On March 26, 2012, Judge Jed Rakoff issued an Opinion and Order in the two related cases against Rajat Gupta, granting in part a Motion to Compel and ordering the SEC to turn over to the U.S. Attorney’s Office materials relating to 44 witnesses (who were interviewed by the SEC and prosecutors jointly during the … Continue Reading
On March 27, 2012, the SEC announced that it has sued John Cinderey, a former executive vice president at United Commercial Bank for aiding and abetting securities law violations relating to falsifying books and records and misleading the bank’s auditors. The Commission settled with Mr. Cinderey, who agreed to be permanently enjoined from violating provisions … Continue Reading
Section 201 of the Jumpstart Our Business Startups Act, or JOBS Act (expected to be signed into law soon by President Obama), requires the SEC to change the rules of a Rule 506 private placement to allow for general solicitation or general advertising so long as all purchasers are accredited investors. Currently, Rule 502(c) prohibits … Continue Reading
On Tuesday, March 27, 2012, the Government filed a motion in the FCPA Sting Case to dismiss the charges against Jonathan M. Spiller, Haim Geri, and Daniel Alvirez, the three defendants who had previously pled guilty to conspiracy charges in the case and were awaiting sentencing. This unusual event occurred after the Court had dismissed … Continue Reading
The U.S. House of Representatives, by a vote of 380 to 41, has passed the Jumpstart Our Business Startups Act, or JOBS Act in the form previously approved by the Senate last week. The bill now goes to President Obama, who is expected to sign it into law. The JOBS Act significantly impacts the securities … Continue Reading
On Friday, March 23, 2012, the SEC filed a subpoena enforcement action in federal court in California against Wells Fargo & Company. The Commission is investigating Wells Fargo’s sale of nearly $60 billion in residential mortgage-backed securities ("RMBS") to investors. The proceeding is unusual in that, while the Commission was still attempting to obtain information … Continue Reading
The U.S. Supreme Court ruled today that the two-year time limit for bringing an action under § 16(b) of the Securities Exchange Act of 1934 is not tolled until after the filing of a § 16(a) disclosure statement. The case involves the right of an issuer (or, in this case, a shareholder bringing a derivative … Continue Reading
In February the SEC issued a Small Entity Compliance Guide that provides a summary of the relatively new net worth standard in the definition of “accredited investor” under the Securities Act, as required by the Dodd-Frank Act. Section 413(a) of the Dodd-Frank Act requires that the value of a person’s primary residence be excluded when … Continue Reading
Normally, when the SEC posts a Litigation Release on its website, it announces a new case which it has filed, or settlement or judgment in a previously-announced case. One of the SEC’s Litigation Releases posted on March 19, 2012 was unique in that it did not announce any of those usual events, but instead was … Continue Reading
On March 14, 2012, the SEC announced that it had filed a complaint in federal court in San Francisco and an Administrative Proceeding relating to private investment funds which were established to acquire the shares of Facebook and other Silicon Valley firms which were privately-held. The Commission’s charges included allegations that investors were misled and … Continue Reading
Today, the Federal Securities Law Blog takes a look back at the last 30 days in the world of securities-related litigation in a regular feature which appears on approximately the 15th of each month. The biggest (and certainly most recent) news may be the Second Circuit’s ruling on March 15, 2012 granting the SEC’s motion … Continue Reading
This morning, the Second Circuit’s Motion Panel granted the SEC’s motion to stay the District Court proceedings in the litigation against Citigroup Global Markets, Inc. while the appellate court considers whether it should set aside Judge Rakoff’s decision refusing to approve the settlement between the parties. Specifically, the Court of Appeals found that the Commission … Continue Reading
On Tuesday, March 13, 2012, the SEC announced that it had filed claims against the CEO, CFO and Chief Accounting Officer of Thornburg Mortgage Inc., which used to be one of the nation’s largest mortgage companies, alleging that the three executives hid "the company’s deteriorating financial condition at the onset of the financial crisis" in the … Continue Reading
On Monday, March 12, 2012, a federal jury in Florida convicted Jean Rene Duperval on two counts of conspiracy to commit money laundering and 19 counts of money laundering related to an FCPA scheme involving Telecommunications D’Haiti S.A.M. ("Haiti Teleco"), the Haitian state-owned telecommunications company. Following a week-long trial, the jury took only three hours … Continue Reading
On Wednesday, March 7, 2012, the SEC’s Division of Corporate Finance responded to a series of No-Action Requests regarding issues under Exchange Act Rule 14a-8 (under which eligible shareholders are permitted to require companies to include shareholder proposals regarding proxy access procedures in company proxy materials). In these series of letters, CorpFin: (1) stated that … Continue Reading
On Tuesday, March 6, 2012, SEC Chairman Mary Schapiro appeared before the House Subcommittee on Financial Services and General Government to testify in support of the Administration’s budget request for the SEC for the 2013 fiscal year. The SEC is seeking a budget of $1.566 billion, an increase of $245 million over the agency’s FY … Continue Reading
In a result that probably surprised few, Robert Allen Stanford was convicted on Tuesday, March 6, 2012 for his decades-long Ponzi scheme that bilked investors of over $7 billion. As reported by the New York Times (here), "the jury cleared Mr. Stanford of only one of several counts of wire fraud, but found him guilty … Continue Reading
On Monday, March 5, 2012, several of the defendants in the Carson FCPA case in California filed a Motion to Dismiss and a Motion to Suppress, raising a new set of interesting issues in a case where the corporation has already settled with the Government and individual employees face charges. In both motions, the defendants … Continue Reading
On Monday, March 5, 2012, the SEC announced that it had filed two separate cases, charging William Duncan, a California-based insurance broker, and John Williams, a Pennsylvania-based tax manager, with insider trading in the shares of Hi-Shear Technology Corporation ("Hi-Shear"). Both men obtained material confidential information regarding Hi-Shear’s proposed acquisition by Chemring Group PLC ("Chemring") … Continue Reading
A March 2, 2012 article by Joshua Gallu on Bloomberg.com states that the SEC’s claim that there has been an increase in the number of enforcement actions "isn’t supported by a detailed examination of the statistics." Mr. Gallu’s article states that 31% of actions filed in fiscal year 2011 were not new, but "were so-called … Continue Reading
On Thursday, March 1, 2012, the Second Circuit Court of Appeals affirmed in part and reversed in part a District Court decision dismissing a complaint for securities fraud filed by nine Cayman Islands hedge funds against entities and individuals involved in an alleged pump-and-dump scheme. Absolute Activist Value Master Fund Limited v. Ficeto, Docket No. … Continue Reading
This week, the FBI released a Public Service Announcement starring two-time Academy Award-winning actor Michael Douglas warning viewers of the risks of securities fraud and encouraging individuals who have information regarding insider trading to contact their local FBI Office or submit a tip on line. The PSA begins with Mr. Douglas’s iconic "greed-is-good" speech from … Continue Reading
In an Opinion and Order dated February 23, 2012, Judge Michael Mosman adopted the January 11, 2012 Findings and Recommendations of Magistrate Judge John Acosta to dismiss the derivative lawsuit against the Board of Directors of Umpqua Holdings Corporation ("Umpqua") for breach of fiduciary duty. Magistrate Judge Acosta recommendation to dismiss the say-on-pay" lawsuit was … Continue Reading
On Monday, February 27, 2012, the FBI released its latest Financial Crimes Report to the Public, which provides a snapshot of the issues on which it has focused. The Bureau stated that in fiscal year 2011, corporate fraud cases resulted in 242 indictments or informations and 241 convictions. During the same period, the FBI’s securities/commodities … Continue Reading
