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
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 … Continue Reading
This post was also written by C. Neil Gray. On June 23, 2014, the Supreme Court of the United States issued its much-anticipated decision in Halliburton Co., et al. v. Erica P. John Fund, Inc., No. 13-317 (2014). The Court vacated and remanded the decision of the United States Court of Appeals for the Fifth … Continue Reading
Supreme Court vacates and remands in Halliburton. United States Supreme Court declines to overturn Basic, but decides that defendants can rebut the presumption of reliance – before class certification – by showing a lack of price impact. Watch this space for a full analysis.… Continue Reading
This post was written by Amy. J. Greer and C. Neil Gray. Earlier this week, J. Bradley Bennett, Executive Vice-President, Enforcement for FINRA, spoke at a gathering hosted by SIFMA’s Compliance & Legal Society. Bennett’s remarks purported to bust common myths about the FINRA Enforcement program he leads—myths like FINRA picks on larger firms and … Continue Reading
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
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
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
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
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
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
This post was written by Amy Greer. I guess we will see whether SEC Chairman Mary Jo White revisits her decision to try more cases, given the unattractive string of losses that is piling up. Most recently, a Federal District Judge in the Northern District of Georgia, after a bench trial, found in favor of … Continue Reading
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
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
In a reversal of course, the Commodities Futures Trading Commission’s Division of Enforcement has confirmed that it will no longer pursue omnibus orders of investigation by means of an “absent objection” procedure, and instead will seek Commission approval before extending such orders. Last month, CFTC Commissioner Scott O’Malia issued a sharply worded objection to the … Continue Reading
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
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
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
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 several pre-existing supervisory rules, and would significantly impact … Continue Reading
This post was also written by Terence Healy. On April 8, 2013, District Judge Shira Scheindlin (S.D.N.Y.) dismissed Deloitte Touche Tohmatsu CPA Ltd. (“Deloitte”) from a securities fraud class action brought by investors in Longtop Financial Technologies, Ltd. (“Longtop”), a Chinese company which was delisted from the NYSE in 2011. The plaintiffs alleged auditing giant Deloitte … Continue Reading
Evidence kicked off last week in the highly anticipated case brought by Hong Kong’s Securities and Futures Commission (“SFC”) against Ernst & Young Hong Kong (“E&Y”) over its failure to adequately respond to statutory requests for information in relation to an SFC investigation of the failed 2009 IPO of Chinese waste management company, Standard Water … Continue Reading
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
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
