The line between civil and criminal
violations of the securities laws is, at best, difficult to discern. That
difficulty is compounded by the increasing criminalization of the federal
securities laws. In some instances, this had led to overreaching by prosecutors
in an effort to establish the charges...
The SEC's blockbuster announcement
last Friday of its civil
enforcement action against Goldman Sachs and one of its investment bankers
rocked the securities markets and made
headlines in the financial press around the world. Undoubtedly because of
Goldman's prominence and perhaps also because...
About a year ago, Lloyd Blankfein
tried to burnish Goldman Sachs' post-financial crisis image by arguing in an interview
with the Times of London that Goldman was performing God's work by bringing
buyers and sellers together to do deals and safeguarding the interests of
In the wake of filing what is the
most significant enforcement action brought in years against Goldman Sachs
& Co., discussed here, the Commission obtained what can only be called a
face saving settlement in its action against former OMB director David Stockman
arising out of his tenure at Collins...
Based on a five-year
financial fraud that began in 2002 and culminated in a $127 million 2008
restatement by Diebold, Inc., the Commission filed three actions. One settled
case was filed against the company. SEC v.
Diebold, Inc. , Civil Action No. 1:10-CV00908 (D.D.C. Filed June 2,
2010). A second...
SEC enforcement this week
brought another SOX claw back case, as well as actions alleging financial fraud
and another investment fund case. DOJ dropped their appeals in the two Broadcom
criminal option backdating cases which were dismissed for prosecutorial
misconduct. DOJ's action finally brought...
The SEC settled a 2007 financial fraud action brought
against Thomas Fisher, former Chairman, CEO and President of Nicor, Inc., after
dropping its primary claims against the executive. SEC v. Fisher , Case
No. 07-cv-4483 (N.D. Ill. Filed Aug. 9, 2007). The case continues as to two
by Brian Whisler, Baker & McKenzie
On June 15, 2010, Lee Bentley Farkas, the former CEO and
Chairman of Florida based Taylor, Bean and Whitaker (TBW), was handcuffed and
arrested outside of his health and fitness club, and was sent to the U.S.
District Court in Alexandria, Virginia where he was...
Former SEC Enforcement Director Steve Cutler once told a
meeting of the DC Bar Association that "no matter how bad the underlying
conduct, you can always make things worse." At the time Mr. Cutler was talking
about failing to produce documents in a Commission investigation. His remarks
The former Chairman of the Board and CEO of Duane Reade,
Inc., Anthony Cuti, was sentenced to serve a prison term of three years for
financial fraud. He was also ordered to pay a $5 million fine. Mr. Cuti was
convicted following a jury trial on one count of conspiracy to make false
In significant market crisis based actions, the SEC and
the U.S. Attorney for Manhattan brought, respectively, civil and criminal
charges against former Credit Suisse Group traders centered on the overpricing
of subprime bonds. SEC v. Kareem Serageldin, Civil Action 12 CIV 0796
(S.D.N.Y. Filed Feb...
The SEC filed a fraud action against Edward Ellis, Sr.
and Jennifer Seidel, alleging that the two defrauded investors in connection
with the purchase of shares in their company, Sederon, Inc. SEC v. Ellis, Civil
Action No. 12-cv-1203 (E.D. Pa. Filed March 8, 2012). The case is in
In an interesting variant on the kinds of claims that the
former directors and officers of a failed financial institution can face, on
April 6, 2012, the SEC charged two former officers of the publicly traded
holding company for the failed Franklin Bank of Houston with securities fraud.
In its April...
A Virginia man and former pastor entered a guilty
plea to charges that he operated a Ponzi scheme under the guise of a
legitimate jewelry business. Matthew James Addy, 34, of Lancaster,
Pennsylvania, pled guilty to a single charge of securities fraud, which carries
a maximum sentence of up to twenty...
WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on Feb. 27 reversed a Second Circuit U.S. Court of Appeals ruling allowing the Securities and Exchange Commission to seek securities fraud penalties for conduct that had ceased more than five years before the SEC brought the lawsuit, saying that...
WASHINGTON, D.C. - (Mealey's) The Securities and Exchange
Commission and the City of Harrisburg, Pa., have agreed to a cease-and-desist
order preventing the city from continuing its violation of federal securities
laws in connection with statements it made both publicly and in financial documents...
Recently, the SEC settled with the City of Harrisburg (City)
over violations of Rule 10b-5 in connection with material misstatements and omissions
made by the City in its public statements and financial information, during a
This settlement underscores the increased focus by...
The case against S.A.C. Capital received what appears to have been a critical, last minute boost when Richard Lee agreed to plead guilty to one count of conspiracy to commit securities fraud and one count of securities fraud on July 23, 2013. U.S. v. Lee, 13 Crim 539 (S.D.N.Y. Filed July 23, 2013, unsealed...
A partner in an investment management company was convicted following a jury trial on multiple counts of mail and wire fraud as well as securities fraud. The charges stem from a scheme in which most of the $5 million in investor funds raised were siphoned off by the defendant and others for their personal...
The Ninth Circuit rejected the SEC’s contention that a stock transfer agent and its principal are necessarily liable “by virtue of their position” for a company whose unregistered shares were sold in violation of Securities Act Section 5. SEC v. CMKM Diamonds, Inc., Nos. 11-17021, 11...
WASHINGTON, D.C. — (Mealey’s) TD Bank NA on Sept. 23 agreed to pay $52.5 million to settle federal regulators’ allegations that the bank helped attorney Scott Rothstein run a $1.2 billion Ponzi scheme out of his law firm.
The Securities and Exchange Commission announced in a press...
The SEC filed a settled an insider trading and Rule 105 short selling action against a seasoned trader and his two trading vehicles. SEC v. Langston, Civil Action No. 1:13-cv-324360 (S.D. Fla. Filed Dec. 3, 2013).
Defendant Charles Langston is a long time securities trader. He actively trades through...
The SEC brought another in a series of offering fraud cases. This one, however, does not focus on just one offering but three since mid- 2011. Promoters Robert Helms and Janniece Kaelin, their entities and Deven Sellers and Roland Barrera are named as defendants. SEC v. Helms, Civil Action No. 1:13-cv...
The Commission filed another action against a securities law recidivist, this time centered on a fraudulent trading and investment program. SEC v. Lee, Civil Action No. 14CV0347 (S.D. Cal. Filed Feb. 13, 2014).
James Lee is an unregistered investment adviser. Beginning in late 2008 he solicited investors...
Since the market crisis enforcement officials have heard repeated calls to prosecute not just companies but high ranking corporate officials. While the Commission brought a series of market crisis actions against firms and individuals, as part of the new “get tough” policy individuals will...