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Category Archives: Federal and State Criminal Activities

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Do You Need Another Reason To Take Cyber-Security Seriously

Posted in Cyber-Security, Dodd-Frank, Federal and State Criminal Activities, Financial Industry Trends

As we all know, the SEC and FINRA have made cyber-security an exam priority in 2014, but what does it mean when the audit of your regulator shows that it is susceptible to a data breach.  A recent audit of the SEC found that its cyber-security was far from perfect.  I am sure that there… Continue Reading

Vilar Will Not Hinder U.S. Attorney From Pursuing Global Fraud

Posted in Federal and State Criminal Activities, International Securities Regulation

The U.S. Attorney’s Office for the Southern District of New York has announced that its prosecutors will not be significantly impacted by a recent appellate court decision concluding that Morrison’s proscription against extraterritoriality applies also in the criminal context. In United States v. Vilar, the United States Court of Appeals for the Second Circuit ruled… Continue Reading

NEW YORK AG PUSHES FOR COLLABORATION TO COMBAT NEW FORMS OF INSIDER TRADING

Posted in Federal and State Criminal Activities, Insider Trading

New York Attorney General Eric Schneiderman is pushing for better cooperation with the financial industry and federal lawmakers to combat emerging insider-trading threats.  While he commended competition among financial services firms, he also said competition has to be guided by an element of fairness, and regulators need to protect the market. The NYAG has already… Continue Reading

BULLSEYE! ATTORNEYS DEAD CENTER FOR REGULATORS

Posted in Federal and State Criminal Activities, Law Firms and Lawyers, SEC Enforcement

We routinely report enforcement actions directed against lawyers because it simply never goes away. Attorneys are a major target for federal and state securities regulators.  Regulators salivate over “getting” attorneys, because they receive notoriety and money from the attorney’s malpractice carrier for investors.  Additionally, the SEC’s new cooperation initiative may result in even more enforcement… Continue Reading

So You Thought You Wanted To Be A Securities Lawyer

Posted in CFTC Enforcement, Federal and State Criminal Activities, Financial Industry Trends, FINRA Enforcement, NFA Enforcement, SEC Enforcement

Lawyers have often been the brunt of cruel jokes. But now, a recent study reported on by the Bureau of National Affairs shows, lawyers are the target of securities regulators. Why the sudden interest? For one, cooperation initiatives between regulators and those caught violating securities law convince these people to turn on their lawyer who… Continue Reading

Law Firms Cannot Ignore Clients Who May Be Engaged in Ponzi Schemes

Posted in Federal and State Criminal Activities, Law Firms and Lawyers, Ponzi Schemes, SEC Enforcement

Regulators seem to believe that lawyers and their law firms act like ostriches when it comes to their clients and Ponzi schemes.  For example, a law firm paid $25 million to settle malpractice claims over legal services rendered to certain hedge funds and related entities controlled by a Ponzi Scheme artist, Arthur Nadel.  See SEC v…. Continue Reading

A “New” Statute for the Department of Justice

Posted in Federal and State Criminal Activities, Financial Industry Trends

The DOJ has been making increasing and aggressive use of the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) FIRREA was an outgrowth of the savings and loan crisis in the late 80’s and early 90’s.  The DOJ is looking to prosecute and obtain civil penalties by using this statute.  This statute allows the DOJ to bring… Continue Reading

Is The FCPA’s Facilitating Payment Exception Dead?

Posted in FCPA, Federal and State Criminal Activities, SEC Enforcement

Incredibly over the last several years, both the DOJ and SEC have been relentless in their aggressive enforcement of the Foreign Corrupt Practices Act.  As part of this pursuit, the FCPA’s facilitation payment exception might not be as viable as it once was, thereby, defending these actions has gotten that much more complicated. Many are suggesting… Continue Reading

Defense Bar Strategies May Help Tackle SEC “No Admit” Policy in Parallel FCPA Cases

Posted in FCPA, Federal and State Criminal Activities, SEC Enforcement

Despite recent changes to the SEC’s no admit/no deny settlement policy, FCPA defense attorneys still have options.  As many know, the SEC will no longer allow settling defendants either to admit nor deny the SEC’s allegations when convicted on parallel criminal charges or where facts were admitted in a criminal proceeding.  In particular, defense attorneys could differentiate the SEC… Continue Reading

Acquiring Companies of Foreign Interests Risk FCPA Liability

Posted in FCPA, Federal and State Criminal Activities, International Securities Regulation, SEC Enforcement

Companies that acquire or invest in offshore entities or in entities that conduct business overseas may inherit FCPA risks. Clearly, the DOJ and the SEC are viewing these transactions and the resulting combinations with a jaundiced eye.  These regulators, most likely, will begin investigations, and, possibly, commence actions.  In fact, there have been recent FCPA actions… Continue Reading

What You Should Know Before You Start a Ponzi Scheme?

Posted in Federal and State Criminal Activities, Ponzi Schemes

Okay, no one is suggesting that you start a Ponzi scheme!!!  However, now, that we have your attention, you should be aware of the United States Court of Appeals for the Second Circuit’s decision affirming a 25-year prison sentence for Ponzi scheme operator, Nicholas Cosmo.  See United States v. Cosmo, 2d Cir., No. 11-4506, 9/20/12, and http://federal-circuits.vlex.com/vid/united-states-v-cosmo-399026010. This… Continue Reading

Foreign Fund Issuers selling in the United States May Require Registration

Posted in Broker-Dealer Regulation, Compliance and Supervision, Federal and State Criminal Activities, International Securities Regulation, SEC Enforcement

Over the course of many years, I have been questioned by American BDs as to their responsibilities for sales to people outside the United States.  My response has always been that they are required to obtain an opinion from counsel in those jurisdictions before proceeding.  Most likely, those foreign jurisdictions may have registration requirements before conducting business in their… Continue Reading

You Have to Make Sure Your Private Equity Firm Has D&O Coverage When Responding to Subpoenas

Posted in Compliance and Supervision, Federal and State Criminal Activities, Hedge and Private Equity Funds, SEC Enforcement, Securities Litigation, State Enforcement

Private equity companies have recently been hit with a barrage of regulatory subpoenas. Responding to these subpoenas may cost the private equity firms to expend millions of dollars.  These entities should have D&O liability insurance.  Initially, the entity must make sure that responding to such a subpoena falls within the definition of a claim.  Some policies may… Continue Reading

Like a Good Neighbor Hedge Fund Insurance Coverage Will Be There, No, Not Unless You Make Sure

Posted in Federal and State Criminal Activities, Hedge and Private Equity Funds, SEC Enforcement, State Enforcement

This blog entry about hedge fund insurance coverage almost sounds like a car insurance commercial.  Sadly, both are critical in today’s modern society. Given the current regulatory environment, volatile market conditions, and the public perception of the industry, hedge funds face enormous risk in doing business.  Hedge funds should carry both D&O and E&O Liability Insurance to protect directors, officers, managers and the… Continue Reading

Investment Advisers Wary of State Civil and (Gulp!) Criminal Action

Posted in Federal and State Criminal Activities, Investment Adviser Regulation, State Enforcement

State securities regulators are going after investment adviser firms with a vengeance, including, but not limited to, seeking prison time for those who violate the their securities laws. A recent NASAA report indicated that investment adviser actions nearly doubled from the previous year.  In fact, these actions comprised approximately 15% of all state securities enforcement actions.  Criminal actions also rose… Continue Reading

How Do Accountants Look in Prison Stripes? You Do Not Want to Find Out

Posted in Accounting Standards, Federal and State Criminal Activities, PCAOB Enforcement

Accountants beware – prison lurks. Recently, a certified public accountant and auditor was sentenced to 54 months in prison for his role in a nearly half-billion dollar investment scam that impacted over 3,500 investors.  In the sentencing, the court indicated accountants and auditors are gatekeepers of our financial system, and must protect that system and those who… Continue Reading

Self-Reporting Impacts SEC Investigation Attitude

Posted in Federal and State Criminal Activities, SEC Enforcement

Self-reporting possible wrongdoing impacts SEC investigations, and effects even the determining of penalties. Essentially, entities would receive credit for this self-reporting, and, according to reports by the SEC, the credit has been substantial.  Such credit has even risen to both the SEC and DOJ not prosecuting targets.  Such an approach is also not new given the SEC’s… Continue Reading

Game Changing Off-Label Marketing Decision Has Implications for Related Securities Lawsuits

Posted in Compliance and Supervision, Corporate Governance, Federal and State Criminal Activities, Internal Investigations, Securities Class Actions, Securities Litigation

The Second Circuit ruled that the First Amendment trumps the federal government’s enforcement off-label marketing prohibitions. The decision could change the face of pharmaceutical compliance and limit criminal, regulatory, and civil exposure to government and private plaintiffs.

ABA Seventh Annual National Institute on Securities Fraud

Posted in Dodd-Frank, Federal and State Criminal Activities, SEC Enforcement, State Enforcement

With the east coast in the midst of Hurrican Sandy, I am sure we are all thinking about a nicer place right now.  Apparently, the Seventh Annual National Institute on Securities Fraud is November 15-16, 2012 in New Orleans. For more information and to register, call 800-285-2221 or log on to:  http://www.ambar.org/sfr2012.

WHAT HAPPENS WHEN THE SKY DOES IN FACT FALL IN ON YOU? EXPORT CONTROLS AND OTHER CUSTOMS ISSUES

Posted in Federal and State Criminal Activities

We have repeatedly blogged about government investigations.  Moreover, regardless of the election results, government investigations will continue.  Further, these governement investigations take on a life of their own and almost always encompass several different areas. Today, we wanted to digress somewhat from our usual securities topicS and let you in on what some of our colleagues at Fox Rothschild do when… Continue Reading

Even Without Knowledge or Participation, Corporate Officers Can Be Criminally Liable for Subordinates’ Misdeeds

Posted in Compliance and Supervision, Corporate Governance, Federal and State Criminal Activities

At least, they can the health care and environmental arenas.  Under the responsible corporate officer (RCO) doctrine, the ability to control corporate conduct is sufficient to hold officers criminally liable, even if the officers did not participate in the misdeeds or have actual knowledge of them.  The D.C. Circuit recently revisited the RCO doctrine in a case… Continue Reading

GREAT CRIMINAL LAW SUBMISSIONS BY OUR FOX COLLEAGUES

Posted in Federal and State Criminal Activities

We wanted to share with you a great article co-authored y one of our partners, Alain Leibman, along with our colleague, Jana Volante.  The article’s title is ”Attacking Eyewitness Identification Testimony, in BNA’s Criminal Law Reporter, and is located at http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=4294971709. Alain also composed an ensemble piece in the ABA’s journal called, Litigation, and that peice is located at http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=15032385703.