Archives: Securities Litigation & Enforcement

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Financial Conduct Authority (FCA) publishes its Annual Report and Accounts for 2014/15

On 2 July 2015, the UK’s financial regulatory, the Financial Conduct Authority (FCA), published its annual report and accounts 2014/15. Overview  The annual report highlighted several areas in which the FCA has been active over the past 12 months, including: The use by the FCA of its new consumer credit powers The launch of ‘Project Innovate’ … Continue Reading

FinCEN Speech Outlines “Core Principles” on Enforcement

A recent Reed Smith Client Alert discusses a June 2015 speech by Stephanie Brooker, Associate Director for Enforcement at the Financial Crimes Enforcement Network (“FinCEN”). Although Ms. Brooker’s comments were specifically directed at the casino and card club industries, she discussed six “core principles” that have and will continue to guide FinCEN’s BSA/AML enforcement activities … Continue Reading

FinCEN Enforcement Stacks the Deck in AML Compliance for Casinos and Card Clubs

Introduction Stephanie Booker, Associate Director for Enforcement, Financial Crimes Enforcement Network (“FinCEN”) recently gave a speech at the Nevada Bar Association’s Bank Secrecy Act Conference in Las Vegas. Involved in the conference were the State Bar of Nevada’s Gaming Law Section, the American Gaming Association, and the University of Nevada-Las Vegas’ International Gaming Institute. FinCEN … Continue Reading

Despite First Administrative Appeal, CFPB Seeks Out Courts

On June 4, 2015, Consumer Financial Protection Bureau Director Richard Cordray issued a decision in the first appeal of a CFPB administrative proceeding. The appeal to Director Cordray followed the CFPB’s first administrative trial before an administrative law judge. The defendant, a mortgage lender, has vowed to appeal it further to the circuit court. But … Continue Reading

FINRA Publishes New Sanction Guidelines Urging Harsher Penalties for Violations

This post was also written by Kiran Somashekara. The Financial Industry Regulatory Authority’s (FINRA’s) National Adjudicatory Council (NAC) released updated Sanction Guidelines on May 12, 2015, for use in adjudicating disciplinary proceedings involving FINRA member firms and associated brokers. The updated Sanction Guidelines provide for tougher sanctions for violations of FINRA rules. FINRA explained that … Continue Reading

CFPB Update: CFPB Orders $3.1 Million in Refunds to Military Servicemembers in Fifth Case Involving Military Allotments

On Monday, the Consumer Financial Protection Bureau (CFPB) announced the latest in a series of five enforcement actions involving military allotments: a $3.1 million consent order against a payment processor, Military Assistance Company (MAC) and its parent, Fort Knox National Company. The CFPB alleged that MAC had failed to disclose to servicemembers the amount of … Continue Reading

CFPB Update – Bank Short Term Loans “Payday” for Banks? CFPB Outlines Sweeping Proposal to Level the Playing Field Between Payday Lenders, Banks and Credit Unions

This post was also written by Travis A. Sabalewski.  Direct from Richmond, Virginia: yesterday, I (Travis) visited the Greater Richmond Convention Center, where the Consumer Financial Protection Bureau (CFPB) announced at a field hearing a sweeping proposal for new rules regarding payday/deposit advance loans, auto title loans, and certain high-interest, longer-term loans. (A Fact Sheet … Continue Reading

FCA raises concerns over structured products

The UK’s Financial Conduct Authority (FCA) has published its Occasional Paper No. 9, setting out the results of the FCA’s research into how well customers understood structured products. The answer, according to the report, is not very well. The report found that, while investors’ expectations of growth in the FTSE were in line with the … Continue Reading

CFPB Updates: CFPB Report Claims Arbitration “Less Beneficial To Consumers” than Individual or Class Litigation, Foreshadows Attempt to Impose Restrictions in Future

This post was written by Leonard A. Bernstein, Deepa J. Zavatsky and Nicholas F.B. Smyth. On March 10, Director Richard Cordray of the Consumer Financial Protection Bureau (“Bureau” or “CFPB”) presided over a Field Hearing on Pre-Dispute Arbitration Clauses, discussing what he described as the “key findings” of the Bureau’s long-awaited 700-page Arbitration Report to … Continue Reading

How Many SARs Does It Take to Find Yourself in Regulators’ Crosshairs? Answer: None

Securities and Exchange Commission (“SEC”) Enforcement Division Director Andrew Ceresney, recently drew attention when he announced that the SEC intends to include among its enforcement priorities compliance with the Bank Secrecy Act (the “BSA”). Ceresney’s comments, made during SIFMA’s 2015 Anti-Money Laundering and Financial Crimes Conference, focused on broker-dealers and the SEC’s concern that broker-dealers … Continue Reading

China Auditor Update: SEC and Chinese Audit Firms “Settle” for the Status Quo

In an Order of Settlement released February 6, 2015, the SEC agreed to stay the administrative action against the Chinese affiliates of the “Big Four” accounting firms for refusing to turn over their audit work papers relating to several U.S.-listed Chinese companies. As we wrote earlier here, the Chinese affiliates of the audit firms had … Continue Reading

EY Appeals Hong Kong Court Order To Produce Audit Working Papers Notwithstanding Holding That EY ‘Deliberately Withheld From SFC’ and State Secrets Not at Issue

More than a year ago, we began following the so-called Ernst &Young (“EY”) State Secrets Case in Hong Kong.  On 23 May 2014, the High Court of Hong Kong finally concluded that there was no “reasonable excuse” for EY’s failure to comply with Securities and Futures Commission (“SFC”) notices seeking information and documents, and that … Continue Reading

CFTC Awards Its First Whistleblower Award

On May 20, 2014, the Commodities Futures Trading Commission (CFTC) announced an award of $240,000 to an anonymous whistleblower who provided “valuable information” concerning unexplained Commodity Exchange Act violations by an unidentified entity or person.  The award was the first issued under the CFTC Whistleblower Program created under the Dodd-Frank Wall Street Reform and Consumer … Continue Reading

China Auditor Update: SEC To Hear Appeal of Decision Barring Chinese Auditors

The Securities and Exchange Commission recently indicated that it would review, de novo, the January 2014 decision barring the Chinese affiliates of the “Big Four” accounting firms from appearing before the SEC.  The Commission’s Order, found here, also granted both parties’ motions to submit additional evidence for consideration – most significantly, the auditors’ evidence that … Continue Reading

SEC’s Corp Fin Double-Takes on WKSI Waivers

For the second time in as many months, the U.S. Securities and Exchange Commission’s Division of Corporation Finance (“Corp Fin”) has issued a Revised Statement on Well-Known Seasoned Issuer Waivers (“WKSIs”). As we mentioned last month, WKSIs are issuers of securities that can get the benefit of registering their securities offerings on shelf registrations that become … Continue Reading

Corp Fin Takes Another Look at WKSI Waivers

The U.S. Securities and Exchange Commission’s Division of Corporation Finance (“Corp Fin”) recently updated its guidance concerning how it will evaluate requests for waivers by Well Known Seasoned Issuers (“WKSI”) who would otherwise become ineligible to be WKSIs under Rule 405 of the Securities Act..  According to Corp Fin, this update is more of a … Continue Reading

Supreme Court Probes “Midway” Position in Halliburton

The United States Supreme Court yesterday heard oral argument in Halliburton Co. v. Erica P. John Fund, Inc. In that much-watched case, Halliburton asks the Court to overrule the fraud-on-the-market theory of reliance in securities fraud cases established by the Court’s decision in Basic v. Levinson, or, at least, to adopt a modification that would … Continue Reading

China Auditor Update: After Round One – SEC 1, Auditors 0

  In the first blow to land in the long running dispute between U.S. regulators and the accounting firms that certify the financial statements of China-based companies listed on U.S. exchanges, yesterday an Administrative Law Judge at the Securities and Exchange Commission (“SEC”) issued a decision barring the Chinese affiliates of the “Big Four” accounting … Continue Reading

The Lawman Cometh: The SEC Adds Deferred Prosecution Agreements to Its Bag of Remedies

This post was written by Terence Healy. Last week the Securities and Exchange Commission (“SEC”) announced it had entered into its first deferred prosecution agreement (“DPA”) with an individual.  The announcement is interesting for two reasons.  It reflects the increasing tone of law enforcement the Commission is taking in its enforcement proceedings, and it raises the … Continue Reading
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