As we described several weeks ago, the SEC across the agency is going to be vigilant in its efforts to regulate, examine and enforce the federal securities laws regarding coronavirus/COVID-19. More recently, the SEC Division of Enforcement (“SEC Enforcement”) has stepped to the forefront of these efforts.
SEC Enforcement Initiative, and SEC Investment Management and FINRA Guidance
Last week, SEC Enforcement appeared to initiate a “sweep” of public companies that borrowed money under the Paycheck Protection Program (“PPP”) —the $669 billion SBA forgivable loan program established by the CARES Act. Specifically, SEC Enforcement is sending voluntary inquiries requesting information regarding the companies’ eligibility to receive PPP loans, including COVID-19’s impact on the business. Eligibility for a PPP loan is based in part on certifying in good faith that “[c]urrent economic uncertainty makes th[e] loan request necessary to support the ongoing … Read More »
On March 3, 2020, the Supreme Court heard arguments in the case of Liu v. SEC, No. 18-1501. This article summarizes what transpired at the hearing, in which the arguments centered on a challenge to the ability of the U.S. Securities and Exchange Commission (“SEC”) to obtain disgorgement as an “equitable remedy” for securities law violations.
During the oral arguments, the Justices’ questions indicated that they appeared reluctant to entirely do away with disgorgement, but rather their queries focused on whether limitations should be placed on the SEC’s continuing use of disgorgement as an equitable remedy. Specifically, the Justices expressed interest in exploring parameters and limitations regarding how disgorgement is calculated and whether the SEC or defrauded investors are entitled to any disgorged funds.