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The Week in Securities Litigation: Criminal Charges Filed For Financial Fraud, SEC Actions

Current market volatility was addressed this week when the Commission announced that the exchanges and FINRA would be filing updated circuit breaker rules. In addition, the staff issued an Alert regarding the use of sub-accounts in market manipulations, money laundering, insider trading and other fraudulent schemes.

SEC Enforcement lost a ruling on primary liability in a decision which applied the Supreme Court's Janus ruling to Securities Act Section 17(a) as well as Exchange Act Section 10(b). The ruling also precluded the Commission from using scheme liability as a predicate for its false statement claims. Enforcement also brought another market crisis case involving the five school districts induced to purchase highly speculative and leveraged investments, an action involving soft dollars, a failure to supervise proceeding and three financial fraud cases.

Finally, criminal prosecutors filed charges against the former Carter's Inc. employee at the center of the financial fraud which ended with the company entering into the Commission's first non-prosecution agreement.

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For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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