Below are notable developments in SEC enforcement activity for the week of December 3-7, 2012.
Big Lots CEO Resigns Amidst SEC Inquiry
The CEO of Central Ohio-based Big Lots (NYSE: BIG) is under scrutiny by the SEC surrounding his sale of over $10 million in company stock prior to a negative quarterly earnings report. Big Lots stock fell 24 percent as a result of the April 2012 earnings report. Steven Fishman will retire as soon as a replacement is found, after serving as CEO since 2005.
Chinese Affiliates of Big Four Accounting Firms Charged For Refusing To Produce Documents
The SEC announced charges this week against the Chinese affiliates of the Big Four accounting firms for refusing to produce audit records for Chinese companies under investigation for violations of accounting fraud. According to the SEC’s administrative order, the four firms (as well as BDO) have refused to cooperate with the SEC investigations for months. For the Shanghai office of Deloitte & Touche, these recent charges are similar to those brought by the SEC in May and September.
See the order here.
Insider Trading: Wells Fargo Investment Banker Tips Friend
A banker at Wells Fargo was the catalyst for an insider-trading scheme resulting in more than $11 million in profits, the SEC charged this week. According to the complaint, John W. Femenia used his position at the bank to gain nonpublic, material information about various impending mergers and tipped off friends and family. The SEC alleges 10 people were involved in the scheme, as well as two companies, Coram Real Estate Holdings Inc. and GoldStar P.S.
See the complaint here.
Insider Trading: Brazilian Settles Charges of Trading Burger King Stock
Brazilian citizen Igor Cornelsen will settle charges of insider trading in connection with the 2010 acquisition of Burger King (NYSE: BKW) by New York private equity firm 3G Capital Partners Ltd. Cornelsen obtained the nonpublic information from a fellow Brazilian working in the Miami office of Wells Fargo, who was charged with insider trading in September. Cornelsen and his previous firm, Bainbridge Group, agreed to pay over $5.1 million to settle.
See the complaint here.
General Counsel Mark Cahn To Leave SEC
This week Mark Cahn, the General Counsel for the SEC, announced he will return to the private sector at the end of the year. Cahn, previously a partner at Wilmer Hale, served as General Counsel since February 2011. Like Mary Schapiro, the departing SEC Chair, Mr. Cahn served during a time of intense regulatory activity in the SEC. He oversaw successful appellate defenses of SEC actions, provided advice on rulemaking, and advised the SEC on rules adopted pursuant to the Dodd-Frank reforms.
Read the SEC Press Release here.