree Racing. A second involved an offering of interests in a real estate investment firm known as Atlanta Rehab which had invested in Raintree Racing...

BlackRock, CCO Settle SEC Conflict Charges

Conflicts of interest involving market professionals continue to be a focus of SEC enforcement. In many cases the conflict is uncovered by the inspection staff, OCIE. This time, however, the information came from an article published by the Wall Street Journal. In the Matter of BlackBock Advisors, LLC...

This Week In Securities Litigation (Week ending April 24, 2015)

The Department of Justice unsealed criminal charges against a U.K. trader who is alleged to have contributed to the flash crash almost five years ago. The trader is alleged to have manipulated the market for certain instruments on the CME in Chicago. Actions brought by the SEC this week largely reflect...

SEC Halts Fraudulent Farm Loan Investment Program

The Commission initiated an action centered on the misuse of offering proceeds tied to farm loans. The defendants include an investment adviser, a financial planner and an attorney. SEC v. Veros Partners, Inc., Civil Action No. 14-cv-659 (S.D. Ind. Filed April 22, 2015). The Court entered a temporary...

CIO Sentenced for Insider Trading

David Riley, formerly the Chief Information Officer of Foundry Networks, Inc. was sentenced to serve 60 months in prison and pay a $50,000 fine based on insider trading charges. He was found guilty by a jury following a 13 day trial. U.S. v. Riley, Case No. 1:13-cr-00339 (S.D.N.Y.) The charges centered...

SEC Sanctions Adviser, and Its CEO, GC and Auditor Based on Conflicts

Conflicts of interest are a central focus for the SEC. Indeed, conflicts are at the core of many of the actions brought against regulated entities. And, an undisclosed conflict was at the center of actions brought against a hedge fund, its founder, general counsel and outside auditor. In the Matter of...

This Week In Securities Litigation (Week ending May 1, 2015)

The SEC announced its first whistleblower award in a retaliation case this week. The agency also brought an insider trading case, an action against an investment adviser, its general counsel and auditor based on a conflict, a books and records action against two bank officers and another offering fraud...

SEC Files Another Market Crisis Case

The market crisis of the last decade seems to have a never ending dribble of cases. The SEC filed another this week, naming four former officers of Wilmington Trust Company as defendants. SEC v. Gibson (D.Del. Filed May 6, 2015). Two of those individuals were named as defendants in a parallel criminal...

This Week in Securities Litigation (Week ending May 8, 2015)

The debate over waivers WKSI waivers and other similar provisions continued this week. The Commission granted a WKSI waiver to Deutsche Bank despite a guilty plea to criminal felony charges but only over the dissent of Commissioner Stein. The agency filed two civil injunctive actions this week. One...

SEC Publishes a Memo on Forum Selection

In the wake of a series of law suits challenging the discretion of the SEC to bring actions as administrative proceedings and questioning of Chair White last week at a Senate Subcommittee budget hearing on the topic, the staff posted on the agency website: “Division of Enforcement Approach to Forum...

SEC Files Offering Fraud Action Against Radio Show Hosts

The SEC filed another offering fraud action, a staple of enforcement. This action centers on two recidivist radio talk show hosts selling interest in life settlements based on enhancements of their investment credentials, omissions of their regulatory history and a series of misrepresentations. SEC v...

SEC Files Fraud Action Centered on Student Loans

Student loans, and the debt burdening many students at graduation, is an important political topic. It is not generally a subject for the Securities and Exchange Commission. Nevertheless, at the center of is most recent enforcement action is an educational institution that was forced to restate its financial...

Investment Professional Charged with Fraud, Self-Dealing by SEC

The SEC charged another investment professional with fraud and self-dealing. SEC v. Ahmed, Civil Action No. 3:15-cv-00675 (D. Conn. Filed May 5, 2015). Defendant Iftikar Ahmed is an investment professional who was a partner at Oak Investment Partners, a multistage venture capital firm. It advises several...

This Week in Securities Litigation (Week ending May 15, 2015)

The Commission filed an insider trading case in tandem with the Manhattan U.S. Attorney’s Office against a father and son based on repeated trades in advance of deal announcements even after FINERA initiated an investigation this week. The agency also filed a settled administrative proceeding against...

SEC Settles Another Market Crisis Financial Fraud Action

The Commission resolved another financial fraud action stemming from the aftermath of the market crisis. This proceeding, initially brought in June 2014, named as a Respondent Thomas Neely, Jr., and E.V. P. of Regions Bank. In the Matter of Thomas A. Neely, Jr., Adm. Proc. File No 3-15945 (June 25, 2014...

Is the SEC a Toothless Watch Dog?

SEC enforcement actions are supposed to halt violations, protect investors and the markets, act as a deterrent and prevent a future repetition of wrongful conduct. To facilitate those goals settlements typically incorporate common elements. For example, when settling a civil injunctive action in Federal...

No Investor Harm, No Ill-gotten Gains, But SEC Fines Insurer $8 Million

Last week the Commission resolved a proceeding involving a life insurance company centered on the pricing of its variable annuity and variable life insurance products. Specifically, the Order alleged violations of Rule 22c-1 since the company apparently chose not to receive at its office mailed orders...

The Impact of Newman on SEC Enforcement: Part I

This is the first segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Introduction In seeking rehearing and an en banc hearing before the Second Circuit Court of Appeals the Manhattan U.S. Attorney’s Office told the...

The Impact of Newman on SEC Enforcement: Part II

This is the second segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases The Immediate Impact of Newman The most immediate impact of Newman is on pending criminal and civil cases. This is illustrated by the decisions in U...

The Impact of Newman on SEC Enforcement: Part IV

This is the fourth segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Post Newman SEC Actions (continued) 2. Administrative proceedings A second option for the SEC is to avoid the potential impact of the decision by...