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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

The SEC imposed fines on U.S. exchange-listed publicly traded companies at the highest levels in years during fiscal year 2022 (which ended September 30, 2022), according to an analysis published Saturday by the Wall Street Journal. As the Journal noted, the fines imposed during the fiscal year on firms accused of wrongdoing “underscore the Biden Administration’s tougher regulatory stance.” The October 29, 2022 Wall Street Journal article, entitled in the online edition “Under Biden Administration, Wall Street Watchdog’s Fines Surge,” can be found here.
Continue Reading Massive SEC Fines Surged During the Most Recent Fiscal Year

In recent months, the SEC has released a series of proposed rules relating to several different topics, including most significantly its March 2022 release of proposed rules regarding climate change and greenhouse gas emissions disclosure. These various proposed rules are still in the public comment period and it remains to be seen whether the various proposed rules will be adopted and if so in what form. Even assuming some forms of the proposed rules are adopted, the rules almost certainly will be subject to court challenge by business groups and other constituencies. As a result of the U.S. Supreme Court’s landmark decision in the last days of June in the carbon emissions rulemaking case, groups challenging the SEC’s rules have a potentially potent new tool to use to try to block the rules.
Continue Reading Will the “Major Questions Principle” Block the SEC’s Proposed Climate Change Disclosure Rules?

On May 18, 2022, the Fifth Circuit held in Jarkesy v. SEC (here), that the agency’s use its in-house Administrative Law Judges, as opposed to its filing of an enforcement action in federal court, is unconstitutional. In the following guest post, Gregory A. Markel, Vincent A. Sama, Daphne Morduchowitz, Giovanna A. Ferrari, and Matthew C. Catalano of the Seyfarth Shaw law firm review the Fifth Circuit’s opinion, and discuss 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: SEC’s In-House Adjudication Deemed Unconstitutional by Fifth Circuit

It arguably is not news that the SEC is monitoring disclosure and related issues concerning ESG. After all, the agency’s enforcement division formed an ESG Task Force in March 2021. And as discussed here, the Task Force recently launched its first ESG disclosure-related enforcement action. Now, in the Task Force’s latest move, the agency charged an investment advisor with securities law violations related to the advisor’s claims that its fund investments had undergone ESG quality review, even though that was not always the case. BNY Mellon Investment Adviser, Inc., the investment adviser involved, agreed to pay a $1.5 million penalty to settle the charges. As discussed below, this latest Task Force action underscores the fact that the ESG cops are on the beat, and they are actively monitoring ESG-related disclosures. That could have important implications for future SEC enforcement activity.
Continue Reading Attention: The ESG Cops Are On The Beat