By Porter Wright on Last week, the Securities and Exchange Commission (SEC) made good on its promises to enforce violations of its non-GAAP financial measure disclosure rules. MDC Partners agreed to pay a $1.5 million dollar penalty to settle the SEC’s charges relating to non-GAAP disclosures made by the company. The SEC alleged that MDC Partners had misused several … Continue Reading
By Porter Wright on Yesterday, the SEC announced penalties totaling approximately $2.6 million against directors, officers, beneficial owners and issuers for failure to promptly report information about holdings and transactions in company stock. The primary enforcement weapon for these types of failures historically has been public shaming: Rule 405 of Regulation S-K requires issuers to identify insiders who failed … Continue Reading
By Porter Wright on A “deferred prosecution agreement” (or DPA) is not a new concept to government prosecutors or to SEC Chairman Mary Jo White, but it is new to the SEC. Under a DPA, the government agrees to withhold prosecution in exchange for enforcement assistance — providing information, implementing internal compliance policies, or other cooperation with SEC investigations. This … Continue Reading
By Porter Wright on In March, an affiliate of SAC Capital agreed to a record high settlement of $616 million for charges of insider trading. As it turned out, the SEC was only getting started with the company and its owner, Steve Cohen. In July, both Cohen and SAC Capital were themselves indicted on insider trading. Based on reports, SAC … Continue Reading
By Porter Wright on After “refusing to be bullied” into settlement, Mark Cuban, the billionaire owner of the Dallas Mavericks, won over a Texas jury and was cleared of insider trading charges brought by the SEC. The nine-person jury in the federal court in Dallas determined that Cuban did not violate federal securities laws in selling his stake in … Continue Reading
By Bob Tannous on On Oct. 10, 2013, the Securities and Exchange Commission (SEC) announced that Rodrigo Terpins and his brother, Michel Terpins, have agreed to pay $5 million to settle charges that they were behind suspicious trading in call H.J. Heinz Company options one day before the company publicly announced its acquisition by Berkshire Hathaway and 3G Capital. … Continue Reading
By Porter Wright on On September 6, 2013, in its first Regulation FD enforcement action in almost two years, the SEC charged the former VP of IR for First Solar, Inc. ("First Solar") with violating Regulation FD. An SEC investigation determined that Lawrence Polizzotto violated Regulation FD when he indicated in telephone conversations with certain analysts that First Solar was not likely … Continue Reading
By Jared Klaus on Federal prosecutors and the F.B.I. today announced a criminal indictment against SAC Capital Advisors, the embattled hedge fund managed by billionaire Steven Cohen, based on an alleged broad conspiracy to commit securities fraud through insider trading. The indictment against the hedge fund itself — as opposed to its employees — could have disastrous consequences for … Continue Reading
By Porter Wright on On July 23, 2013, the United States District Court for the District of Columbia dismissed the challenge to the Securities and Exchange Commission (SEC) conflict minerals rules (the Rules) brought by a group of trade associations. The Rules were issued under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and … Continue Reading
By Jared Klaus on The Second Circuit’s holding in Police & Fire Retirement Sys. of City of Detroit v. IndyMac MBS, Inc., Nos. 11-2998-cv(L) & 11-3036-cv(CON), 2013 WL 3214588 (June 27, 2013) confirms that Section 13’s three-year statute of repose is indeed iron-clad. The case originated as a putative class action brought against IndyMac for fraud in the sale … Continue Reading
By Porter Wright on Friday afternoon, the Securities and Exchange Commission (“SEC”) announced that it filed charges against Steven Cohen, manager of SAC Capital Advisors (“SAC Capital”), for failing to adequately supervise his employees and ignoring signs of suspicious trading activity. Cohen is alleged to have missed warning signs that “any reasonable hedge fund manager” should have seen, though the … Continue Reading
By Bob Tannous on On June 13, 2013, the Securities and Exchange Commission (“SEC”) charged Revlon with violating federal securities laws when the company misled shareholders during a going private transaction. Specifically, the SEC found that Revlon violated Section 13(e) of the Securities Exchange Act of 1934 and Rule 13e-3(b)(1)(iii), which prohibits issuers and their affiliates in going private … Continue Reading
By Porter Wright on Last week, the SEC reached a settlement with CR Intrinsic Investors, LLC, which tore up the record books on insider trading cases. CR Intrinsic, an affiliate of SAC Capital, agreed to pay over $600 million to settle charges of using nonpublic information about clinical pharmaceutical trials to earn profits of over $274 million. … Continue Reading
By Porter Wright on State of Illinois Charged With Misleading Muni Bond Investors The SEC charged the state of Illinois with failing to inform municipal bond investors of potential issues with its pension funding plan. The state failed to disclose that its pension obligations were at risk of “structural underfunding” issues associated with the state’s statutory funding plan, and misrepresented … Continue Reading
By Porter Wright on Mark Cuban Insider Trading Case Set For Trial Mark Cuban, the charismatic owner of the NBA’s Dallas Mavericks, lost his attempt to dismiss the SEC’s insider trading case against him, sending it to trial. The district court judge in Dallas said the ruling was “in some respects a close one.” Mr. Cuban is charged in connection with … Continue Reading
By Porter Wright on Second Circuit Hears Oral Argument on SEC-Citigroup Settlement Last November, a federal judge in New York rejected a proposed settlement between the SEC and Citigroup in connection with charges of misleading investors at the beginning of the financial crisis. This week the Second Circuit Court of Appeals heard oral arguments in the case, which saw the … Continue Reading
By Bob Tannous on On February 15, 2013, the Securities and Exchange Commission ("SEC") issued a press release announcing that it had obtained an emergency court order to freeze assets in a Swiss-based trading account that was used to gain more than $1.7 million from insider trading activities in connection with yesterday’s announced acquisition of H.J. Heinz Company. In a complaint … Continue Reading
By Porter Wright on SEC Settles with Pond Securities In Market Manipulation Case Four defendants – Andreas Badian, Jeffrey Graham, Pond Securities, and Ezra Birnbaum – agreed to settle charges of market manipulation, the SEC announced this week. In a complaint filed in April 2006, the SEC alleged that the defendants manipulated the stock of Sedona Corporation and violated record-keeping … Continue Reading
By Porter Wright on Following the short holiday week, below are notable developments in SEC enforcement activity for the week of Dec. 24-28. Insider Trading: One More Charged for IBM-SPSS Merger Scheme The SEC has charged another broker for taking part in an insider trading scheme connected to IBM’s acquisition of SPSS. Trent Martin learned of the impending merger from an … Continue Reading
By Porter Wright on 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 … Continue Reading
By Porter Wright on Below are updates on notable SEC enforcement activity from the week of November 26-30, 2012: “White-Out” Firm Found Guilty Jeffrey Liskov and his firm, EagleEye Asset Management, LLC were found guilty of securities fraud by a jury in Boston. The Plymouth, MA firm was found guilty of misleading investors by misrepresenting the risks associated with investments … Continue Reading
By Bob Tannous on On September 14, 2012, Securities and Exchange Commission ("SEC") announced that it had brought charges against the New York Stock Exchange and its parent company NYSE Euronext ("NYSE") for compliance failures that improperly gave certain customers a "head start" on trading information. A graphic analysis of the NYSE’s improper practices is attached. The NYSE agreed to a … Continue Reading
By Bob Tannous on On August 16, 2012, in a Complaint filed in the U.S. District Court in the Northern District of California, the Securities and Exchange Commission (“SEC”) charged Oracle Corporation with violating the Foreign Corrupt Practices Act (“FCPA”). The Complaint alleges that, from 2005 to 2007, employees of an Indian subsidiary of Redwood Shores, a California-based enterprise systems … Continue Reading
