This week the Commission prevailed in a litigated action, securing the relief it sought against a defendant and his company after prevailing on summary judgment. The agency also brought two insider trading actions, one centered on a financial fraud case, and two investment fraud actions.
The Division of Enforcement altered its long standing policy on one of its key settlement terms. Traditionally, the Division has permitted defendants to settle enforcement actions without admitting or denying the allegations in the complaint expect as to jurisdiction. Under a revision to the policy announced the Division will no longer permit those convicted, or who otherwise admitted the facts in a parallel criminal action, to settle with the Commission based on "not admitting or denying" the facts.
SEC Enforcement: Litigation cases
Fraudulent tender offer: SEC v. Weintraub, Case No. 11-21549 (S.D. Fla.) is an action against Allen E. Weintraub and his company AWMS Acquisitions, Inc. The compliant centers on claims that Mr. Weintraub and his company made false tender offers for all of the outstanding stock of AMR Corporation, the parent of American Airlines, and Eastman Kodak Company. At the time of the offers, which were for, respectively, $1.3 billion in case and $3.25 billion in cash, the defendants did not have any ability to enter into the transactions. Mr. Weintraub also failed to disclose key facts about his background including the fact that he had pleaded guilty to criminal charges. The complaint alleged violations of Exchange Act Section 10(b) and 14(e). The court granted summary judgment in favor of the Commission. It also entered permanent injunctions against both defendants and requires the defendants to pay $400,000 in civil money penalties.
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