As I have frequently noted on this blog (most recently here), a recurring D&O insurance issue is the question of coverage for costs incurredin responding to SEC investigations. This question can be complicated both by the features of the specific SEC investigation involved as well as by the specific wording of key policy provisions. These complications were definitely involved in a recent case before the Tenth Circuit, in which the appellate court concluded that policy coverage did not extend to the costs MusclePharm incurred in responding to SEC subpoenas issued pursuant to a formal order of investigation. The decision raises a number of important issues, as discussed below. The Tenth Circuit’s October 17, 2017 opinion can be found here.
Continue Reading Tenth Circuit: SEC Subpoenas Issued After Formal Investigative Order Not Covered
Politics and SEC Enforcement
A number of factors might be supposed to affect the SEC’s exercise of its judgment in deciding which firms to investigate. Some possibilities that immediately come to mind are the nature and seriousness of the suspected problem; the way the problem came to the agency’s attention; and the availability of resources to investigate the problem.