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

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

In the latest SEC enforcement action relating to alleged misrepresentations pertaining to the coronavirus outbreak, the agency has filed a securities fraud action against the President and Chief Science Officer of a biotechnology company who allegedly made false statements to investors concerning the status of his company’s COVID-19 test. The enforcement action complaint also contains allegations concerning the individual’s statements about the status of his company’s delinquent SEC reporting. The enforcement action underscores the fact that the SEC intends to enforce the securities laws with respect to company statements falsely suggesting the company is in a position to profit from the coronavirus outbreak. A copy of the SEC’s September 25, 2020 complaint can be found here. The SEC’s September 25, 2020 press release regarding the enforcement action can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Action Against Biotech Company Exec

As noted in a prior post, on June 22, 2020, the U.S. Supreme Court entered its opinion in Liu v. SEC, in which the Court addressed a number of questions surrounding the SEC’s authority to seek disgorgement. In the following guest post, Stephen Cutler, Michael Osnato, Meaghan Kelly and M Moore of the Simpson Thacher law firm take a closer look at the Court’s opinion and consider its implications. 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 Guest Post: Supreme Court Affirms SEC’s Disgorgement Remedy, but Places Limits on Its Use

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

David Topol

In its June 2017 decision in Kokesh v. SEC (discussed here), the U.S. Supreme Court held that disgorgement in an SEC enforcement action represents a “penalty,” and therefore a SEC enforcement action claim for disgorgement is subject to a five-year statute of limitation. The Court emphasized that it was only deciding the statute of limitations issue, and was emphatically not reaching the larger issue of whether the SEC has the proper authority to order disgorgement in enforcement proceeding. As discussed here, last November, in the case of Liu v. SEC, the U.S. Supreme Court agreed to take up the  larger issue to determine whether or not the SEC may seek may seek and obtain disgorgement as “equitable relief” for a securities law violation. On June 22, 2020, the Supreme Court issues its opinion in the Liu case. As discussed below in a guest post written by David Topol of the Wiley law firm, the court has ruled that the SEC may collect disgorgements as “equitable relief,” subject to important constraint. 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: Liu v. SEC: What Is “Disgorgement”?

In a June 4, 2020 press release (here), the SEC announced that it had granted an individual a $50 million whistleblower award, the largest ever award to a single individual. While there had been a prior $50 million award that two individuals shared, the largest prior award to a single individual was a 2018 award of $39 million.
Continue Reading SEC Grants Largest Ever Individual Whistleblower Award