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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...

This Week In Securities Litigation (May 15 – June 5 , 2015)

This week Senator Elizabeth Warren forwarded a 13 page letter to SEC Chair White regarding her performance in office. The letter highlighted what it calls a “significant gap” between the promises of Ms. White at the time she was confirmed and now. In addition, the letter expressed concern...

SEC Files Financial Fraud Actions, Mired in Controversy

In the wake of the market crisis and the formation of a task force, the SEC has sought to focus in part on financial fraud actions. The action filed at the close of last week against Computer Sciences Corporation and seven of its executives may be one of the more significant financial fraud actions brought...

Another SEC Insider Trading Case: Does It Comply With Newman?

The SEC continues to bolster its allegations regarding the relationships between tipper and tippee in insider trading cases as well as the knowledge of the tippee. Whether those allegations will be sufficient to meet the Newman personal benefit test remains to be seen. The Commission’s latest insider...

SEC Insider Trading Case Brought as Administrative Proceeding Enjoined

The SEC’s shift to administrative proceedings in recent months has spawned a series of suits against the agency challenging its forum selection authority. The suits have generally met with little success. Nevertheless, earlier this week, Judge Leigh Martin May, sitting in the Northern District...

SEC, USAO File Parallel Insider Trading Charges

The SEC brought an insider trading case against a senior corporate official and a chain of tippees that starts with his brother-in-law broker who then tipped his friend, another broker. Others, not named as defendants, were also tipped. SEC v. Fefferman, Civil Action No. 15 CV 1276 (S.D. Cal. Filed June...

This Week in Securities Litigation (Week Ending June 12, 2015)

The question of forum selection by the SEC was a key issue this week. While to date suits challenging the SEC’s right to bring an action as an administrative proceeding rather than in federal court have had little success – until now. This week a judge sitting in the Northern District of...

SEC Settles Another Insider Trading Case Tied to Brocade Deal

The acquisition of Foundry Networks, Inc., a networking hardware company, by Brocade Communications System, Inc., a technology company specializing in data and storage networking products, announced on July 21, 2008, has spawned two enforcement actions by the Commission and two criminal case. The first...

SEC Files Settled Insider Trading Case as Administrative Proceeding

One question in the wake of the Second Circuit’s decision in Newman regarding the personal benefit test for illegal tipping has been how the SEC would respond to a decision the U.S. Attorney told the Court would significantly undermine insider trading enforcement. To date it has been mixed –...

SEC Halts “Smart Contract” Exchange Built on Silicon Valley Start-Ups

Two entrepreneurs wanted to create a business that centered on valuing private start-up companies. They experimented with models that began with a variation of “fantasy sports,” changed to a contest and became a game. It ended with one which involved securities based swaps sold in violation...

This Week In Securities Litigation (The Week Ending June 19, 2015)

The Commission chose to appeal the decision in Hill v. SEC in which the Court held that the manner in which SEC Administrative Law Judges are retained violates the Appointment Clause of the Constitution. While the Court pointed out that the Commission could easily remedy the situation, the agency has...

This Week in Securities Litigation (The week ending June 26, 2015)

The SEC brought another custody rule action this week – against the outside auditors alleging that one examination was insufficient and the others incomplete thereby causing the client to violate the surprise audit requirement of the rule. failing the surprise audit requirement. The agency also...

Supreme Court to Hear Appeal of Third Circuit ‘Naked’ Short Selling Securities Suit

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today agreed to hear an appeal of a Third Circuit U.S. Court of Appeals ruling remanding a securities class action lawsuit over the alleged illegal “naked” short selling of a company’s stock back to state court Merrill...