Corporate Defense and Disputes

Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds

Tag Archives: Securities Regulation

SEC Continues to Use Advanced Data Analytics to Investigate Insider Trading

The SEC has continued to pursue a number of insider trading cases this year, both large-scale and small. Some of those matters involved trades that yielded relatively small amounts of profits: $40,000-$60,000. Why does the enforcement division spend resources on these smaller cases? First, they serve as a reminder that violations can be identified, even … Continue Reading

Proskauer Attorneys Pen Cover Article for New York Law Journal’s White-Collar Crime Special Report

Proskauer partner Joshua M. Newville and associate Lindsey A. Olson recently wrote the lead article for New York Law Journal’s White-Collar Crime special report. In the article, they discuss how proposed amendments to the Electronic Communications Privacy Act of 1986 could affect financial fraud investigations by the SEC and DOJ.  For more information, please read … Continue Reading

SEC Overrules Its Own Administrative Law Judge to Clear Customer of Fraud Charges

In a rare reversal of its own administrative law judge in the Matter of optionsXpress, the full Securities and Exchange Commission unanimously held that the SEC’s Enforcement Division had not met its burden of proof that the customer of a broker-dealer had committed securities fraud in connection with his clearing broker-dealer’s failure to deliver stock … Continue Reading

Joshua Newville Discusses Amendments to Rules Governing SEC Administrative Proceedings with Compliance Week

Last month, the SEC announced that it had adopted amendments updating the rules of practice governing its in-house administrative proceedings.  On August 9, 2016, Compliance Week published an article on the recently-adopted amendments, entitled, SEC modifies administrative proceedings, but did it go far enough? The article features insights from Proskauer partner Joshua Newville, who discusses … Continue Reading

Key Takeaways from Cornerstone Research’s Securities Class-Action Filings 2016 Midyear Assessment

Cornerstone Research recently released its 2016 midyear assessment of federal securities class-actions filings. The report finds an increase in filings in the first half of 2016, with particular increases in M&A filings, filings against U.S.-exchange-listed companies and S&P 500 companies, and filings within both the Financial and Consumer Non-Cyclical sectors. Below are some key takeaways … Continue Reading

SEC Adopts Amendments to Rules Governing Its Administrative Proceedings

Earlier today, the SEC announced that it will adopt certain amendments to its rules of practice governing administrative proceedings. Faced with criticism from practitioners and the media regarding a perceived “home field advantage” in administrative proceedings, as well as various constitutional challenges to the ALJ process, the SEC has now approved amendments “intended to update … Continue Reading

Eleventh Circuit Rules Disgorgement No Different Than Forfeiture, Barring SEC From Seeking Ill-Gotten Gains Outside Five-Year Limitations Period

A three judge panel in the Eleventh Circuit issued a ruling last Thursday in Securities and Exchange Commission v. Barry Graham et al., Case No. 14-13562, holding—contrary to several other circuits—that the remedy of disgorgement was effectively a forfeiture, and therefore subject to the standard five-year statute of limitations.  The SEC brought this case in … Continue Reading

Supreme Court’s Manning Decision Leaves Questions Unanswered

The U.S. Supreme Court’s decision yesterday in Merrill Lynch v. Manning clarified the scope of federal jurisdiction under the Exchange Act in certain important respects, but also left open critical issues that may arise in future cases.  Although the Court rejected federal jurisdiction in resolving the sole issue that was before it, the Court also … Continue Reading

Investors Fight Back – Court Battle Could Determine Scope of HSR Act Exemption

When an enforcement action for a violation of the Hart-Scott-Rodino Act is announced, chances are the matter has already come to a close – by the time the action becomes public, the agency and the parties usually have agreed upon financial penalties and other sanctions to be levied. But that is not the case for … Continue Reading

Cornerstone Research Reports “Surge” in Securities Class-Action Settlements in 2015

Cornerstone Research’s latest annual report discloses that the number and average size of securities class-action settlements increased in 2015 as compared to 2014.  Total settlement dollars rose to more than $3 billion – similar to the annual average for the prior five years, but a significant increase from 2014. Cornerstone attributes the 2015 increase in … Continue Reading

Second Circuit Adopts Actual-Knowledge Standard for MD&A Disclosures

The Second Circuit held yesterday that Item 303 of SEC Regulation S-K requires issuers to disclose only those trends, events, or uncertainties about which the issuer has actual knowledge, rather than those matters about which the issuer allegedly should have known.  The court’s decision in Indiana Public Retirement System v. SAIC, Inc. also reinforced prior … Continue Reading

SEC Proposal Would Limit Investment In Derivatives By Investment Companies

Recognizing the substantial risks inherent in many derivatives transactions, and the substantial leverage that is often imbedded in derivatives, the SEC last week announced its proposed new rules that would impose limits on the exposure to derivatives for investment companies, which include mutual funds, exchange-traded funds and closed-end funds, and create other regulatory requirements. Exposure … Continue Reading

SEC to Conduct Second Round of Cybersecurity Examinations

On September 15, 2015, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) issued a Risk Alert announcing its second round of examinations of registered investment advisers and broker-dealers under its cybersecurity examination initiative.… Continue Reading

FINRA Bars Former President Of Broker-Dealer Along With Former Registered Representatives

Reflecting increased regulatory willingness to discipline principals and supervisors, FINRA recently announced that it had imposed an industry bar on the former president of a defunct broker-dealer, along with five registered representatives who likewise were barred in all capacities. FINRA also barred two former principals from continuing to act in a principal capacity and imposed … Continue Reading

Big Loss For Plaintiffs In High Frequency Trading Cases

Last week, SDNY Judge Jesse Furman issued a 51 page decision in In Re: Barclays Liquidity Cross and High Frequency Trading Litigation dismissing all of the cases consolidated under the MDL.  In these cases, investor plaintiffs asserted  federal securities law claims under Section 10(b) and 6(b) of the Exchange Act against seven stock exchanges, Barclays … Continue Reading

SEC Brings First Major Cyber Insider Trading Case Against International Hacking Ring

In an action that emphasizes the agency’s commitment to cybersecurity, the SEC recently charged 32 defendants with violations of the federal antifraud laws and corresponding SEC rules, stemming from an alleged $100 million conspiracy to steal and trade on material non-public information contained in corporate earnings announcements that were obtained by hacking into the computer … Continue Reading

SEC Sanctions Dark Pool Operator and Affiliated High Frequency Trader

In the latest round of regulatory action involving high frequency trading and dark pools, the SEC announced yesterday that it reached a settlement with ITG, Inc., and its affiliate Alternet Securities, Inc., imposing a $20.3 million sanction based on ITG’s misuse of confidential order information to benefit the firm’s proprietary high-frequency trading.… Continue Reading

SEC Flexes Its Enforcement Muscle For Securities-Based Swaps

The broad definition of a “swap” in the Dodd-Frank Act, read literally, would encompass many transactions that Congress never intended to cover, so the SEC and the CFTC have jointly promulgated regulations that provide that many of those transactions are not treated as swaps.  However, a recent SEC Investor Alert, stating that fantasy stock trading … Continue Reading

UK Regulators Address Manipulation of Trading Benchmarks and Other Misconduct

Concluding a year-long review, UK regulators issued the final report of the Fair and Effective Markets Review Committee last week, making a number of recommendations intended to restore confidence in the trading markets for fixed income, currency and commodities (“FICC”) in the wake of past misconduct. The report noted the substantial fines that have been … Continue Reading

Department Of Justice Emphasizes Expectation That Corporations Cooperate In The Prosecution Of Company Executives

The Justice Department continues to send the strong signal that it is looking to charge senior executives of companies.  At a conference this week in London, senior Justice Department official Deputy Assistant Attorney General Sung-Hee Suh focused not only on the high priority the Department places on prosecution of corporate executives but she also made … Continue Reading

SEC Examination Priorities in 2015 to Focus on Transparency Issues and the Early Detection of Potential Fraudulent or Other Illegal Activity

On January 13, 2015, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its 2015 examination priorities for investment advisers, broker-dealers and transfer agents.  These priorities emphasize the importance of transparency and seek to identify, through enhancements in technology, potential illegal activity by focusing on the following key areas. Protecting Retail Investors and Investors … Continue Reading

SEC Sanctions Two Exchanges for Failing to Accurately Describe Order Types and Making Preferential Disclosure to High Frequency Traders

On January 12, 2015, the Securities and Exchange Commission announced that it had obtained a $14 million settlement against two exchanges formerly owned by Direct Edge Holdings, EDGA and EDGX (the “Respondent Exchanges”) for their failure to file Exchange Rules that accurately described the order types they offered, and for providing preferential disclosure to certain … Continue Reading

FINRA’s 2015 Examination Priorities Zero In On Abusive Trading Algorithms and Other Issues Involving Trading Technology

FINRA’s recently-released Regulatory and Examinations Priorities Letter for 2015 reflects substantial regulatory interest in high-frequency trading and other issues arising from trading technology.  Regulatory concern over these issues has been previously reported on this blog here and here. The 2015 Letter states that FINRA has adapted its surveillance program to identify potentially violative conduct such … Continue Reading

SEC Focus on Disclosure Issues for Municipal Securities, Private Equity and ETFs

At the recent Columbia Law School Conference, “Hot Topics: Leading Current Issues in Securities Regulation and Enforcement,” SEC Commissioner Kara M. Stein’s keynote address focused on a number of transparency and disclosure issues regarding municipal securities, private equity and exchange traded funds. Municipal Securities Commissioner Stein highlighted the importance of municipal finance to the growth of … Continue Reading
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