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
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 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
Fresh from convicting numerous individuals, U.S. Attorney for the Southern District of New York Preet Bharara said that his office will focus, in appropriate cases, on holding institutions liable for wrongdoing. He is now warning these institutions to be on the lookout for these actions. Moreover, he said it will take several forms: civil suit,… Continue Reading
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
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
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
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
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
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
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
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
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
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
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
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
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 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
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.
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.
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
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
One of the major issues an investor, who happens to be a victim of a ponzi scheme faces, is what is the proper measure of recovery, if any recovery is available. One school of thought is that the victim should receive the value of the investment as they believed it to be at the time… Continue Reading
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.