SEC Enforcement

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Britt Latham
Brian Irving

In the following guest post, Britt K. Latham and Brian Irving of the  Bass, Berry & Sims PLC  law firm take a look at the SEC’s enforcement action track record under the Trump administration and take a look ahead at what may be next for the agency. I would like to thank Britt and Brian for their willingness to allow me to publish their article as a guest post. 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 Britt and Brian’s article.
Continue Reading Guest Post: SEC Enforcement Still Strong Under Trump – What’s Next?

John Reed Stark

One of the most interesting and arresting business stories of 2017 has been the astonishing proliferation of initial coin offerings (ICOs), as I discussed in a prior post (here). Readers who have been watching this story develop undoubtedly are aware that things have been moving very quickly recently on the regulatory front with respect to ICOs. ICOs suddenly are facing a very different regulatory environment. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look the recent regulatory developments and examines their implications. A version of this article originally appeared on Securities Docket. I would like to thank John for his willingness to allow me to publish his guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post.
Continue Reading Guest Post: Which ICOs are Next to Get Caught up in the SEC’s ICO Dragnet?

On November 15, 2017, when the SEC Enforcement Division released its annual report detailing its enforcement activity during the preceding fiscal year, the report included a statement by the division’s co-directors detailing the division’s priorities for the coming year. As detailed below, the enforcement statistics in the report clearly reflect an agency in transition. The changes under the new administration are particularly apparent with regard to the agency’s enforcement activities involving publicly traded companies. The Enforcement Division’s annual report can be found here. The division’s November 15, 2017 press release about the report can be found here.
Continue Reading SEC Fiscal Year Enforcement Statistics Reflect an Agency in Transition

sotomayorOn June 5, 2017, in an opinion written by Justice Sonia Sotomayor for a unanimous court, the U.S. Supreme Court held that the five-year statute of limitations applies to claims for disgorgement imposed as a sanction for violation the federal securities laws. The Court rejected the SEC’s argument that the statute of limitations was not applicable to claims for disgorgement. The decision provides greater certainty about the scope of potential liability for parties facing SEC liability. The decision is also important in light of the other securities law statute of limitations case that remains pending on the Court’s docket. The U.S. Supreme Court’s June 5, 2017 opinion can be found here.
Continue Reading Supreme Court Holds Disgorgement Claims Subject to Five-Year Statute of Limitations

skarzynski 1In the following guest post, Tammy Yuen and Ted Carleton of the Skarzynski Black law firm review and analyze the May 9, 2017 Cornerstone Research report entitled “SEC Enforcement Activity: Public Companies and Subsidiaries, Midyear FY 2017 Update” (here), which details the SEC’s enforcement activity during the first half of the current fiscal year. I would like to thank Tammy and Ted for their willingness to allow me to publish their article 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 Tammy and Ted’s guest post.
Continue Reading Guest Post: SEC Enforcement Data: Midyear Review

SEC logoThe SEC’s enforcement activity so far this fiscal year trails the record levels in the 2015 fiscal year. According to a recent report from Cornerstone Research (here), the SEC’s enforcement activity through the end of the fiscal third quarter (on June 30, 2016) is eight percent below the activity levels during the same period in FY 2015, largely as a result of an activity decline in the third quarter. At this point, even if the agency is active in the fourth fiscal quarter, it seems unlikely that by the end of the fiscal year on September 30, 2016 that the agency’s enforcement activity will catch up to the prior year.
Continue Reading SEC Enforcement Actions Decline

Pillsbury_logo (400x240)The advent of an SEC investigation is a serious and difficult event in the life of any organization, particularly registered-investment advisors. As a result of recent changes at the agency, an SEC investigation may be more difficult than ever for registered-investment advisors. In the following guest post, Ildiko Duckor, Sarah A. Good and Corey Harris of the Pillsbury law firm take a look at the recent changes at the agency, and provide a list of dos and don’ts. A version of this article previously was published as a Pillsbury client alert. 

I would like to thank Ildiko, Sarah and Corey for their willingness to publish their guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to readers of this blog. Please contact me directly if you would like to submit a guest post. Here is Ildiko, Sarah and Corey’s guest post.

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The regulatory environment for SEC-registered advisers has become more complex as the result of a more aggressive and interconnected Securities and Exchange Commission (SEC). The connecting hub within the SEC is the Office of Compliance Inspection and Examination (OCIE), which serves as the “eyes and ears” of the SEC. The OCIE often is the first line of contact between an investment adviser and a potential referral to the SEC Enforcement Division’s Asset Management Unit (AMU), which is devoted exclusively to investigations involving investment advisers, investment companies, hedge funds and private equity funds.

The OCIE’s three main areas of focus for their 2015 exam priorities are (i) protecting retail investors, (ii) issues related to market-wide risks, and (iii) data analysis as a tool to identify registrants engaging in illegal activity.

Overlapping with the OCIE’s frontline examination role is the Compliance Program Initiative, which began in 2013 by sanctioning three investment advisers for ignoring problems within their compliance programs. The Compliance Program Initiative is designed to address repeated compliance failures that may lead to bigger problems. As such, any issues raised in a deficiency letter resulting from an examination are ripe for follow-up as the starting point of a subsequent examination. In the current regulatory environment—where violations of compliance policies and procedures can serve as the basis of enforcement actions—investment advisers and their compliance professionals need to pay close attention to the implementation, follow-through and updating of every aspect of their compliance program.
Continue Reading Guest Post: The Dos and Don’ts of an SEC Examination

nyulaw2On October 27, 2015, Cornerstone Research in conjunction with the New York University Pollock Center for Law & Business and the Leonard N. Stern School of Business to launch the Securities Enforcement Database (SEED). As described in the organizations’ joint October 27, 2015 press release (here), the database will track record and information relating to SEC enforcement actions filed against public companies. The SEED database, which can be found here, will facilitate the analysis of and reporting of SEC enforcement actions through regular updates of new filings and settlement information relating to ongoing enforcement action.
Continue Reading New SEC Enforcement Action Database from NYU and Cornerstone Research

seclogoFrom time to time, the SEC reiterates its view of the critical gatekeeper role companies’ outside directors play in safeguarding investors’ interests. Nevertheless, it has been relatively rare for SEC to pursue enforcement actions against outside directors based on an alleged failure to fulfill that role. But while these actions are rare, the agency does periodically bring enforcement actions against directors whom the agency contends shirked their duties.
Continue Reading SEC Enforcement Actions Against Outside Directors