Category: General


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 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.


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 »


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 »


The SEC’s Reg BI Package Time to Vote

Posted on May 30th, by in General. Comments Off on The SEC’s Reg BI Package Time to Vote

On June 5, the SEC will hold an Open Meeting to consider whether to adopt certain measures to reform retail investment standards. In this alert, the Best Interest Compliance Team provides a brief preview of the key topics and potential concerns about the proposed standards.


District Court Holds SEC Cannot Use CEO’s Criminal Conviction to Establish Company’s Liability

Posted on April 8th, by in General. Comments Off on District Court Holds SEC Cannot Use CEO’s Criminal Conviction to Establish Company’s Liability

Recently, the Northern District of Illinois denied the SEC
summary judgment on its claims against a company charged with fraudulently
offering and failing to register securities. United
States Securities and Exchange Commission v. Webb et al. In doing so, it rejected the SEC’s argument that,
pursuant to the doctrines of collateral estoppel and respondeat superior, the company’s liability for the alleged
securities violations was established through the criminal conviction of the
company’s founder, CEO, and chairman for wire and mail fraud. The Court’s
decision emphasizes the legal necessity of establishing and giving each
defendant the opportunity to defend against the claims brought against them,
even if claims against companies and their officers for purported securities
violations seem inextricably related.

In SEC v. Webb., No. 11 C 7152 (N.D. Ill.), the SEC alleged that InfrAegis, Inc. and its founder, CEO, and chairman, Gregory Webb, violated the Securities Act of 1933 and … Read More »


CFTC Divisions Publish Inaugural Exam Priorities

Posted on February 19th, by in CFTC, Futures, General. Comments Off on CFTC Divisions Publish Inaugural Exam Priorities

In an effort to increase awareness and attention by
regulated entities, the CFTC’s divisions of Market Oversight (DMO), Swap Dealer
& Intermediary Oversight (DSIO), and Clearing & Risk (DCR) announced
their 2019 examination priorities. This marks the first time that the agency
has published division
examination priorities, and Chairman Giancarolo commended CFTC
leadership and staff for their work in bringing additional transparency into
the CFTC’s agenda.

DMO Priorities

Tasked with oversight of trade execution
facilities, DMO focuses its examination priorities on  designated contract markets (DCMs) and swap
execution facilities (SEFs). DMO’s Compliance Branch conducts examinations of DCMs
to monitor their compliance with the Commodity Exchange Act and CFTC
regulations. Throughout 2018 the Compliance Branch completed a review of 11
DCM’s self-regulatory operations. Based on this review, and feedback from the
DCM staff, the division identified the following topics for in-depth
examination in 2019:

cryptocurrency surveillance practices; surveillance for disruptive trading (including
DCMs’ rules, surveillance practices, investigations, and disciplinary … Read More »


Court Rules that Law Firm’s Oral Summaries to SEC of Interview Notes and Memoranda Constitutes Waiver of Work Product Protection

Posted on December 14th, by and in General. Comments Off on Court Rules that Law Firm’s Oral Summaries to SEC of Interview Notes and Memoranda Constitutes Waiver of Work Product Protection

We previously reported that on October 31, 2017, two former executives from General Cable Corporation (“GCC”) moved to compel Morgan Lewis & Bockius LLP (“Morgan Lewis”) to produce interview memoranda and notes created during an internal investigation of GCC that were subsequently provided to the SEC and an independent auditor. In S.E.C. v. Herrera, et al., No. 17-20301, 2017 WL 6041750 (S.D. Fla. Dec. 5, 2017), the issue before the court was whether Morgan Lewis “waived work product protection when it voluntarily gave the SEC oral summaries of the work product notes and memoranda its attorneys prepared about interviews of its client’s executives and employees.” On December 5, 2017, Magistrate Judge Jonathan Goodman issued a ruling ordering Morgan Lewis to produce the notes and memoranda for the interviews the firm discussed with the SEC.

As a matter of background, GCC retained … Read More »




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...