Tag Archives: SEC

Board of Directors: Guide to Cybersecurity Oversight

Cybersecurity and data breach risk were prominent subjects at the 35th Annual Ray Garrett Corporate and Securities Law Institute held on April 30, 2015 at Northwestern Law School in Chicago. Reed Smith partner Mark Melodia, along with several other panelists, engaged in a lively discussion of effective board oversight of cybersecurity challenges facing their companies … Continue Reading

SEC Message to Government Contractors: Don’t Limit Whistleblowing

On April 1, the Securities and Exchange Commission (“SEC”) settled its first enforcement action against a company for violating whistleblower protections by including restrictive language in confidentiality agreements used in its internal investigations. The SEC charged a Houston-based government services contractor with violating whistleblower protections codified in section 21F of the Securities Exchange Act. Rule … 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

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

DC Circuit Invalidates Conflict Mineral Reporting Regulations

This week the U.S. Court of Appeals for the D.C. Circuit held that the Security and Exchange Commission’s (“SEC”) final rule concerning “conflict mineral” disclosures is unconstitutional.  Nat’l Assoc. of Mfrs v. SEC, No. 13-5252 (D.C. Cir., decided April 14, 2014).  The SEC rule requires registrants to disclose annually on a Form SD whether their … 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

Bold and Unrelenting: Six Months In

This post was written by Terence Healy and Amy J. Greer. Mary Jo White promised Congress she would pursue a “bold and unrelenting” enforcement program as chairman of the Securities and Exchange Commission (“SEC”). Six months into her tenure, we should take her at her word. In public remarks this week, White reiterated her desire for … Continue Reading

The SEC Brings Charges Against ‘Gatekeeper’ Accountants

This post was written by James A. Rolfes. In a “crackdown” on the “gatekeepers” who put investors at risk when they fail to uncover financial statement fraud and misstatements, the Securities and Exchange Commission this week highlighted the work of “Operation Broken Gate” when it announced the filing of several proceedings against certified public accountants … Continue Reading

U.S. District Court Vacates SEC’s Rule Requiring Public Disclosure of Energy Companies’ Payments to Foreign Governments

  On July 2, 2013, the U.S. District Court for the District of Columbia vacated a rule promulgated by the Securities and Exchange Commission (“SEC”) that would have required energy companies to publicly disclose payments to U.S. and foreign governments in connection with the commercial development of oil, natural gas, or minerals. The American Petroleum … Continue Reading

Déjà Vu All Over Again? SEC Announces More Specialized Initiatives

This post was written by Amy J. Greer and Terence Healy. After several weeks of anticipation, the SEC’s Division of Enforcement announced July 2 three new special initiatives: a Microcap Fraud Task Force, a Financial Reporting and Audit Task Force, and a Center for Risk and Quantitative Analytics. These new groups are in addition to … Continue Reading

Will the Third Time be the Charm for FINRA’s New Supervision Rules?

This post was written by Daniel Z. Herbst. After two unsuccessful attempts to implement consolidated supervisory rules, the Financial Industry Regulatory Authority, Inc. (FINRA), on June 21, 2013, filed with the Securities and Exchange Commission (SEC) a long-anticipated notice of proposed Rules 3110 (Supervision) and 3120 (Supervisory Control System). The proposed rules would replace and consolidate … Continue Reading

The U.S. Has a New MOU with Securities Regulators in China: Real Change or Just Déjà vu?

  The Securities and Exchange Commission’s (“SEC”) power to obtain documents from U.S. companies and their auditors is a key component of its mandate to protect the marketplace from fraud. But what happens when the exercise of that power conflicts with the civil and criminal laws of another country? In the case of the SEC … Continue Reading

SEC Order Emphasizes Need to Follow Disclosed Valuation Method when Valuing Private Equity Fund

This post was written by James A. Rolfes. Expressing its concern that “the current difficult fundraising environment … can incentivize private equity managers to artificially inflate valuations,” the Securities and Exchange Commission emphasized the need for private equity firms to “implement policies and procedures to ensure that investors receive performance data derived from the disclosed … Continue Reading

“Know Your Customer” No More? The SEC Signals a Uniform Fiduciary Standard May Be Coming for Broker-Dealers and Investment Advisers

This post was written by Terence Healy and Daniel Herbst. On March 1, 2013, the Securities and Exchange Commission (“SEC”) published a sweeping request for comments that may determine whether a uniform fiduciary standard will be required for all broker-dealers and investment advisers providing services to retail customers. Under the present regime, registered investment advisers … Continue Reading

Down goes Frazier!… The SEC Takes It on the Chin in Supreme Court Fight to Maintain “Discovery Rule” in Enforcement Actions

This post was written by Terence Healy. The discovery rule is no more. The Supreme Court today issued its decision in Gabelli v. SEC, 568 U. S. ____ (2013), and held the five-year limitations period under 28 U.S.C. § 2462 runs from the date of the underlying violation, and not from when the government reasonably … Continue Reading

SEC Better Fasten Those Seat Belts, Looks Like A Bumpy Ride

This post was written by Amy J. Greer. As the securities enforcement world awaits the U.S. Court of Appeals for the Second Circuit’s decision in the SEC v. Citigroup matter – where Judge Jed Rakoff balked at the Commission’s “neither admit nor deny” policy and refused to approve a settlement for lack of evidentiary support … Continue Reading

The Clock Is Ticking for the SEC… (Or Is It?)

This post was written by Terence Healy. The Supreme Court heard oral argument this morning in a case addressing the time within which the Securities and Exchange Commission (“SEC”) can initiate an action seeking civil penalties for violations of the federal securities laws. In Gabelli v. SEC, the Court considered whether the “catch all” five-year limitations … Continue Reading

SEC Warning: Phony Email Hoax

This post was written by Amy J. Greer. The SEC sent out a warning yesterday that a phony message referencing the Agency’s Whistleblower Office is being used in connection with a potential computer hack or dissemination of malicious software. According to the SEC Alert, sent through the Agency’s push technology, it has received numerous calls … Continue Reading

Judge Rakoff Rejects the SEC-Citi Settlement, But Is “Truth” Really the Purpose of Any Settlement and Does the SEC Need the Courts to Settle its Cases?

This post was written by Amy J. Greer. Once again, Judge Jed Rakoff has proven to be a thorn in the side of the SEC, rejecting the agency’s $285 million settlement with Citigroup Global Markets. While Judge Rakoff’s opinions are always a good read: sharp, well written, and to the point – and this one … Continue Reading

SEC Rejects Proposal by its Enforcement Staff to Settle Landmark ‘Clawback’ Suit

This post was written by James A. Rolfes. Last week, the Washington Post reported the SEC had rejected a proposed settlement of SEC’s landmark case seeking enforcement of the so-called “clawback” of executive compensation under Sarbanes Oxley Section 304. See Hilzenrath, D., Washington Post July 20, 2011, SEC Rejects Proposal. In SEC v. Jenkins, No. … Continue Reading