From the outset of his time in office, SEC Chair Gary Gensler has made it clear that establishing oversight of crypto assets represent one his priorities. In a speech last week, Gensler said that agency will be “very active” in bringing digital currency under its investor protection framework, saying further that the digital assets will not mature if they are not brought under broad regulatory oversight. The regulator’s position is not restricted to mere words; a recent report shows that the agency has indeed been active in asserting its cryptocurrency oversight through enforcement actions. According to a recent report from Cornerstone Research, the agency has bought 19 enforcement actions related to cryptocurrency in the first nine months of 2021. The report, entitled “SEC Cryptocurrency Enforcement: Q3 2021 Update,” can be found here.
Continue Reading SEC Enforcement Activity Targets Crypto Assets

With the latest whistleblower awards to two individuals totaling $114 million (including an award to one individual of $110 million), the total amount awarded under the SEC whistleblower since its first award in 2012 now totals over $1 billion. The pace in the number and size of awards has accelerated significantly in the past year, as the SEC under the Biden Administration had pursued a pro-whistleblower approach. A copy of the SEC’s September 15, 2021 press release about the latest awards can be found here. The agency’s September 15, 2021 order regarding the awards can be found here.
Continue Reading With Latest Awards, Total SEC Whistleblower Awards Top $1 Billion  

Even though the worst of the pandemic crisis in the U.S. appears, at least for now, to be past, the threat of COVID-19-related claims continues. In the latest example of the continuing COVID-19-related claim threat, the SEC has initiated a COVID-19-related enforcement action against a California-based digital health care company that had made claims early in the coronavirus outbreak about the company’s ability to profit from the outbreak. The SEC’s new action is a reminder that the threat of new COVID-19-related claims is ongoing. A copy of the SEC’s July 7, 2021 complaint against Parallax Health Sciences, Inc. can be found here. The SEC’s July 7, 2021 press release about the enforcement action can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Action Against Digital Health Firm

In recent years, the SEC has established itself as an active cryptocurrency enforcement agency, according to a new report from Cornerstone Research. The report, entitled “SEC Cryptocurrency Enforcement: Q3 2013 – Q4 2020,” details that between July 2013 and year end 2020, the agency initiated a total of 75 enforcement actions and 19 trading suspension orders against respondents involved with digital assets. The report also shows that the agency’s cryptocurrency activity has steadily increased throughout the 2013-2020 period. A copy of the report can be found here. Cornerstone Research’s May 11, 2021 press release about the report can be found here.
Continue Reading SEC Establishes its Cryptocurrency Enforcement Credentials

President Biden’s nominee to head the SEC, Gary Gensler, faced a grilling today before the U.S Senate banking committee as his nomination  proceeds through Congress. Although the outcome of his nomination technically remains uncertain, his eventual confirmation seems likely. With that possibility in mind, it seems timely to look ahead at some of the issues the agency may address and initiatives the agency may advance under the new administration.  As it is, because of some initiatives that already underway, it is possible to project where we might be headed, at least to a certain extent.
Continue Reading What’s Ahead at the SEC?

On December 4, 2020, in what is according to the SEC its first proceeding charging an issuer for misleading investors about the financial effects of the pandemic on company finances and operations, the SEC entered into a settled Cease and Desist Order with The Cheesecake Factory Incorporated based on the agency’s determinations that the company’s late March and early April statements that it was “operating sustainably” were, without further information, misleading to investors.  The SEC’s December 4, 2020 Cease-and-Desist Order can be found  here, and the agency’s December 4, 2020 press release about the Order can be found here.
Continue Reading SEC Charges Cheesecake Factory Over Misleading COVID-Related Disclosures

As I noted at the time, earlier this month the SEC released its enforcement activity report for the fiscal year ending September 30, 2020. While the report fully detailed the agency’s enforcement activity, the report did not break out statistics reflecting the SEC’s actions against publicly traded companies. A November 18, 2020 report from Cornerstone Research, written in collaboration with the NYU Pollack Center for Law & Business, entitled “SEC Enforcement Activity: Public Companies and Subsidiaries Fiscal Year 2020 Update” (here), takes a detailed look at SEC enforcement activity involving publicly traded companies and their subsidiaries during FY 2020.

As was the case with enforcement activity overall, enforcement activity involving publicly traded companies declined during FY 2020 due to the impact of the coronavirus outbreak, but after a sharp drop in activity during the first half of the fiscal year, enforcement activity rebounded toward the end of the second half. The agency’s $1.6 billion in public company monetary settlements slightly exceeded the equivalent figures for FY 2019. Cornerstone Research’s November 18, 2020 press release about the report can be found here.
Continue Reading SEC Public Company Enforcement Actions Decreased in FY 2020, But Recoveries Increased

It was only this past June when the SEC made what was at the time the largest ever whistleblower award — $50 million – to a single individual. As it has turned out, that record stood for only a short time, as on October 22, 2020, the SEC shattered the prior record, paying out a whopping whistleblower bounty of $114 million to a single individual. The SEC’s award order is heavily redacted to protect the identity of the whistleblower so relatively is known about the circumstances surrounding the award, but even so the sheer size of the award makes a serious statement. The SEC’s October 22, 2020 award order can be found here. The SEC’s October 22, 20202 press release about the award can be found here.
Continue Reading SEC Awards Largest-Ever Whistleblower Bounty of $114 Million

According to a new report from Cornerstone Research, the number of accounting and auditing enforcement actions the SEC initiated in 2019 was down slightly from the number initiated in 2018, but the number remained near the 2014-2018 average. Monetary settlements of accounting and auditing enforcement actions during 2019 totaled approximately $626 million.  The June 25, 2020 report, which also summarizes accounting and auditing enforcement activity initiated by the PCAOB, is entitled “Accounting and Auditing Enforcement Activity – 2019 Review and Analysis” and can be found here. Cornerstone Research’s June 25, 2020 press release about the report can be found here.
Continue Reading SEC Accounting and Auditing Enforcement Actions Down Slightly in 2019

In prior enforcement actions the agency filed in the wake of the coronavirus outbreak, the SEC has made it clear that it intends to target companies and individuals that are seeking to secure gains by misrepresenting to investors the companies’ ability to profit from the pandemic. On June 9, 2020, the SEC filed what is the latest of these pandemic-related enforcement actions. In its complaint, the agency alleges that a penny stock trader engaged in a fraudulent pump-and-dump scheme involving the stock of a biotechnology company. The SEC alleges he drove the company’s share price by making hundreds of false statements about the company in an online forum, and then after the company’s share price rose, he sold his stock for significant profits.
Continue Reading SEC Files Enforcement Action Based on Alleged COVID-19 Pump-and-Dump Scheme