LexisNexis® Legal Newsroom
Implications of the SEC’s Charges Against Unregistered Broker Based on EB-5 Program

[UPDATE: This article was updated to correct the names of the respondents in the described case.] The Securities and Exchange Commission (“SEC”) has further demonstrated its intent to take a more active role in ensuring that participants in the EB-5 program are in compliance with securities...

This Week in Securities Litigation (Two weeks ending July 10, 2015)

The Ninth Circuit upheld a conviction for illegal tipping, following Dirks but raising doubt regarding its adherence to Newman in an opinion authored by Judge Rakoff, sitting by designation. The Commission filed settled proceedings against Goldman Sachs and KKR for, respectively, market access violations...

Deadlines and SEC Enforcement: When 180 Days Is Not 180 Days

When does a 180 day deadline not mean that in 180 days’ time is up? Answer: When the SEC says so and the DC Circuit gives the conclusion Chevron deference. That is the holding of Montford and Company, Inc. v. SEC, No. 14-1126 (Decided July 10, 2015) [subscribers can access an enhanced version of...

An Example of Cooperation Credit From the SEC

DOJ and SEC officials repeatedly encourage cooperation. There are benefits for both sides. Cooperation can facilitate the Government’s investigation, providing a road to the scheme. Testimony can aid in obtaining a favorable result. For the cooperator there is the promise of cooperation credit...

SEC Files Microcap Fraud Action Charging Thirty-Four Defendants

Microcap fraud has been a priority for SEC Enforcement at least since the creation of the Microcap Fraud Task Force two years ago. The cases typically focus on market manipulation claims of shell companies and pump-and–dump type schemes. The SEC’s newest case in this area, SEC v. Gallison...

The U.S. Chamber of Commerce on SEC Enforcement

The U.S. Chamber of Commerce published a report regarding the enforcement practices of the SEC titled “Examining U.S. Securities and Exchange Commission Enforcement: Recommendations on Current Processes and Practices, July 2015” ( here ). The Report contains twenty-nine recommendations for...

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

The U.S. Chamber of Commerce published a report containing a series of recommendations regarding the SEC’s Enforcement program. Several recommendations focused on the use of administrative proceedings, including one which would permit a Respondent seeking a jury trial to essentially opt out of...

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

The U.S. Chamber of Commerce published a report containing a series of recommendations regarding the SEC’s Enforcement program. Several recommendations focused on the use of administrative proceedings, including one which would permit a Respondent seeking a jury trial to essentially opt out of...

SEC Charges Three For Six Microcap Fraud Manipulations

Microcap fraud has been a priority of SEC Enforcement since at least the formation of the Microcap Task Force about two years ago. The Commission has brought a series of cases focused largely on pump-and-dump schemes. Now the Commission has brought an action against three individuals who are alleged...

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

The SEC filed three actions following-up on its settled proceeding against Oppenheimer for selling millions of shares of unregistered penny stocks. Each individual settled with the agency. In addition, the Commission brought a manipulation action against three individuals centered on the manipulation...

SEC Sanctions Adviser For Not Fully Disclosing Fee Arrangements

The Commission has brought a series of cases focused on undisclosed conflicts of regulated entities. A number of those cases centered on undisclosed fee and compensation arrangements. In its most recent case the agency went one step further, charging an investment adviser with fraud who disclosed the...

SEC Settles Unregistered Broker Charges Tied to Offering Fraud

The SEC entered into partial settlements with three persons charged with acting as brokers without registering. The charges were tied to an offering fraud which centered on selling interests in a firm that claimed to be engaged in the business of buying and selling fractional interests in oil and gas...

This Week In Securities Litigation (Week ending July 31, 2015)

The Government requested that the Supreme Court overturn U.S. v. Newman, the Second Circuit’s decision on tipping and the personal benefit test. Previously, the Second Circuit had declined a request to either rehear the case or consider it en banc. The SEC filed another settled FCPA action this...

Dirks, Newman, Tippees and the Government’s Cert Petition

The Government filed its long awaited Petition for a Writ of Certiorari with the Supreme Court in the Newman insider trading case. The Petition presents three key issues which were generally presaged in the request for rehearing en banc : 1) The Second Circuit’s decision is contrary to Dirks, adding...

This Week in Securities Litigation (Week ending August 7, 2015)

The SEC issued its final Dodd-Frank pay ratio rules this week by a 3-2 vote. It also issued its final registration rules for Security-Based Swap Dealers and Major Security-Based swap participants. More questions were raised this week regarding the propriety of the manner in which SEC ALJs are retained...

DOJ Files For Cert in Newman

Since the financial crisis in 2008, the DOJ has been teaching yet another generation of insider traders the important lesson that one shall not trade on confidential inside information. However, that campaign took a big - one might say devastating - hit when the Second Circuit overturned Judge Rakoff...

SEC ALJ: No Sanction For Compliance Official Who Violated Statute

Amid all the concern regarding the selection by the SEC of an administrative rather than a district court forum for bringing agency enforcement action comes a decision which has the potential to change the tenor of the debate, at least temporarily. Administrative Law Judge Cameron Elliot issued an Initial...

SEC Fines Adviser $20 Million Based on Conflicts

Failure to disclose conflicts of interest and/or to comply with firm procedures are the predicates for a series of SEC enforcement actions involving regulated entities. The most recent example of these trends is an action involving an investment advisory subsidiary of a large financial services firm...

SEC, Insider Trading and Cyber Security: An International Hacking—Insider Trading Ring

Cyber security is a key focus for virtually everyone these days. The SEC, for example, has been issuing releases discussing disclosure requirements and offering guidance for a number of years. Prominent issuers have reported breaches as has the U.S. Government. Now the SEC has brought an enforcement...

This Week in Securities Litigation (Week ending August 14, 2015)

A second insider trading action was brought by the Commission against a senior banking official based on the same take-over for which he was previously charged — but a different securities trading account is at the center of the new case. The SEC also brought its first action against a municipal...

SEC, FINRA, DC Sanction Success Trade

A recurrent theme in today’s enforcement environment is parallel and often overlapping proceedings. That is the case with a District of Columbia based broker that drew sanctions from the SEC, FINRA and DC. In the Matter of Success Trade, Inc., Adm. Proc. File No. 3-16755 (August 14, 2015). Respondent...

SEC Files Another Settled Market Crisis Case

The market crisis may have ended years ago, but not the SEC’s supply of cases from that time period. The agency filed a settled action in which those soliciting sophisticated investors misrepresented the risks of two funds, contrary to the warnings in the materials. In the Matter of Citigroup Alternative...

This Week in Securities Litigation (Week ending August 21, 2015)

The Commission filed a settled FCPA action this week centered on hiring relatives of foreign officials tied to a sovereign wealth fund. In addition, the agency filed two actions involving Citigroup – one based on the market crisis and a second tied to compliance failures – a boiler room case...

Sixth Circuit Concludes Morrison Does Not Apply to Advisers Act

In Morrison v. National Australia Bank, Ltd., 561 U.S. 247 (2010) the Supreme Court held that the reach of Exchange Act Section 10(b) is the water’s edge of the United States [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ]. Specifically, the court held that...

SEC, DOJ Charge Investment Bank Analyst With Insider Trading

The SEC and the Department of Justice announced insider trading charges against a former investment banker and his longtime friend centered on two deals. The SEC’s complaint also named a third person alleged to have been a second tier tippee. SEC v. Aggarwal, Civil Action No. 2:15-cv-06460 (C.D...