In prior enforcement actions the agency filed in the wake of the coronavirus outbreak, the SEC has made it clear that it intends to target companies and individuals that are seeking to secure gains by misrepresenting to investors the companies’ ability to profit from the pandemic. On June 9, 2020, the SEC filed what is the latest of these pandemic-related enforcement actions. In its complaint, the agency alleges that a penny stock trader engaged in a fraudulent pump-and-dump scheme involving the stock of a biotechnology company. The SEC alleges he drove the company’s share price by making hundreds of false statements about the company in an online forum, and then after the company’s share price rose, he sold his stock for significant profits.
Continue Reading SEC Files Enforcement Action Based on Alleged COVID-19 Pump-and-Dump Scheme

In the following guest post, Jay Knight, Taylor Wirth and Chris Johnson of the Bass, Berry & Sims law firm review the key developments at the Securities and Exchange Commission (SEC) during 2019, and consider what to expect in the months ahead. I would like to thank the authors for allowing me to publish their article as a guest post on my 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: 7 Key SEC Developments in 2019

Paul A. Ferrillo

In the following guest post, Paul A. Ferrillo takes a look at the recent findings that the SEC Office of Compliance, Inspections and Examinations issue with respect to its cybersecurity examinations of registered investment advisers and broker dealers. The findings, Paul suggests, provides good guidance from a number of perspectives with regard to cybersecurity governance issues. Paul is a partner with McDermott, Will & Emery. I would like to thank Paul 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 Paul’s article.
Continue Reading Guest Post: Avoiding Event Driven Litigation through Good Cybersecurity Governance

The SEC’s Enforcement Division had another active enforcement year in fiscal 2019, which ended September 30, 2019, that resulted in substantial recoveries. According to the Division’s latest annual report, the agency pursued more enforcement actions in fiscal 2019, including more standalone actions, than in the past several years. The agency’s enforcement action monetary recoveries, including both penalties and disgorgement, also were at the highest level in years. As the report points out, the agency maintained this level of activity and recoveries despite a number of factors – what the report describes as “significant headwinds” — that constrained the agency’s efforts and recoveries. The Enforcement Division’s November 6, 2019 annual report can be found here. The agency’s November 6, 2019 press release about the report can be found here.
Continue Reading The SEC’s Enforcement Division Reports Elevated Enforcement Action and Monetary Recovery Levels

While the most common type of whistleblower may be a disgruntled employee, others can be whistleblowers, too. And as a recent SEC enforcement action highlights, interfering with these others’ attempts to communicate with the SEC can violate the agency’s whistleblower protection rules. In an amended complaint filed on November 4, 2019 in a pending SEC enforcement action, the agency alleges that the defendant company and one of its principals violated the SEC’s whistleblower rules by requiring the company’s investors to enter agreements in which the investors agreed not to contact the SEC or other regulatory enforcement authorities. The SEC alleges that these actions violated the agency’s whistleblower rules. A copy of the SEC’s November 4, 2019 press release about the amended complaint can be found here.  
Continue Reading SEC’s Whistleblower Protections Extend Beyond Just Employees

John Reed Stark

In a series of recent actions, the SEC has demonstrated its aggressive approach toward cryptocurrency regulation and enforcement. 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 detailed look at the SEC’s recent actions and considers the actions’ 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 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 John’s article.
Continue Reading Guest Post: The SEC Triples Down on its Cryptocurrency Crackdown

On July 24, 2019, in a development that underscores the heightened significance of privacy-related issues, the Federal Trade Commission (FTC) announced that Facebook will pay a record-breaking $5 billion penalty and submit to new restrictions and a modified corporate structure. In a related development, the Securities and Exchange Commission (SEC) also announced that Facebook had agreed to a $100 million settlement to resolve the agency’s allegations that the company misled investors regarding the risk of misuse of Facebook user data. Both agency actions followed the March 2018 revelations data analytics firm Cambridge Analytica had obtained access to user data of millions of Facebook users.  The FTC’s July 24, 2019 press release about the $5 billion penalty can be found here. The SEC’s July 24, 2019 press release about the $100 million settlement can be found here.
Continue Reading Massive Facebook Settlements Underscore Privacy’s Importance as Corporate Risk

Jay Knight

In the following guest post, Jay Knight, a member in the Bass, Berry & Sims law firm, provides some recommendations on what do to when responding to filing comments from the SEC. I would like to thank Jay 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Jay’s article.
Continue Reading Guest Post: Practical Tips When Responding to SEC Comments

Driven in significant part by the new actions filed as part of the SEC’s Share Class Selection Disclosure Initiative, the number of SEC enforcement actions against public companies and subsidiaries remained at “near-record levels” in the first half of fiscal year 2018, according to a recent report. The report, published by Cornerstone Research in collaboration with the NYU Pollack Center for Law & Business and entitled “SEC Enforcement Activity: Public Companies and Subsidiaries Midyear FY 2019 Update,” states that the enforcement activity levels in the first half of FY 2019 continued “a resurgence of activity that began in the second half of FY 2018.” The report can be found here. A May 15, 2019 press release describing the report can be found here.
Continue Reading SEC Public Company Enforcement Activity Remained Near Record Levels in FY2019’s First Half

John Reed Stark

Among the agencies largely closed by the current partial U.S. federal government shutdown is the U.S. Securities and Exchange Commission (SEC). 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 at what the SEC’s closure means for the processes and responsibilities that constitute the agency’s watch. Stark calls on the country’s political leaders to end the stalemate and re-open the government, including the SEC. Every day the shutdown continues, and the SEC staff remain at home, Stark says, the risks to U.S. markets increase. A version of this article originally appeared on Securities Docket. I would like to thank John for allowing me to publish his 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 John’s article.
Continue Reading Guest Post: Why the Shutdown Must End