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A unit of Deutsche Bank has agreed to the entry of a cease-and-desist order and to the payment of a $19 million penalty in connection with an SEC enforcement action in which the agency alleged that the unit had made materially misleading statements about its use of ESG factors into its research and investment recommendations. The ESG-related enforcement action was accompanied by a separate anti-money laundering (AML) enforcement action against the unit, Deutsche Bank’s New York-based investment advisor subsidiary, DWS Investment Management Americas (DWS), in which DWS agreed to pay a separate $6 million penalty. The ESG-related action, which apparently involved the SEC’s Climate and ESG Task Force, highlights the ways in which companies seeking to be proactive on ESG-related issues can attract claims. The action also underscores the fact that the SEC is scrutinizing ESG-related disclosures.…

Continue Reading Deutsche Bank Unit Hit with SEC Penalties Over ESG Claims

Sarah Abrams

In the following guest post, Sarah Abrams, Head of Professional Liability Claims at Bowhead Specialty, discusses the updated compliance rules for Private Equity Firms and Hedge Funds, which the SEC released on August 23, 2023. I would like to thank Sarah for allowing me to publish her article 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 Sarah’s article.…

Continue Reading Guest Post: New SEC PE and Hedge Fund Disclosure Rules Winners? The Lawyers

Greg Markel
Gershon Akerman

As I noted in a prior post (here), in June, the U.S. Supreme Court agreed to take up a case to consider the legality of the SEC’s use of in-house administrative tribunals, which the agency uses to enforce the federal securities laws. As discussed below in a guest post written by Greg Markel, a partner at the Seyfarth Shaw law firm, and Gershon Akerman, an associate at the firm, the case could have important implications for the SEC’s enforcement authority and could affect the agency’s other activities as well. This article previously was published as a Seyfarth client alert. I would like to thank Greg and Gershon for allowing 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 the authors’ article.…

Continue Reading Guest Post: Sup. Ct. to Rule When Feds Must Provide Enforcement Action Jury Trial

On July 26, 2023, a divided SEC adopted, by a 3-2 vote, final rules for cybersecurity disclosures. The final rules are based on proposed rules the agency first introduced in March 2022. The rules require companies to disclose material cybersecurity incidents they experience, and also to disclose on an annual basis material information regarding their cybersecurity risk management and governance. The rules will have a significant impact on reporting companies’ disclosure practices and could present a challenge for some companies. A copy of the final cybersecurity disclosure rules can be found here. The SEC’s July 26, 2023, press release about the final cybersecurity disclosure rules can be found here. The SEC’s two-page fact sheet about the new rules can be found here.…

Continue Reading SEC Adopts Final Cybersecurity Disclosure Rules

On June 30, 2023, the U.S. Supreme Court agreed to take up a case to consider the legality of the SEC’s use of in-house administrative tribunals, which the agency uses to enforce the federal securities laws. The agency sought Supreme Court consideration of a federal appellate court ruling that held the administrative courts to be unconstitutional. The case could significantly impact the way in which the agency enforces the federal securities laws. The court’s June 30, 2023 order in which the SEC’s petition for a writ of certiorari was granted can be found here.…

Continue Reading U.S. Supreme Court Takes Up Case Concerning the SEC’s Use of In-House Court

On March 9, 2023, the SEC announced that it had settled charges that data management software company Blackbaud, Inc. had settled charges that the company’s cybersecurity disclosure policies and procedures violated the agency’s public company disclosure reporting requirements and that the company had made misleading disclosures about a 2020 ransomware attack that impacted more that 13,000 of its customers. The company, which neither admitted or denied the charges, agreed to a cease-and-desist order and to pay a $3 million penalty. The action, which follows a similar proceeding involving cybersecurity disclosures and procedures, highlights the agency’s focus on cybersecurity-related disclosures.…

Continue Reading SEC Charges Company Over Disclosures Concerning Ransomware Attack

In the following guest post, Brian Baney, Senior Vice President, Head of Management and Professional Liability Claims, Ascot Group, Peter Trochev, Senior Vice President, Financial Institutions, Ascot Group, Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC, survey the current risk environment for private equity firms. 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 author’s article.…

Continue Reading Guest Post: The State of Private Equity in 2023: Is a Maelstrom on the Horizon?  

As readers of this blog well know, ESG is one of the hot topics in the investment and financial world these days. ESG is also very much on the mind of regulators as well, as two recent developments show. First, on November 22, 2022, the U.S. Department of Labor issued updated rules expressly allowing plan fiduciaries to consider ESG factors when they select retirement fund investments and exercise shareholder rights, such as proxy voting. Second, the SEC, acting through its Division of Enforcement’s Climate and ESG Task Force, brought a settled enforcement action against Goldman Sachs Asset Management for policies and procedures shortcomings at funds marketed as ESG investments. These developments underscore the challenges companies, investment funds, and others face as they navigate the complex ESG landscape.
Continue Reading Regulators’ Take On ESG Investing       

If you have had the sense that under the current administration the SEC is more active and more aggressive, two reports issued this past week will confirm that your sense is correct. First, on November 15, 2022, the SEC’s Enforcement Division issued its Enforcement Results Report for FY 2022 (ended September 30, 2022), showing that during the fiscal year money ordered in SEC enforcement actions totaled $6.439 billion, the most on record in SEC history. Second, on November 16, 2022, Cornerstone Research, in conjunction with the NYU Pollack Center for Law & Business, issued its report on SEC Public Company-related enforcement activity during FY 2022, which shows that the agency’s actions against public companies increased relative to prior fiscal years and that the agency’s $2.8 billion in aggregate total monetary settlements with public companies was the highest in any fiscal year.
Continue Reading You Aren’t Just Imaging Things: The Current SEC Really is More Active

On October 26, 2022, the SEC adopted final rules implementing the Dodd-Frank Act’s requirement for issuers to recover from current and former executives compensation that was erroneously paid due to an accounting restatement. The final rules require securities exchanges to adopt listing standards that will require listed companies to implement and disclose policies requiring the erroneously paid compensation to be recovered, on a “no fault” basis – that is, without regard to whether any misconduct occurred or whether an executive bears responsibility. The SEC’s Release covers a broad range of topics, including — importantly for readers of this blog — considerations relating to indemnification or insurance for the clawed-back compensation. The SEC’s October 26, 2022 press release about the new rules can be found here. The SEC’s fact sheet about the new rules can be found here. The SEC’s Release document (referred to below as the “Release”) can be found here.
Continue Reading Insurance Implications of the SEC’s New Compensation Clawback Rules