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Under Siege from the SEC, Steven Seagal Ponies Up to Settle Charges for Promoting an Initial Coin Offering

Posted on March 3rd, by and in Cryptocurrency. Comments Off on Under Siege from the SEC, Steven Seagal Ponies Up to Settle Charges for Promoting an Initial Coin Offering

Steven Seagal just learned the hard way that, unlike the title of his 1988 police action movie, he is not Above the Law. Unfortunately for the prolific action movie star, the SEC took notice of his recent actions and was Out for Justice. In order to avoid a Maximum Conviction, the SEC recently announced that Seagal made the Executive Decision to settle charges brought by the agency related to the actor’s failure to disclose the nature, scope, and amount of compensation he received for promoting an investment in an initial coin offering (ICO) conducted by Bitcoiin2Gen.


Could New Legislation on Insider Trading be on its Way?

Posted on February 25th, by , , and in Insider Trading. Comments Off on Could New Legislation on Insider Trading be on its Way?

The SEC and DOJ have long prioritized insider trading prosecutions. Moreover, insider trading cases frequently involve parallel investigations in which the SEC and DOJ share information and coordinate efforts to collect evidence in support of civil and criminal litigation. Despite some setbacks that prosecutors have faced in recent years as insider trading case law has evolved, there is no sign that either the SEC or DOJ is backing down from vigorously enforcing the law prohibiting insider trading. We have previously blogged about the recent case law changes and their effect on civil and criminal investigations. The Bharara Task Force on Insider Trading was created in late 2018 and released its report on January 27, 2020.


Trump Budget Proposes Folding the PCAOB into the SEC by 2022

Posted on February 14th, by and in General. Comments Off on Trump Budget Proposes Folding the PCAOB into the SEC by 2022

According to a White House budget issued on February 10, 2020, the White House is considering transferring the authority of the Public Company Accounting Oversight Board (PCAOB or Board) to the SEC by 2022 in order to eliminate duplication between the two regulators and to “reduce regulatory ambiguity.” See A Budget for America’s Future.

The Sarbanes-Oxley Act of 2002 established the PCAOB as a nonprofit corporation to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports. This was done in response to accounting scandals at major companies such as Enron and Worldcom. The SEC has oversight authority over the PCAOB, including the approval of the Board’s rules, standards, and budget. And, of course, the SEC has authority to broadly enforce the securities laws against, among others, … Read More »


SEC Gives Management’s Discussion and Analysis (MD&A) a Makeover

Posted on February 14th, by , and in Corporate Disclosures, Disclosures, SEC Guidance. Comments Off on SEC Gives Management’s Discussion and Analysis (MD&A) a Makeover

With the aim of eliminating certain duplicative disclosures, and modernizing and enhancing Management’s Discussion and Analysis (MD&A) disclosures for the benefit of investors while reducing the compliance burden on companies, the Securities and Exchange Commission (SEC) has proposed amendments to simplify and enhance certain financial disclosure requirements in Regulation S-K. The proposed amendments, released January 30, 2020, are part of an ongoing re-evaluation of the current disclosure regime per the SEC’s recommendation in the Report on Review of Disclosure Requirements in Regulation S-K, which was mandated by Section 108 of the JOBS Act, adopted in 2012.

The proposed amendments would eliminate Items 301 (Selected Financial Data), 302 (Supplementary Financial Information) and 303(a)(5) (Tabular Disclosure of Contractual Obligations in MD&A) of Regulation S-K, as well as revise a number of disclosure obligations under Item 303 (Management’s Discussion and Analysis of Financial Condition … Read More »


The SEC’s Most Detailed Cybersecurity Guidance to Date

Posted on February 10th, by and in Cybersecurity, Enforcement, Office of Compliance Inspections and Examinations (OCIE). Comments Off on The SEC’s Most Detailed Cybersecurity Guidance to Date

The SEC, through its Office of Compliance Inspections and Examinations (“OCIE”), recently issued its most detailed cyber guidance to date. OCIE had previously issued several cybersecurity risk alerts over the past few years. This most recent release, however, offers much more than a risk alert. OCIE’s “Cybersecurity and Resiliency Observations” goes into significantly more detail than OCIE’s prior risk alerts in this area and is fashioned in a vastly different and more user-friendly format. Thus, it is required reading for SEC regulated entities because, rest assured, it will be closely followed and applied by OCIE staff conducting cyber examinations, as well as by the Division of Enforcement’s “Cyber Unit.”


The SEC Lays Down a Bet in a Nevada Court

Posted on December 16th, by and in General. Comments Off on The SEC Lays Down a Bet in a Nevada Court

The college football bowl season is upon us, NFL teams are jockeying for playoff seeding, and with the college basketball season underway fans of that game are looking longingly towards March for how their brackets may look for the 2020 tournament. Thus, sports and the gambling associated with it are all around us. In recent years, this gambling has risen from the shadows and is now openly discussed throughout society. So this industry has evolved and continues to evolve, since the times when gamblers needed to travel to Las Vegas or Atlantic City to legally gamble. Over the years, state laws have expanded such that today numerous states allow gambling in some form. Further accelerating this expansion, in the spring of 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act.


The SEC in 2019: Doing More With Less

Posted on November 15th, by , and in Enforcement, General. Comments Off on The SEC in 2019: Doing More With Less

Facing a 35-day government shutdown and new restrictions on the ability to recover disgorgement, it would be perfectly understandable if the SEC’s Division of Enforcement suffered a lackluster year. Nevertheless, according to their recently released Annual Report, the Division of Enforcement defied the odds and turned in an impressive year by most metrics. The full report is available here, but we address several key aspects of the report below.

In fiscal year 2019 (which runs from October to September), the SEC reported a total of 862 enforcement actions, including 526 “standalone” actions filed in either federal court or as administrative proceedings, which was its highest number of standalone actions since 2016. The SEC also filed 210 “follow-on” proceedings seeking the barring of individuals based on actions by other authorities or regulators. This number of “follow-on” proceedings matched the prior year’s total, … Read More »


DOJ Drops Insider Trading Charges After Guilty Plea Found Insufficient

Posted on November 14th, by and in DOJ, Insider Trading. Comments Off on DOJ Drops Insider Trading Charges After Guilty Plea Found Insufficient

Last week, the Southern District of New York dropped its prosecution of Richard Lee, a former portfolio manager at SAC Capital who, in 2013, entered a guilty plea to trading on material nonpublic information that he gained from corporate insiders. The court recently ruled that Mr. Lee’s guilty plea must be vacated to conform with the ruling in United States v. Newman, 773 F.3d 438, 450-51 (2d Cir. 2014), abrogated on other grounds by Salman v. United States, 137 S. Ct. 420 (2016). Newman held that a tippee who traded on material nonpublic information must have knowledge that the insider acted for personal benefit in disclosing the information. Thus, in 2017, Mr. Lee moved to withdraw his guilty plea on the grounds that (1) he was innocent; (2) had he known additional information, he would not have pleaded guilty; and … Read More »


The SEC’s SCSD Initiative Second Wave and the Applicability of the President’s Recent Executive Order

Posted on October 15th, by and in Disgorgement, Enforcement, SCSD Initiative, Self-Reporting. Comments Off on The SEC’s SCSD Initiative Second Wave and the Applicability of the President’s Recent Executive Order

On September 30, 2019, the SEC ordered an additional 16 self-reporting investment advisory firms to pay nearly $10 million in disgorgement. Some have referred to this as the “second wave” of the SEC Division of Enforcement’s Share Class Selection Disclosure Initiative (“SCSD Initiative”). It’s unclear if there will be another “wave” of SCSD Initiative settlements. What is clear, though, is that the number of self-reporting firms charged by the SEC so far totals ninety-five. When the SCSD Initiative was first announced many anticipated that the tally of firms charged would number in the hundreds, but the number remains under 100.

While the number of self-reporting firms is still significant and indicates that this was an industry issue, it may also signal that many firms elected to take their chances and not self-report. Along those lines, the SEC also announced that same … Read More »


SEC: Here Is When Loss Contingencies Must Be Disclosed and Reserved

Posted on October 2nd, by in Corporate Disclosures, Enforcement, Settlements. Comments Off on SEC: Here Is When Loss Contingencies Must Be Disclosed and Reserved

When confronted with government inquiries, public companies commonly grapple with the issue of when events have escalated to the point that they are subject to disclosure obligations—or, further yet, require recognition as a loss reserve in the financial statements. Is one or both of these requirements triggered when the government initially informs the company of the inquiry’s existence? When the magnitude and frequency of the government’s informational requests provide reasonable notice of a full-blown investigation? When the government rejects the company’s efforts to discontinue the investigation? Or when the government and company commence settlement discussions? While the seminal moment when each of these obligations solidifies can be quite fact-specific, the Division of Enforcement provided its own guidepost last week as to when disclosure and loss recognition become necessary.






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