As I discussed in a post at the time (here), in August 2021 the SEC brought an cybersecurity-related disclosure enforcement action against UK educational publishing firm Pearson plc. In the following guest post, Paul Ferrillo, Daphne Morduchowitz and James Billings-Kang take a detailed look at the Pearson enforcement action and discuss the action’s implications. Paul and Daphne are partners and James is an associate at the Seyfarth Shaw law firm. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading SEC Ramps Up Its Cyber-Security Enforcement in Pearson Matter

As the pandemic has progressed and as time has passed, one question I am regularly asked is whether we will continue to see COVID-19 related legal actions being filed. If the latest SEC action is any indication, we have not yet seen the last of new COVID-19-related suit filings. On August 17, 2021, the agency filed a civil enforcement action against an Ohio biotech firm claiming that the firm made false claims about one of its products, as a way to suggest that the firm was positioned to profit from the coronavirus outbreak. A copy of the agency’s complaint can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Suit Against Biotech Firm

In the agency’s latest move underscoring its emphasis on cybersecurity disclosure, the SEC has filed settled charges against the U.K. educational publishing and services company Pearson plc, alleging that the company misled investors about a 2018 data breach. The company, which neither admitted nor denied the charges, agreed to pay a $1 million civil money penalty. The administrative enforcement action, while not the first of its type, does highlight the agency’s heightened focus on cybersecurity disclosure issues. The agency’s August 16, 2021 cease and desist order can be found here. The agency’s August 16, 2021 press release about the order can be found here. Pearson’s statement about the proceeding can be found here.
Continue Reading SEC Charges Company Over Misleading Cybersecurity-Related Disclosures

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

The number of SEC and PCAOB accounting and auditing enforcement actions decreased in 2020 relative to 2019, but monetary settlements increased year-over year, according to a recent report from Cornerstone Research. The report, entitled “Accounting and Auditing Enforcement Activity – 2020 Review and Analysis” (here), analyzes the agencies’ publicly disclosed accounting and auditing enforcement actions between 2015 and 2020. Cornerstone Research’s April 27, 2021 press release about the report can be found here.
Continue Reading Accounting and Auditing Enforcement Actions Down in 2020 While Total Settlements Increased

In what is, according to the SEC itself, the second-largest whistleblower award in the history of the agency’s whistleblower program, the SEC has awarded two joint whistleblowers a bounty of over $50 million. The agency’s order making the award is heavily redacted, in order to protect the whistleblowers’ identities, so it is hard to tell very much about the circumstances surrounding the award. But the award is the latest in what has been a recent flurry of very large whistleblower awards by the agency. The SEC’s April 15, 2021 press release announcing the award can be found here. The April 15, 2021 award order can be found here.
Continue Reading SEC Awards Second-Largest Ever Whistleblower Bounty

Anyone reading the business pages know that SPAC IPO activity continues to surge; indeed, we have not yet even officially completed 2021’s first quarter, yet the number of SPAC IPOs completed and the amount of funding raised have both already exceeded the totals for the full year 2020. As I have already noted in prior posts on this site, all of this SPAC activity has already attracted some legal action. At the end of the last week, there were further signs that the legal activity could be about to pick up. As discussed below, news reports circulated late last week that the SEC has sent informal inquiries to Wall Street banks concerning SPACs, and, as also discussed below, a plaintiff shareholder has initiated a class action lawsuit against the directors and officers of a SPAC, among others, in Delaware Chancery Court presenting some alternative liability theories.
Continue Reading Is SPAC-Related Legal Action About to Heat Up?

Suresh Ellawala

As many readers may have noted at the time, in December the SEC filed an enforcement action against Ripple Labs and two of its executives in connection with what the SEC described as the company’s unregistered offering of securities, relating to the company’s sale of digital asset units between 2013 and the time of the filing of the enforcement complaint. In the following guest post, Suresh Ellawala takes a closer look at the issues that the SEC’s enforcement action presents. Suresh is Head of Commercial Financial Lines at Price Forbes & Partners. I would like to thank Suresh for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Suresh’s article.
Continue Reading Guest Post: The Ripple Effect – Are Cryptocurrency Tokens Securities, and Why Does it Matter?

David H. Topol

In the following guest post, David H. Topol of the Wiley law firm reviews the important legal and regulatory developments affecting private investment funds during 2020. I would like to thank David for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is David’s article.
Continue Reading Guest Post: Private Investment Funds: Major Developments from 2020

In the latest coronavirus outbreak-related securities suit, a Canadian diagnostic medical testing company that hoped to obtain emergency regulatory authorization for its rapid COVID-19 antigen test has been hit with a securities class action lawsuit after the company failed to obtain the regulatory approvals. A copy of the plaintiff’s complaint, filed on December 17, 2020 in the Central District of California, can be found here. In addition, as discussed below, this past week, the SEC separately filed a coronavirus-related enforcement action against a biotechnology company that touted its ability to provide a blood-based diagnostic test for the coronavirus.
Continue Reading Canadian Testing Company Hit with COVID-19-Related Securities Suit