On October 16, 2009, the
Securities and Exchange Commission (SEC) instituted a civil injunctive action
in the United States District Court for the Southern District of New York
charging Raj Rajaratnam and his hedge fund advisory firm Galleon Management...
While sources are wallowing in the
exposure of a political figure in a "pay to play" scandal, I thought there
might be some lessons for other investment managers as states and perhaps the
SEC roll out limitations on political contributions...
The SEC lost a claimed Ponzi scheme case following a
bench trial in a decision handed down late last week. The complaint alleged
that a privately held exploration company defrauded promissory note investors
by misrepresenting or not disclosing the...
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...
James R. McGibbon,
Carla Wong McMillian, Jeffrey P. Bialos, Steuart H. Thomsen
In American Needle, Inc. v. National
Football League , 560 U.S. __ (2010), the Supreme Court unanimously held
that teams in the National Football League and a corporate...
What Is A PIPE?
The term PIPE, an acronym for “private investment in public equity,” refers to the private placement of a public company’s securities to select investors. The issuer company enters into a purchase agreement with investors...
The financial reform bill
now working its way through Congress will include an amendment to the
securities laws allowing private civil actions for aiding and abetting
liability, if an amendment Senator Arlen Specter proposed on May 4, 2010 is
Commissioner Louis Aguilar, in remarks at SEC Speaks last Friday, called for a revamping of the Commission’s 2006 Statement on Corporate Penalties, discussed here . While Commissioner Aguilar makes a good point, any reassessment should begin with...
In London v. Tyrrell et al .,
C.A. No. 3321-CC (March 11, 2010), read opinion here , the
Court of Chancery denied a special litigation committee's ("SLC") motion to
dismiss a shareholder's lawsuit under Zapata Corp. v. Maldonado,...
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...
The saga of Ponzi scheme
king Bernard Madoff continues with the
filing of a new action by New York Attorney General Andrew Cuomo against an
investment adviser who is alleged to have had information of the fraud by
the late 1990s. The complaint suggests...
The Libor scandal first began to unfold more than four years ago, but the with dramatic announcements in late June of the imposition of fines and penalties of over $450 million against Barclays PLC, the scandal has shifted into a higher gear and is now...
The insider trading case against Raj Rajaratnam, founder of Galleon Fund, and others, discussed here , is being heralded as the most significant in years, leading some to ask if its signals the rejuvenation of SEC enforcement. The significance of the...
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The dividing line between
primary and secondary...
Will FINRA step in to prevent a ban
on placement agents working with government investors?
You may remember that last August,
the SEC published a proposed rule that would create a prohibition on paying a
third party, such as a placement agent, to...
Thomas O Gorman, Partner,
Porter, Wright, Morris &
The market crisis, past enforcement
failures, insider trading and the FCPA dominated securities litigation this
week. In the wake of the report on the collapse of Lehman, not surprisingly...
Lingo v. Lingo, No. 713, 2009 (Del. Supr., June
10, 2010), read opinion here. The factual background of this Delaware
Supreme Court decision involves a faithless fiduciary who abused the Power
of Attorney given to her, but the part of the opinion that...
Thomas O Gorman, Partner, Porter, Wright, Morris & Arthur
Consistency is sometimes a virtue and, at other times, the "hobgoblin of small minds" to borrow an old phrase. In SEC v. Pentagon Capital Management PLC , Case No. 08 Civ. 3324...
Thomas Fox, Esq.
On January 21, 2010, the United States Sentencing Commission (USSC) proposed amendments to the Federal Sentencing Guidelines . These proposed changes included several which are used as the basis for the consideration of penalties...
In a series of posts, I have been exploring the
"nuts and bolts" of D&O insurance. In this post, the seventh in
the series, I examine the perennial questions of limits selection and program
structure - that is, how much insurance is enough...
Rule 4.2 of the ABA Model Rules of Professional Conduct instructs us that “In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the...
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...
The Commission filed a settled
registration fraud action yesterday against Daniel O'Riordan, the president of
Paradigm Tactical Products. According to the complaint, the founder of the
company sold millions of shares of unregistered stock into...
Capital Hill continued to debate
market reform this week with the introduction of the Volker Rule bill in the
Senate. SEC enforcement focused on resolving financial fraud and Ponzi scheme
cases, while the appellate section at FINRA reversed a panel...
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...