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The SEC Sees a Significant Uptick in Tips, Complaints, and Referrals

Posted on June 3rd, by , and in Enforcement. Comments Off on The SEC Sees a Significant Uptick in Tips, Complaints, and Referrals

From mid-March to mid-May, the SEC received more than 4,000 tips, complaints, and referrals. This, according to one of the SEC Co-Directors of the Division of Enforcement, represented a 35% increase over the same period last year. Additionally, as recently confirmed by the Director of the SEC’s New York regional office, the SEC is actively monitoring these tips, complaints, and referrals because it knows that doing so sends an important deterrence message to market participants. While the SEC has many sophisticated market monitoring and other fraud detection tools, tips and complaints provide the Enforcement Staff with valuable leads, which often develop into investigations and enforcement actions in matters that would otherwise may have remained hidden. Undoubtedly, many of these tips and complaints are either directly related to the COVID-19 pandemic or are indirectly related to the resulting economic turbulence. It … Read More »


CFTC Releases New Guidance Regarding Civil Monetary Penalties

Posted on May 21st, by and in CFTC, Enforcement. Comments Off on CFTC Releases New Guidance Regarding Civil Monetary Penalties

Yesterday, the CFTC’s Division of Enforcement formally issued new guidance regarding the Division’s decisions to recommend the imposition of civil monetary penalties. According to the CFTC, “[t]he guidance memorializes the existing practice within the Division,” but “has now been incorporated into the Division’s Enforcement Manual.” CFTC, CFTC Division of Enforcement Issues Civil Monetary Guidance.


SEC Enforcement Expanding Efforts Regarding Coronavirus Impacts

Posted on May 18th, by , , and in Enforcement, General. Comments Off on SEC Enforcement Expanding Efforts Regarding Coronavirus Impacts

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 »


SEC Announces Next Step in Pandemic Response Efforts, Forms Cross-Divisional COVID-19 Market Monitoring Group

Posted on April 29th, by and in SEC Guidance. Comments Off on SEC Announces Next Step in Pandemic Response Efforts, Forms Cross-Divisional COVID-19 Market Monitoring Group

As we noted earlier this month, the SEC has sought to proactively combat fraud related to the coronavirus/COVID-19 pandemic and related economic crisis by suspending the trading of at least eleven different companies since February 7, 2020. On Friday, April 24th the SEC announced another major step in its related efforts to protect investors — the formation of a Cross-Divisional COVID-19 Market Monitoring Group.

According to the SEC, the group is intended to assist the Commission and staff in analyzing “the effects of COVID-19 on markets, issuers and investors—including our Main Street investors” and to work with other regulators and public sector entities such as the President’s Working Group on Financial Markets, the Financial Stability Oversight Council, and the Financial Stability Board. This initiative is broadly linked to Chairman Clayton’s longstanding interest in supporting “the long-term interests of the … Read More »


COVID-19: SEC Announces Trading Suspensions and Focuses on Potential Fraud

Posted on April 10th, by and in Corporate Disclosures, Enforcement, SEC Guidance. Comments Off on COVID-19: SEC Announces Trading Suspensions and Focuses on Potential Fraud

The SEC has suspended the trading of eleven companies for issues related to the COVID-19 pandemic since February 7, 2020. Of those eleven suspensions, seven have come since April 3rd. Most of the suspensions follow the recent statement from the co-directors of the SEC’s Division of Enforcement that “the Enforcement Division is committing substantial resources to ensuring that our Main Street investors are not victims of fraud or illegal practices in these unprecedented market and economic conditions.” In addition, the SEC this week updated an investor alert about possible investor scams related to the pandemic.

The reasons for the suspensions range from possible confusion about the name of a company to suspicious statements from companies about having “FDA-approved” at-home COVID-19 test kits, supposed new technology for non-contact human temperature screening, or the ability to produce a vaccine or protective … Read More »


SEC OCIE and Enforcement Are Still Watching

Posted on April 1st, by , , , and in Enforcement, General, Office of Compliance Inspections and Examinations (OCIE). Comments Off on SEC OCIE and Enforcement Are Still Watching

As the world is navigating through COVID-19 and as we are focused on our health and well-being as we self-quarantine and engage in social distancing to do our part to stop the spread, our markets remain open, active, and volatile, and the U.S. Securities and Exchange Commission (“SEC”) has recently made clear that they will continue to be an active overseer.


Delaware Supreme Court Upholds Federal Forum Selection Provisions Requiring Securities Claims Be Brought in Federal Court

Posted on March 30th, by and in General. Comments Off on Delaware Supreme Court Upholds Federal Forum Selection Provisions Requiring Securities Claims Be Brought in Federal Court

In its highly anticipated decision in Salzberg v. Sciabacucchi, No. 346, 2019 (Del. Mar. 18, 2020), the Delaware Supreme Court confirmed the facial validity of a provision contained in certificates of incorporation of many companies requiring that claims under the Securities Act of 1933 (the Securities Act) be brought only in federal court and not in a state court. The decision reverses the Delaware Court of Chancery’s decision.


SEC Disgorgement: Looking to the Future

Posted on March 19th, by , , and in Disgorgement. Comments Off on SEC Disgorgement: Looking to the Future

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.


SEC Requests Industry Comments on Fund Names

Posted on March 10th, by and in Investment Advisers. Comments Off on SEC Requests Industry Comments on Fund Names

Is the Names Rule effective in preventing misleading or deceptive fund names? The Securities and Exchange Commission (SEC) is seeking public input from funds, investors and other market participants on Rule 35d-1 under the Investment Company Act of 1940 (Names Rule). The SEC identified several fund developments and challenges to applying the Names Rule since it was adopted in 2001 and issued a request for public comment.


In Enforcement Action, SEC Underscores Heightened Scrutiny of KPIs in MD&A Reporting

Posted on March 4th, by and in Disclosures, SEC Guidance. Comments Off on In Enforcement Action, SEC Underscores Heightened Scrutiny of KPIs in MD&A Reporting

In February, the Securities and Exchange Commission (SEC) announced a settlement with Diageo plc, a London-based producer of liquor, wine and beer, for failure to make required disclosures of known trends and uncertainties, thereby rendering its required periodic filings materially misleading with respect to its financial results. The enforcement action provided immediate insight into how the Securities and Exchange Commission would act on its recent guidance related to disclosing key performance indicators and other metrics in MD&A reporting. The enforcement action makes it clear that public issuers should expect increased scrutiny of any metrics used to assess business performance and ensure they have appropriate disclosure controls and procedures in place.






From the Blog:

The SEC Sees a Significant Uptick in Tips, Complaints, and Referrals

From mid-March to mid-May, the SEC received more than 4,000 tips, complaints, and referrals. This, according to one of the SEC Co-Directors of the...

CFTC Releases New Guidance Regarding Civil Monetary Penalties

Yesterday, the CFTC’s Division of Enforcement formally issued new guidance regarding the Division’s decisions to recommend the imposition of civil monetary penalties. According to...

SEC Enforcement Expanding Efforts Regarding Coronavirus Impacts

As we described several weeks ago, the SEC across the agency is going to be vigilant in its efforts to regulate, examine and enforce...