Compliance and Legal Officer Guidelines to Prevent Non-Line Supervisory Liability

Posted on April 7th, by and in Compliance Rule, Guidance, SEC Guidance. Comments Off on Compliance and Legal Officer Guidelines to Prevent Non-Line Supervisory Liability

Chicago partner Jim Lundy and associate Carrie DeLange, members of Drinker Biddle’s SEC & Regulatory Enforcement Team, authored “Compliance and Legal Officer Guidelines to Prevent Non-Line Supervisory Liability” for the National Society of Compliance Professionals’ (NSCP) professional journal, Currents, March 2017 edition.

The article provides guidance and recommendations to compliance officers and in-house attorneys with investment management and broker-dealer firms regarding the legal background and recommended practices to avoid supervisory liability with respect to the violative conduct of business personnel. Specifically, the article examines the applicable statutes and rules, the controversial “Gutfreund Standard,” and the SEC’s more recent guidance from a Division of Trading and Markets “FAQ” and speeches. Jim and Carrie build on this information to provide recommendations for investment management and broker-dealer compliance and in-house personnel to manage satisfying their compliance obligations while dealing with the potentially problematic conduct … Read More »


Caught by the Satellite: SEC Files Charges against Mexican-Based Company Homex

Posted on March 10th, by and in Enforcement. Comments Off on Caught by the Satellite: SEC Files Charges against Mexican-Based Company Homex

On March 3, 2017, the SEC published its complaint against Desarrolladora Homex, once one of Mexico’s leading homebuilders. The complaint alleged that Homex committed “massive fraud” when it reported the construction and sale of 100,000 homes that did not even exist.

The complaint alleges that Homex booked revenue from a development in the Mexican state of Guanajuato where it claimed that homes were built and sold by the end of 2011. However, satellite images taken in March 2012 showed that tens of thousands of those homes were “nothing but bare soil.” According to the SEC, through this fraudulent scheme Homex overstated its revenue by 355% (or approximately $3.3 billion).

Signs of trouble for Homex began as early as 2013 when Homex’s builder and his competitors suffered incredible losses on stocks and bonds. In 2014, Homex filed for the Mexican equivalent of bankruptcy … Read More »


President–Elect Trump Nominates Jay Clayton For SEC Chair

Posted on January 9th, by , and in General. Comments Off on President–Elect Trump Nominates Jay Clayton For SEC Chair

On January 4, 2017, President-Elect Donald Trump announced that he intends to nominate Walter “Jay” Clayton for Chairman of the Securities and Exchange Commission (SEC). In response, Mr. Clayton stated that, “If confirmed, we are going to work together with key stakeholders in the financial system to make sure we provide investors and our companies with the confidence to invest together in America. We will carefully monitor our financial sector, as we set policy that encourages American companies to do what they do best: create jobs.”

Of the three pillars of the SEC’s mission statement – 1) protect investors; 2) maintain fair, orderly, and efficient markets; and 3) facilitate capital formation – Mr. Clayton’s deep experience as a “dealmaker” most closely aligns with the facilitation of capital formation pillar.  Chair Mary Jo White’s primary prior experience as a federal prosecutor, in contrast, … Read More »




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