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SEC Files Settled Financial Fraud Action

Financial fraud actions have traditionally been a staple of SEC Enforcement. During the market crisis, however, the number of those cases waned. Following the formation of a task force focused on financial statement fraud, and a related data group, many thought the Commission would again bring more cases...

This Week In Securities Litigation (Week ending September 25, 2015)

The Commission responded to critics of its administrative proceedings this week, proposing changes to the Rules of Practice which govern them. If adopted the new rules would modify the time period within which the actions must be completed, permit depositions and provide for electronic filing. SEC...

Financial Fraud: An SEC Staple?

Since the SEC announced the formation of its Financial Fraud Task Force two years ago the agency has struggled to establish this once enforcement mainstay as a current staple. Some commentators have suggested that a trend is emerging in this area. To be sure the SEC is bringing financial fraud cases...

UBS Puerto Rico, Others Tied to SEC Fraud Action

When the bond market collapsed in Puerto Rico many clients at UBS Financial Services Incorporated of Puerto Rico had significant losses. Many had purchased shares of UBS PR closed-end funds or CEFs. UBSPR had been selling shares of these funds for years. Indeed, the firm offered customers a number of...

This Week In Securities Litigation (Week ending October 2, 2015)

September 30 th Madness dominated this week. The drive for stats was evident as the Commission stacked up cases like cord wood at a pace seldom seen. Twenty-two municipal bond actions were filed in one swoop; an insider trading case; a financial fraud action; an offering case; an FCPA action; and more...

U.S. Supreme Court Won’t Hear Appeal in Newman Insider Trading Suit

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today declined review of a Second Circuit U.S. Court of Appeals ruling overturning the conviction of two portfolio managers alleged to have engaged in an insider trading scheme ( United States of America v. Todd Newman, et al. , No. 15...

DC Circuit: No Jurisdiction For Suits Re SEC Forum Selection Choice

Suits challenging the SEC’s forum selection decisions continue to proliferate. As the trend has unfolded the Commission posted a memo on its website discussing the issue of forum selection and has proposed modifications to the Rules of Practice for administrative proceedings. A few ALJ rulings...

SEC Settles With Blackstone on Disclosure Issues

The SEC’s Asset Management Unit continues to review and analyze fees, expenses and the related disclosure at private equity firms. The Unit has encouraged advisers to self-report these issues. The most recent action emanating from the review involves three Blackstone Group L.P. investment advisers...

This Week in Securities Litigation (Week ending October 9, 2015)

The PCAOB filed a settled action involving an auditing firm in which the consent order of settlement was based on admissions of facts. The approach is similar to the one adopted by the SEC in which the Commission requires admissions of fact in select cases. This week the SEC filed a settled FCPA action...

UBS Settles Structured Note Case with SEC

The Commission brought its first case tied to inadequate disclosure regarding structured notes. The complex instruments, a debt security linked to a derivative tied to the performance of other products, are frequently marketed to relatively unsophisticated retail investors. In the Matter of UBS AG, Adm...

Broken Windows: SEC Files Six Settled Rule 105 Actions

Broken Windows – the SEC initiative cloned from the NYC Police Department which prosecutes every case large and small based on the a deterrence theory – is alive and well in the form of the Rule 105 Initiative. This week the Commission announced the filing of six settled actions based on...

This Week In Securities Litigation (Week ending October 16, 2015)

The SEC prevailed on two summary judgment motions. One centered on a manipulation action. The other was against an attorney who facilitated a prime bank fraud. The Commission also filed: An action against UBS tied to its failure to disclose certain factors which negatively impacted the value of structured...

Supremes Refuse Insider Trading Case- Prosecutions Now Tougher

Earlier this month, the US Supreme Court said it would not hear a case in which the appeals court overturned two insider trading convictions. By refusing to hear the case, they effectively let stand the decision below, which many say will make it much tougher to prosecute insider trading cases. As is...

This Week in Securities Litigation (Week ending October 23, 2015)

The Manhattan U.S. Attorney announced the filing of motions to dismiss the insider trading conviction of Michael Steinberg, formerly a portfolio manager at SAC Capitol, and six others in the wake of the Second Circuit’s decision in Newman. SEC released its enforcement statistics for the last...

SEC – Broker From Grand Central Insider Trading Scheme Settle

The scheme was perfect . Broker Vladimir Eydelman of Oppenheimer & Co. would place the trades; law school graduate Steven Metro, a clerk at Simpson Thatcher, would misappropriate the inside information; mortgage broker Frank Tamayo, a law school class mate of Mr. Metro would be the go-between –...

SEC Sanctions Another Entity for Not Following Its Own Procedures

A continuing focus of SEC enforcement is compliance by entities with their disclosed procedures. The Commission’s latest action in this regard resulted in the payment of nearly $6 million by a Credit Rating Agency that not only failed to comply with its disclosed procedures but lacked the required...

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...

New SEC Enforcement Action Database from NYU and Cornerstone Research

On October 27, 2015, Cornerstone Research in conjunction with the New York University Pollock Center for Law & Business and the Leonard N. Stern School of Business to launch the Securities Enforcement Database (SEED). As described in the organizations’ joint October 27, 2015 press release ...

This Week in Securities Litigation (Week ending October 30, 2015)

The SEC’s apparent preference for administrative proceedings as a venue for its enforcement actions continues to draw criticism. H.R. 3798 is now pending in the House of Representatives. The bill is tilted the “Due Process Restoration Act of 2015.” It would give a Respondent in a cease...

SEC Partially Settles Insider Trading Action Based on Gift to Romantic Partner

The SEC filed an insider trading action in which the tipper partially settled the action. While the complaint alleged that the tippee knew of the breach of duty and that the information was gifted to him by his romantic partner, he did not settle. SEC v. Spivak, Case No. 1:15-cv-13704 (D. Mass. Filed...

SEC, Adviser Settle Proceeding Centered on Conflicts

Conflicts of interest and a failure to disclose related party transactions continue to be key themes in Commission actions involving investment advisers. Undisclosed conflicts, as well as a failure to disclose related party transactions, were at the center of a proceeding brought against a registered...

SEC Brings Actions Against Ponzi Schemer, Client

Ponzi scheme cases have, of course, become a staple of SEC enforcement since the discovery of Madoff’s unprecedented scheme. While there seems to be a virtually endless number of these cases centered on the proverbial “too good to be true” scheme, the agency may have uncovered a new...

This Week In Securities Litigation (Week ending November 6, 2015)

Conflicts and investment fund fraud cases were the focus this week. The SEC brought two actions in each category. In addition, a settled insider trading action was filed. SEC Remarks: Andrew Cheresney, Director, Division of Enforcement addressed the 2015 National Society of Compliance Professional...

SEC, DOJ Charge Author of False Stock Tweets

“What could you arrest them for?” asked the Scottish tweeter who just made $97 total manipulating two stocks. “@dunragit are you serious? Did you read my post? It’s called securities fraud.” It would be difficult to find the people since they did not use their real name...

This Week In Securities Litigation (Week ending November 13, 2015)

The New York AG may have launched a new trend this week. Using the Martin Act, he filed a settled action against the largest coal producer in the nation alleging false statements regarding the firm’s ability to project the impact of climate change on its future business operations. Many of the...