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

Category Archives: Financial Services

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Current Issues Relating to Silicon Valley Bank Closure

On Friday, March 10, 2023, Silicon Valley Bank (“SVB”) became the largest U.S. lender since the Great Financial Crisis to enter into receivership with the Federal Deposit Insurance Corporation. SVB was a major provider of depository services and liquidity to various investment funds, managers and their related entities through subscription or capital call facilities, net … Continue Reading

Shining a Light on the Corporate Transparency Act: FinCEN’s Rules for Beneficial Ownership Reporting

On January 1, 2021, Congress enacted the Corporate Transparency Act as part of the Anti-Money Laundering Act of 2020 to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.” FinCEN issued the final rule on Beneficial Ownership Information Reporting Requirements on September … Continue Reading

First-of-its-Kind Crypto Insider Trading Conviction

In the first insider trading case involving cryptocurrencies, a crypto trader was convicted of insider trading in federal district court and recently sentenced to 10 months in prison. The defendant, Nikhil Wahi, pleaded guilty in the U.S. District Court for the Southern District of New York to illegally trading on information tipped by his brother, … Continue Reading

Second Circuit Holds that Expanding FSIA to Criminal Cases Would Not Save a Turkish Bank from U.S. Prosecution

The Second Circuit recently held that a denial of a motion to dismiss a criminal indictment based on the Foreign Sovereign Immunities Act (“FSIA”) is immediately appealable under the collateral-order doctrine but concluded that even if FSIA did provide immunity from criminal prosecutions, that immunity would not extend to a foreign sovereign’s or its instrumentality’s commercial activities. … Continue Reading

Supreme Court to Consider Securities Class Action Issue

On December 11, 2020, the United States Supreme Court granted certiorari in a shareholder securities litigation against Goldman Sachs.[1] On appeal, Goldman argues that federal securities law permits issuer defendants in purported class actions to rebut the presumption of reliance where the alleged misstatements are of such a generic nature that they could not be … Continue Reading

FinCEN Proposal Looks to Extend AML Requirements to Non-Federally Regulated Banks

On August 25, 2016, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, proposed a rule that would require all banks, regardless of whether they are subject to regulation by a “Federal functional regulator,” to establish and implement written AML programs, conduct ongoing customer due diligence, and identify and … Continue Reading

In Conflict With Other Circuits, Seventh Circuit Rules That Certain Transfers Involving Financial Institution Intermediaries Not Immune From Recovery By Bankruptcy Trustee

Section 546(e) of the bankruptcy code prohibits a bankruptcy trustee from avoiding “settlement payment[s]”, or payments “made in connection with a securities contract,” that are “made by or to (or for the benefit of)” qualifying financial entities, including financial institutions, stockbrokers, commodities brokers and others.   In a ruling that conflicts with precedent from the Second, … Continue Reading

No General Jurisdiction Over Out-of-State Firms Registering to Do Business in Delaware

The Delaware Supreme Court ruled yesterday that out-of-state corporations no longer would be subject to general personal jurisdiction in Delaware merely because they had registered to do business in Delaware. In making that ruling, the Court overruled prior state precedent, under which foreign corporations were deemed to have consented to jurisdiction in Delaware when they … Continue Reading

Ketchum Clarifies How FINRA Will Assess a Firm’s Culture of Compliance

In an April 15, 2016 speech to the Brookings Institution, FINRA CEO Richard G. Ketchum addressed the fundamental question of whether the equity markets are sufficiently fair, flexible, and efficient to encourage the participation of retail investors.   Ketchum described the substantial concerns of some investors regarding these issues and outlined recent action by FINRA to … Continue Reading

SEC’s 2016 Examination Priorities Focus on Retail Investors, Market Wide Risk and Use of Data Analytics

The recently issued Examination Priorities for 2016 reveals that the SEC’s priorities are organized around the same three thematic areas as last year: (i) retail investors, including retirement investments; (ii) market-wide risks; and (iii) the SEC’s increasing analysis of data to identify problematic activity.… Continue Reading

FINRA’s 2016 Examination Priorities Identifies New Initiatives on Market Integrity and Firm Culture and Further Concern on Supervision and Controls

The recently issued 2016 Regulatory and Examination Priorities Letter discloses FINRA’s new initiatives on market integrity and firm culture and reflects a focus on firms’ supervision regarding conflicts of interest and technology. Regulatory concern over many of these issues has been previously reported in this blog here, here, here and here.… Continue Reading

FINRA Arbitration Task Force Fails To Reach Consensus On Many Major Issues

The FINRA Dispute Resolution Task Force issued its final report last week, making certain recommendations designed to improve the arbitration process. More notably, however, the Task Force reported that it was unable to reach agreement on a number of more controversial issues, reflecting deep divisions among practitioners in this area.… Continue Reading

CFTC Proposes New Regulations For Algorithmic Trading

On November 24, 2015, the CFTC announced the new proposed Regulation Automated Trading (“Reg. AT”), which contains a variety of measures designed to prevent potential market disruptions arising from algorithmic trading.   Among other things, Reg. AT proposes certain pre-trade risk and order management controls, the implementation of policies and procedures governing algorithmic trading, and additional … Continue Reading

SEC Once Again Sanctions The CCO of An Investment Advisory Firm

On November 19, 2015, the SEC announced a settlement with investment advisory firm Sands Brothers Asset Management, LLC for violating the Custody Rule, SEC Rule 206(4)-2, which requires that registered investment advisers who have custody of their clients’ assets put in place policies and procedures intended to safeguard those assets against loss, misuse or misappropriation. … Continue Reading

SEC Director of the Division of Enforcement Discusses Market Structure Enforcement

On November 2, 2015, the Director of the SEC Division of Enforcement Andrew Ceresney spoke at the “SIFMA Compliance & Legal Society New York Regional Seminar” and outlined the SEC’s enforcement priorities with respect to market structure issues.  This is yet another response by regulators to the growth of algorithmic trading and alternative trading venues, … Continue Reading

CFTC Chair Discusses the CFTC’s Response to Algorithmic Trading

On October 21, 2015, CFTC Chair Timothy Massad spoke at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York.  His remarks came the day after SEC Chair Mary Jo White’s comments, which we blogged about here, and follow this summer’s … Continue Reading

CFTC Brings Enforcement Action for Swap Reporting Violations

The Commodity Futures Trading Commission (CFTC) recently brought its first enforcement action arising from the Dodd-Frank requirement that swap transactions be reported to a registered swap data repository (SDR). The CFTC has emphasized that the accuracy and completeness of swap reporting is essential to enhance market transparency, promote standardization and reduce systemic risk.… Continue Reading

CFTC Accuses Firm Manually Entering Orders Of Spoofing Scheme That Fooled Algorithmic Traders

Potentially abusive trading algorithms, such as algorithms that purportedly engage in “spoofing” or “layering” are the subject of considerable regulatory interest.  However, in an interesting complaint filed on October 19, 2015, the CFTC alleged that a firm manually entering futures orders engaged in illegal spoofing that appears to have lured algorithmic traders into the market. … Continue Reading

Coding Errors Lead To SEC Sanctions for High-Frequency Trading Firm

Mistakes in computer coding by a high frequency trading firm that went undetected for approximately four years were responsible for approximately 12.6 million orders that violated Reg NMS, according to an Order settling an enforcement proceeding with Latour Trading LLC, announced by the SEC on September 30.  These noncompliant orders involved more than $4.6 billion … 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
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