By Porter Wright on On Thursday, the SEC’s Inspector General David Kotz, Former General Counsel David Becker and Chairman Mary Schapiro testified before a joint session of two House Subcommittees regarding the recent report by the Inspector General regarding the involvement of Mr. Becker in matters relating to Bernie Madoff. As previously discussed here, on September 20, the Inspector … Continue Reading
By Porter Wright on On Tuesday, September 20, the SEC’s Inspector General released one of a series of reports expected this month (as discussed here) – this one concerned the involvement of David Becker, the former General Counsel and Senior Policy Director of the Commission, in matters relating to Bernie Madoff. The Inspector General "found that Becker participated personally … Continue Reading
By Porter Wright on On Thursday, September 15, SEC Chairman Mary Schapiro and former SEC Chairman Harvey Pitt provided testimony to the House Committee on Financial Services. As previously discussed, the SEC has faced a number of issues this summer, including inquiries about its now-suspended document destruction policy (here), upcoming reports from the Inspector General on a variety of topics … Continue Reading
By Porter Wright on There were two interesting news items this week regarding what the nation’s regulators are doing to protect investors – one from the SEC and the other from the Department of Justice. The SEC announced that it "is in the process of re-establishing an Investor Advisory Committee," while Commissioner Luis A. Aguilar expressed disappointment that the … Continue Reading
By Porter Wright on On Friday, September 9, the Office of the Chief Operating Officer of the SEC issued its Report on the Implementation of SEC Organizational Reform Recommendations, which was mandated by Section 967 of the Dodd-Frank Act. The 25-page report was prepared to address the recommendations made in March 2011 by the Boston Consulting Group ("BCG"), who … Continue Reading
By Porter Wright on According to a report in the Wall Street Journal, "SEC General Counsel Mark Cahn issued a memo to Division of Enforcement staff telling them to stop existing record-destruction procedures for closed cases, until further notice." This issue originally arose in mid-August (as discussed here) when Senator Chuck Grassley (R. Iowa) asked SEC Chairman Mary Schapiro … Continue Reading
By Porter Wright on On Tuesday, September 6, the SEC announced that it is not seeking rehearing of the decision by the D.C. Circuit Court of Appeals invalidating Exchange Act Rule 14a-11. That Rule, which was previously discussed here, allowed 3% shareholders (or larger) to use the company proxy statement to nominate directors. As discussed here, on Friday, July … Continue Reading
By Porter Wright on In a letter dated August 17, 2011, Senator Chuck Grassley (R. Iowa) of the Senate’s Committee on the Judiciary, asked SEC Chairman Mary Schapiro whether the Commission has destroyed files relating to some of its more high-profile and controversial matters, such as its investigations of Bernie Madoff, Goldman Sachs, Bank of America, Lehman Brothers and … Continue Reading
By Porter Wright on The SEC announced that its Whistleblower Rules, adopted on May 25, 2011 became effective today and the Commission launched its new web page (here) for that particular office. In addition, in his first speech since being appointed as Chief of the Office of the Whistleblower, Sean McKessey addressed some misunderstanding about certain hotly debated issues … Continue Reading
By Porter Wright on Following Standard & Poor’s decision last Friday to downgrade the U.S. credit rating, there have been a couple of interesting articles regarding S & P and the SEC. An article from MarketWatch on Tuesday afternoon asked whether it would be appropriate for the Commission to investigate S & P regarding possible leaks of information on … Continue Reading
By Porter Wright on The SEC and Rajat Gupta have agreed to settle their dispute regarding the forum in which they should litigate the allegations of insider trading by the former Goldman Sachs director by dismissing the pending actions against each other. Specifically, the SEC has dismissed its Administrative Proceeding against Mr. Gupta alleging insider trading and the parties … Continue Reading
By Porter Wright on On Friday, July 22, 2011, the D.C. Circuit Court of Appeals issued an Opinion vacating Exchange Act Rule 14a-11. Business Roundtable v. SEC, No. 10-1305, slip op. (D.C. Cir. Jul. 22, 2011). The Rule, which was previously discussed here, allowed 3% shareholders (or larger) to use the company proxy statement to nominate directors.… Continue Reading
By Porter Wright on On Thursday, July 21, 2011 (the first anniversary of the passage of the Dodd-Frank Act), SEC Chairman Mary Schapiro testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs regarding the Commission’s efforts to fulfill its responsibilities under the Act. During her testimony, she advised the Committee that "the new responsibilities assigned to … Continue Reading
By Porter Wright on On Monday, July 18, 2011, a Federal Judge in Texas, Sidney Fitzwater, granted a Motion to Strike by the SEC in its case against Mark Cuban, the owner of the Dallas Mavericks, eliminating his affirmative defense of "unclean hands" in the Commission’s case against him. Notably, although it did strike the defense in Mr. Cuban’s … Continue Reading
By Porter Wright on On Monday, July 11, 2011, New York federal Judge Jed Rakoff denied the SEC’s Motion to Dismiss in Gupta v. SEC, No. 11-cv-1900 (S.D.N.Y.). The Plaintiff, Rajat Gupta, a former director at Goldman Sachs, has been accused by the SEC of having provided material nonpublic information to Raj Rajaratnam of Galleon Management, who was recently … Continue Reading
By Porter Wright on The SEC has proposed a rule that would disqualify securities offerings involving certain “felons and other ‘bad actors’” from reliance on the safe harbor from Securities Act registration provided by Rule 506 of Regulation D. The rule change is required by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Rule 506 … Continue Reading
By Porter Wright on On Monday June 13, 2011, the SEC announced that it was amending its rules to delegate authority to the Director of the Division of Enforcement to issue witness immunity orders to compel individuals to give testimony or provide other information. This rule will go into effect for an 18-month period once it is published in … Continue Reading
By Porter Wright on Earlier this month, the SEC approved a new securities market for smaller companies called BX Venture Market. Demand for such a market highlights a constant tension between the SEC’s goal of facilitating capital formation on one hand and protecting investors and markets on the other. Issuers unable to meet the listing standards of NYSE and … Continue Reading
By Porter Wright on At an open meeting on Wednesday morning, the SEC adopted final rules to implement Section 922 of the Dodd-Frank Act regarding securities whistleblower incentives and protection. One of the significant highlights of the final rules is that the Commission has sought to struck a compromise between the importance of the corporation’s compliance programs on the … Continue Reading
By Porter Wright on In January 2010, the SEC announced "a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency’s investigations and enforcement actions." One of those measures included the use of Deferred Prosecution Agreements ("DPA"). On Tuesday May 17, the SEC announced that it has entered into … Continue Reading
By Porter Wright on On Friday, April 22, 2011, the SEC released its study and recommendations regarding how the Commission could reduce the burden of complying with Section 404(b) of the Sarbanes-Oxley Act for companies whose market capitalization is between $75 and $250 million, while maintaining investor protections for such companies. The SEC recommended leaving the Section 404 requirements … Continue Reading
By Porter Wright on In March 2011, an individual accused of participating in an insider trading scheme filed a Complaint against the SEC in federal court in New York, arguing, among other things, that the SEC should be enjoined from retroactively applying the provisions of the Dodd-Frank Act in an administrative proceeding against him. On Friday April 1, 2011, … Continue Reading
By Porter Wright on On March 10, 2011, the Boston Consulting Group ("BCG") submitted a Report to Congress examining the internal operations, structure and need for reform at the SEC. As part of its work, BCG reviewed extensive documentation and conducted over 425 interviews. The Report (available here) recommended a series of initiatives designed to optimize the SEC’s resources, but … Continue Reading
By Porter Wright on In late January, the SEC proposed a new rule to formerly change the definition of “accredited investor” to exclude the value of a person’s primary residence for purposes of determining whether the person qualifies as an “accredited investor” on the basis of having a net worth in excess of $1 million. Previously, the value of … Continue Reading
