Made for the U.S.A Only: Second Circuit Holds That the Dodd-Frank Act’s Antiretaliation Provision Applies Only Domestically

Posted on August 25th, by , and in Foreign Corrupt Practices Act (FCPA), SOX. Comments Off on Made for the U.S.A Only: Second Circuit Holds That the Dodd-Frank Act’s Antiretaliation Provision Applies Only Domestically

According to the SEC, in fiscal year 2013, foreign whistleblowers accounted for 404 of the 3,238 whistleblower reports received by the SEC (nearly 12%). Recently, the Second Circuit Court of Appeals may have significantly undermined incentives for foreign tipsters to report potential violations to the SEC.

On August 14, 2014, the Second Circuit held that the Dodd-Frank Act’s whistleblower antiretaliation provision (15 U.S.C. § 78u-6(h)(1)) does not apply “extraterritorially” and thus did not cover a foreign tipster’s allegation that he had been terminated for reporting potential Foreign Corrupt Practices Act (FCPA) violations to his employer. Liu v. Siemens AG, Docket No. 13-cv-4385 (2d Cir. Aug. 14, 2014). The antiretaliation provision of the Dodd-Frank Act, which gives employees easy access to U.S. district courts, prohibits employers from retaliating against whistleblowers employees who make certain protected disclosures. The provision incentivizes reporting and facilitates … Read More »


SEC Gives Insider Trader a $30,000 Slap On The Wrist

Posted on May 16th, by and in Insider Trading, Settlements. Comments Off on SEC Gives Insider Trader a $30,000 Slap On The Wrist

On April 23, 2014, the SEC agreed to settle insider trading charges against Chris Choi, a former accounting manager at Nvidia Corporation who allegedly set into motion a trading scheme that reaped nearly $16.5 million in illicit profits and avoided losses. Given the amount of the purported loss, the fact that Choi was the original “tipper,” and the fact that nearly every other member of the scheme has been indicted, the Choi settlement seems like nothing more than a slap on the wrist: a $30,000 penalty without admitting to the insider trading allegations. The Choi settlement also represents a notable departure from the SEC’s recent insider trading fines and penalties against “tippers.”

According to the SEC’s complaint, on at least three occasions during 2009 and 2010, Choi tipped material nonpublic information about Nvidia’s quarterly earnings to his friend Hyung Lim. SEC … Read More »


The SEC’s Municipalities Continuing Disclosure Cooperation Initiative: Carrot for Issuers & Underwriters, Stick for Individuals

Posted on April 22nd, by and in Cooperation, Individual Liability, Municipal Securities, SEC Guidance, Settlements. Comments Off on The SEC’s Municipalities Continuing Disclosure Cooperation Initiative: Carrot for Issuers & Underwriters, Stick for Individuals

It’s no secret that the SEC is stepping up its enforcement efforts in the estimated $3.7 trillion municipal securities market. In 2012, the Commission published a 165-page report calling for Congress to give it more authority to improve disclosures in municipal bond offerings. See SEC’s Report on the Municipal Securities Market (July 31, 2012). In the last year, the Commission has filed a number of enforcement actions against municipal bond issuers and underwriters based on alleged misstatements or omissions concerning various topics, including: compliance with tax exemption requirements, continuing disclosure obligations, and debt limitations and property values.

Most recently, in March 2014, the SEC launched a new cooperation initiative designed to encourage issuers and underwriters of municipal securities to self-report certain violations of federal securities laws. Under the Municipalities Continuing Disclosure Cooperation Initiative (“MCDC Initiative”), SEC staff will recommend favorable settlement terms … Read More »


An Upside to Parallel Civil and Criminal Investigations? Criminal Authorities May Have to Disclose Exculpatory Information in the Possession of the Civil Agency

Posted on March 24th, by and in Brady Material, Insider Trading, Joint Investigations, Parallel Investigations. Comments Off on An Upside to Parallel Civil and Criminal Investigations? Criminal Authorities May Have to Disclose Exculpatory Information in the Possession of the Civil Agency

Good facts make good lawyers, but good lawyers need to know where to go to get those facts. More and more frequently, the staff of the Division of Enforcement of the SEC is conducting investigations in coordination with U.S. Attorney’s Offices. The close relationship offers mutual benefits. The SEC brings the subject matter expertise; the USAOs have “tools” that the SEC does not have—e.g., the ability to conduct “covert” operations and to use wire taps. Certainly, the Galleon line of insider trading cases demonstrates the results of the close working relationship.

USAOs are quickly learning, however, that there are certain heightened obligations that accompany parallel investigations. In a criminal proceeding, due process requires that prosecutors produce all material information that is favorable to the defendant. Civil regulatory agencies such as the SEC, however, do not usually have a specific duty to … Read More »




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