Securities

Recent Posts

Sales Executive at Center Of Carter’s, Inc. Fraud Indicted
Posted on 27 Sep 2011 by Thomas O. Gorman

The executive at the center of the fraud at Carter's, Inc., Joseph Elles, was named as a defendant in a 32 count indictment. The charges include securities fraud and wire fraud. U.S. v. Elles, 11 CR 445 (N.D. Ga.). The company entered into the... Read More

Plaintiff’s Counsel: $2.46 Billion Judgment in Fraud Suit Is Record
Posted on 18 Oct 2013 by Michael J. Lello

CHICAGO — (Mealey’s) A federal judge in Illinois on Oct. 17 entered a $2.46 billion judgment — the largest judgment following a securities class action trial, according to the lead plaintiff’s counsel — against Household... Read More

Manhattan U.S. Attorney Prevails in Securities Fraud, RICO Case
Posted on 24 Mar 2015 by Thomas O. Gorman

The SEC has brought a series of investment fund fraud and Ponzi schemes. Indeed, the Commission has brought so many of these cases in recent years they have become a staple. None of those cases, however, involved securities fraud tied to an investment... Read More

This is "God's Work"?
Posted on 20 Apr 2010 by Brian JM Quinn

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... Read More

Madoff Anniversary: Scam Takes Additional Toll
Posted on 15 Dec 2010 by Mark Zimbelman

Saturday, December 11, 2010 was the two-year anniversary of the day when Bernie Madoff's sons, Mark and Andrew, contacted law enforcement officials to notify them that their father was running the largest Ponzi scheme in history. On this same day... Read More

TD Bank Agrees to Pay $52.5M to Settle Charges Related to Rothstein Scheme
Posted on 24 Sep 2013 by Michael J. Lello

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... Read More

SEC Names Recidivist, Claimed Country Music Fund Raiser, In Fraud Order
Posted on 1 May 2014 by Thomas O. Gorman

The Commission directed the institution of an administrative proceeding charging recidivist Stanley Jonathan Fortenberry, an unregistered fund adviser, with fraud in connection with the operation of a fund supposedly tied to a country music talent. In... Read More

Making a Bad Day Worse
Posted on 21 Oct 2010 by Thomas O. Gorman

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... Read More

Shifting Theories of Criminal Liability Should Raise Red Flags
Posted on 12 Apr 2010 by Thomas O. Gorman

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... Read More

How Falsifying Compliance With a Lease Became Securities Fraud
Posted on 4 Dec 2014 by Doug Esten

The CEO and CFO of a successful senior living firm sought to expand the business by acquiring the operations of another firm and leasing its facilities. Despite warnings that the lease terms were far to onerous, the deal was concluded. The result was... Read More

SEC Reaches $127.5M Settlement with Investment Bank Over Misrepresentations
Posted on 19 Jul 2012 by LexisNexis® Mealey's™ Legal News

WASHINGTON, D.C. - (Mealey's) The U.S. investment banking subsidiary of Japan-based Mizuho Financial Group will pay $127.5 million to settle claims that it provided "dummy assets" to a ratings agency "that inaccurately reflected the... Read More

Cooperation by Broker Mitigates SEC Sanctions
Posted on 2 Mar 2015 by Doug Esten

Cooperation was a key factor in the resolution of an action involving a minority owner of a broker-dealer that is alleged to have facilitated a fraudulent scheme to conceal losses at a major Japanese company. In the Matter of Hajime Sagawa, Adm. Proc... Read More

Supreme Court to Consider Securities Fraud Pleading Question
Posted on 15 Jun 2010 by Thomas O. Gorman

The Supreme Court granted certiorari on Monday in a securities fraud class action, agreeing to hear a question regarding pleading standards. The question presented is: "Whether a plaintiff can state a claim under Section 10(b) of the Securities... Read More

The Second Circuit, Primary Liability and the Bright Line Test
Posted on 4 May 2010 by Thomas O. Gorman

Note: The enhanced versions of the opinions cited below may be accessed by lexis.com subscribers. Except where noted, non-subscribers may access the unenhanced version on lexisONE's Free Case Law. The dividing line between primary and secondary... Read More

This Week in Securities Litigation (June 4, 2010)
Posted on 4 Jun 2010 by Thomas O. Gorman

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... Read More

  • Blog Post: Shifting Theories of Criminal Liability Should Raise Red Flags

    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...
  • Blog Post: This Week in Securities Litigation (April 16, 2010)

    On Capital Hill, the debate continues regarding financial reform, as CFTC Chairman Gary Gensler continued to champion new regulation for OTC derivatives. The SEC brought another case in its on-going investigation regarding kickbacks relating to the New York state pension fund and another investment...
  • Blog Post: High Stakes for the SEC, Goldman and Investors

    The Commission's action against Goldman Sachs is the most significant case it has brought in years. SEC v. Goldman Sachs & Co. , Case No. 3229 (S.D.N.Y. Filed Apr. 16, 2010). The case pits the once revered securities markets regulator struggling for a come-back against the Wall Street giant...
  • Blog Post: O.K., So The SEC Sued Goldman Sachs - Now What?

    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...
  • Blog Post: This is "God's Work"?

    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 shareholders. Whatever...
  • Blog Post: SEC Drops Most Significant Claims Against Stockman

    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...
  • Blog Post: The Second Circuit, Primary Liability and the Bright Line Test

    Note: The enhanced versions of the opinions cited below may be accessed by lexis.com subscribers. Except where noted, non-subscribers may access the unenhanced version on lexisONE's Free Case Law. The dividing line between primary and secondary liability in securities fraud actions has been...
  • Blog Post: Two Financial Fraud Cases and a SOX Section 304 Action

    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...
  • Blog Post: This Week in Securities Litigation (June 4, 2010)

    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...
  • Blog Post: Supreme Court to Consider Securities Fraud Pleading Question

    The Supreme Court granted certiorari on Monday in a securities fraud class action, agreeing to hear a question regarding pleading standards. The question presented is: "Whether a plaintiff can state a claim under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 based on a pharmaceutical...
  • Blog Post: Establishing the Element of Intent in a Criminal Securities Case

    The Second Circuit reversed the securities fraud convictions of Mark Kaiser arising out of the financial fraud at Royal Ahold subsidiary U.S. Food Services, concluding that the instructions regarding a key intent element were error. Mr. Kaiser is a former executive of U.S. Food Services who for years...
  • Blog Post: SEC Drops Significant Claims In Settling Financial Fraud Case

    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 other executives...
  • Blog Post: Virginia: Bellwether Venue for Financial and Securities Fraud Enforcement

    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...
  • Blog Post: Pleading Scienter Against an Outside Auditor

    The Sixth Circuit addressed the liability of an outside auditor named as a primary violator in a securities fraud action in Louisiana School Employees' Retirement System v. Ernst & Young, LLP , No. 08-6194 (6th Cir. Decided Sept. 22, 2010) [ enhanced version available to lexis.com subscribers...
  • Blog Post: Say It Ain’t So, Jon!

    The Gawker blog reports that Larry Wilcox, Ponch's sidekick Jon from the cop show ChiPs, was caught in a sting operation by FBI agents and the Securities and Exchange Commission. He was allegedly seeking kickbacks in exchange for penny-stock manipulation. The heroes from my past continue to fall...
  • Blog Post: Making a Bad Day Worse

    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 ...
  • Blog Post: Madoff Anniversary: Scam Takes Additional Toll

    Saturday, December 11, 2010 was the two-year anniversary of the day when Bernie Madoff's sons, Mark and Andrew, contacted law enforcement officials to notify them that their father was running the largest Ponzi scheme in history. On this same day, Bernie and Ruth's oldest son, Mark, decided he...
  • Blog Post: SEC Prevails in Court

    The Commission has had mixed results in court in recent months. The agency has prevailed in some cases. In others it has lost. Some losses raise troubling questions about the program ( here ). In SEC v. Radical Bunny , LLC, Case No. 2:09-cv-01560 (D. Ariz. Filed July 28, 2009) however the Commission...
  • Blog Post: Janus: Narrowing the Reach of Section 10(b)

    The Supreme Court drew the line between primary and secondary liability, resolving a debate which has swirled since its 1994 decision in Central Bank v. First Interstate, 511 U.S. 164 [ an enhanced version of this opinion is available to lexis.com subscribers / unenhanced version available from lexisONE...
  • Blog Post: Thomas Gorman on Matrixx Initiatives: Not A Pro-Business Decision

    "The Supreme Court rejected an opportunity to adopt a bright line test of materiality in favor of its traditional "total mix" standard in Matrixx Initiatives, Inc., v. Siracusano, Case No. 09-1156, 131 S. Ct. 1309; 179 L. Ed. 2d 398; 2011 U.S. LEXIS 2416 (March 22, 2011) [ enhanced version...
  • Blog Post: Former Duane Reade CEO Sentenced to Prison for Financial Fraud

    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 statements in...
  • Blog Post: Sales Executive at Center Of Carter’s, Inc. Fraud Indicted

    The executive at the center of the fraud at Carter's, Inc., Joseph Elles, was named as a defendant in a 32 count indictment. The charges include securities fraud and wire fraud. U.S. v. Elles, 11 CR 445 (N.D. Ga.). The company entered into the SEC's first non-prosecution agreement in December...
  • Blog Post: NY AG Charges Bank of New York Mellon with Securities Fraud

    The New York Attorney General added Martin Act securities fraud claims and other charges to a whistleblower complaint in taking over a suit against Bank of New York Mellon. The complaint centers on claims that the bank made almost $2 billion in revenues by misrepresenting the interbank rates it obtained...
  • Blog Post: Rudy – Securities Fraud

    Who cares how much effort I put in, if it doesn't produce any results. In a sad turn of event, Daniel "Rudy" Ruettinger was charged by the SEC with securities fraud. Ruettiger and 10 of the scheme's other participants have agreed to settle the SEC's charges without admitting...
  • Blog Post: Duane Morris Alert: Two-Year Statute of Limitations for Federal Securities Fraud Claims Begins to Run When a Reasonably Diligent Plaintiff Would Have Discovered the Violations

    In Strategic Diversity, Inc. v. Alchemix Corp. , an opinion marked for publication, the United States Court of Appeals for the Ninth Circuit held that for federal securities fraud claims, the statute of limitations begins to run when a reasonably diligent plaintiff would have discovered the underlying...