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SEC Enforcement “Must be Bold and Unrelenting” Ms. White Says

Mary Jo White, President Obama's nominee to become Chairman of the SEC, testified before the Senate Committee on Banking, Housing and Urban Affairs as part of the confirmation process. While some had anticipated that the testimony might be elongated or contentious because of her prominent Wall...

The SEC Should Make Financial Fraud an Enforcement Priority Now

At the Financial Reporting Institute Conference last week SEC Commissioner Walter and Chief Accountant Paul Beswick addressed the necessity for high quality financial reporting, the application of international accounting standards or IFRS and the work of the Public Company Accounting Oversight Board...

Offering Fraud: An SEC Enforcement Staple

One of the new staples of SEC enforcement is offering fraud cases. When coupled with Ponzi scheme or investment fund fraud actions, they constitute a significant portion of the day to day work load of the reorganized Enforcement Division. Two recent examples of these cases are SEC v. Detroit Memorial...

SEC Files Another Offering Fraud Action

Offering frauds continue to be the focus of the SEC Enforcement Division. Echoing claims from other recent cases, such as In the Matter of Scuderi Group, Inc., Adm. Proc. File No. 3-15344 (Filed May 30, 2013) (repeated share placements made under a claimed exemption which were one years long unregistered...

Insider Trading: Is the SEC Eliminating the Element of Deception?

Insider trading prohibitions are based on Exchange Act Section 10(b). That statute requires proof of deception to establish a violation. Absent deception there is no violation of Section 10(b) and no insider trading. Under the classic theory of insider trading deception is supplied by a corporate...

Compliance, Remediation and Effective SEC Enforcement

Compliance is a critical function for a public company. While it can be viewed as simply a “cost of doing business” perhaps it is better considered as a critical business component, helping create a market place brand of a fair and ethical dealing reflecting its culture. That image, of course...

Another Trial, Another Loss For The SEC

One of the basic tenants of the new SEC “get tough/omnipresent” policy is winning at trial. Courtroom wins earn the program respect, aiding the overall enforcement effort. Yet the Commission seems to have difficulty doing that. Despite what the agency claims is a good courtroom track record...

SEC Chair: It Will Be a Busy Year For Enforcement

SEC Chair Mary Jo White outlined the 2014 agenda for the SEC in recent remarks. SEC Chair Mary Jo White, 41 st Annual Securities Regulation Institute, Coronado, California (Jan. 27, 2014)(here). Portions of the agenda focused on technology and rule making initiatives. A key segment focused on Enforcement...

SEC Enforcement – Deterrence, Prevention or Both?

The Commission’s current enforcement approach was detailed by Chair Mary Jo White in a speech delivered to the Australian Securities Investment Commission. In remarks titled “Perspectives on Strengthening Enforcement,” delivered on March 24, 2014 ( here ), Ms. White discussed first...

SEC Commissioner Piwowar On Enforcement Policy

Commissioner Michael Piwowar, the only economist currently on the Commission, outlined his views regarding enforcement policy in remarks delivered at the Securities Enforcement Forum 2014 last week ( here ). That policy begins with the due process clause of the Fifth Amendment, the Commissioner stated...

The SEC and the DMV

“The SEC Should Copy the DMV” is the title of an article published in the New York Times by Joseph S. Fichera recently. The article focuses on the use of corporate fines, questioning whether they are effective: “The SEC and other federal regulators have levied over $125 billion in penalties...

The SEC Commissioners Speak: Part I

The SEC Speaks conference has traditionally been a forum in which the agency reviewed significant recent undertakings and indicated its future direction. This year was no different. Four of the five Commissioners addressed conference participants, discussing recent significant undertakings and sketching...

The SEC Commissioners Speak: Part II

Yesterday’s article reviewed the remarks of SEC Chair Mary Jo White and Commissioner Kara M. Stein at SEC Speaks. The article today reviews the remarks at the conference of Commissioners Michael S. Piwowar and Daniel M. Gallagher. Collectively, the comments of the Commissioners provide insight...

Priorities for the SEC’s Enforcement Division

Last week SEC Enforcement Division Director Andrew Ceresney,testified before Congress regarding the efforts of the Division and its requested for additional funding, highlighting its priorities ( here ). The Director began by telling the subcommittee that “A strong enforcement program is at the...

Is the SEC a Toothless Watch Dog?

SEC enforcement actions are supposed to halt violations, protect investors and the markets, act as a deterrent and prevent a future repetition of wrongful conduct. To facilitate those goals settlements typically incorporate common elements. For example, when settling a civil injunctive action in Federal...

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 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...

Challenges to SEC Forum Selection Decisions

Two cases challenging the SEC’s use of administrative proceedings based on the Constitution’s Appointment Clause are headed for the Circuit Courts. One, Duka v. SEC will be considered by the Second Circuit. A second, Hill v. SEC, will be heard by the Eleventh Circuit. Both courts concluded...

SEC Files Record Number of Independent Enforcement Actions in Fiscal 2015

According to the agency’s recently released enforcement activity statics, the SEC’s overall enforcement activity and the number of independent enforcement actions both increased in the fiscal year 2015 (which just ended on September 30) compared to prior years. More specifically, during fiscal...