SEC Enforcement Proceedings

Retaliation is the primary concern among those who decide to blow the whistle on wrongdoing. It represents a significant impediment to obtaining the primary goals of whistleblowing:  accountability and transparency of government and corporate activities. According to a 2010 government survey of federal employees, “approximately one-third of the individuals who felt they had been identified as a source of a report of wrongdoing also perceived either threats or acts of reprisal

The Foreign Corrupt Practices Act (“FCPA”) requires issuers to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” all transactions are “executed” and “recorded … to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and … to maintain accountability for assets.” 15 U.S.C. §§ 78m(b)(2)(B). As discussed below, com

On September 19, 2013, Andrew Ceresney, then Co-Director of the Division of Enforcement of the Securities and Exchange Commission (“SEC” or the “Commission”), told an audience attending a continuing legal education program at the American Law Institute in Washington, D.C. about the importance of pursuing those who commit financial and accounting fraud ( here ). Comprehensive, accurate and reliable financial reporting is the bedrock upon which our markets are based because fa

This Blog has often noted that “securities fraud comes in all shapes and sizes.” ( E.g. , here .) Though the alleged fraudulent scheme may differ, the types of schemes implemented tend to fall into one of the following (non-exclusive) categories: financial statement/accounting fraud; pyramid schemes; Ponzi schemes; pump-and-dump schemes; affinity fraud; promissory note fraud; Internet fraud; “microcap” stock fraud; and fraud concerning information about a company, its operati

On August 29, 2018, the Securities and Exchange Commission (”SEC”) announced ( here ) that it charged a Tallahassee-based investment advisory firm and its two former principals with defrauding investors, most of whom were retired NFL players who had joined the class-action lawsuit against the National Football League (“NFL”) claiming they suffered brain injuries as a result of concussions. The SEC charged Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors

The disclosure of material information is the foundation of the Securities and Exchange Commission’s (“SEC”) mission. For this reason, the SEC considers itself to be “a disclosure agency.” See “The Importance of the SEC Disclosure Regime” by Daniel M. Gallagher, Commissioner, U.S. Securities and Exchange Commission (July 16, 2013) ( here ). One need only look at the SEC’s website to confirm this point: “ he laws and rules that govern the securities industry in the United Sta

On June 17, 2019, the Securities and Exchange Commission (“SEC” or the “Commission”) announced ( here ) that KPMG LLP (“KPMG”) agreed to settle charges that it altered prior audit work after receiving information about inspections of the firm by the Public Company Accounting Oversight Board (“PCAOB”).  In connection with the settlement, KPMG agreed to pay a $50 million penalty and comply with a set of remedial measures to prevent the conduct at issue, including retaining an i

On May 7, 2019, the Securities and Exchange Commission (“SEC” or “Commission”) announced ( here ) that it had settled an insider trading action against Brian Fettner (“Fettner”), a Nevada resident who obtained confidential, inside information about a potential corporate merger from a lifelong friend and used it to generate more than $250,000 in illicit trading profits. The action involved unlawful trading in the securities of G&K Services, Inc. (“G&K”) prior to an August 16,

On April 29, 2019, the Securities and Exchange Commission (“SEC”) announced ( here ) that it filed charges against a New York City man for continuing a previously charged ticket resale scheme, in which investors were falsely promised that their funds would be used for the purchase and resale of tickets to Broadway shows and a sporting event. According to the SEC, at least 12 investors were defrauded out of approximately $2.7 million as a result of the scam. According to the S

On April 25, 2019, the Securities and Exchange Commission (“SEC”) announced ( here ) that it had charged Indianapolis-based Celadon Group Inc. (“Celadon”), a truckload freight transportation provider, with an accounting fraud that allowed it to avoid disclosing substantial losses and misrepresent its financial condition. The SEC alleged ( here ) that, between mid-2016 and April 2017, Celadon avoided recognizing at least $20 million in impairment charges and losses – almost tw

On March 5, 2019, the Securities and Exchange Commission (“SEC”) announced ( here ) that BB&T Securities, LLC (“BB&T Securities”), a wholly owned brokerage subsidiary of BB&T Corp., had agreed to return more than $5 million to retail investors and pay a $500,000 penalty to settle charges that a firm it acquired, Valley Forge Asset Management, LLC (“Valley Forge”), misled its advisory clients into believing they were receiving full service brokerage services at a discount whil

Securities fraud comes in all shapes and sizes. While the substance of a fraudulent investment scheme may change depending upon the circumstances and the fraudster involved, the types of securities fraud tend to fall into one of the following (non-exclusive) categories: financial statement/accounting fraud; pyramid schemes; Ponzi schemes; pump-and-dump schemes; affinity fraud; promissory note fraud; Internet fraud; “microcap” stock fraud; and fraud concerning information abou

Last month, former Dewey & LeBoeuf, LLP (“Dewey”) executives agreed to a settlement with the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) to pay civil penalties in connection with their roles in a $150 million fraudulent bond offering by the now defunct international law firm. The SEC claimed that the executives used accounting tricks when the firm needed money to weather the economic recession and steep costs resulting from the merger between the pred

During the last week in August, the Securities and Exchange Commission (“SEC” or “Commission”) filed a number of actions and administrative proceedings involving, among other things, insider trading and the use of financial models and controls. Today’s installment of SEC Enforcement News looks at two of the actions/proceedings filed by the Commission: one involving insider trading allegations against former Cleveland Browns linebacker, Mychal Kendricks (“Kendricks”), and the

Investing in the market involves different degrees of risk. The reward for taking on risk is the potential for a greater investment return. The flip side, of course, is the potential to lose some or all of the money invested. Thus, when it comes to investing, there is no such thing as a sure thing. Nonetheless, there are people who promise no risk, no loss investing. They claim that they can place a person’s money into a “can’t miss” investment, where the risk of loss is min

In today’s post, this Blog looks at SEC enforcement actions and/or settlements of potential enforcement actions, the focus of which is the protection of the retail investor. New York-Based Investment Firm and Two of its Managers Charged for Failing to Supervise Brokers Who Defrauded Customers On June 29, 2018, the SEC announced ( here ) that it had charged New York-based broker-dealer Alexander Capital L.P. (“Alexander Capital”) and two of its managers for failing to superv

On June 21, 2018, the United States Supreme Court resolved a split among the circuit courts over the constitutionality of administrative law judges (“ALJs”) appointed by the staff of the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”). In Lucia v. U.S. Securities and Exchange Commission , the Court held that the appointment of the SEC’s ALJs by members of the Commission’s staff, rather than the Commission itself, violated the Appointments Clause of the

San Francisco-based Credit Karma, Inc. ("Credit Karma" or the "Company"), the rapidly growing financial services tech company, has been penalized by the Securities and Exchange Commission ("SEC") for regulatory violations related to its Employee Stock Ownership Plan ("ESOP"). The SEC alleged that the Company unlawfully offered securities to its employees and failed to provide them with timely financial statements and risk disclosures.  A copy of the press release announcing

The Securities and Exchange Commission (“SEC”) has been busy so far this spring. In the latest roundup, this Blog looks at enforcement actions taken by the SEC against investment advisors, a medical device company and a purported cryptocurrency company. SEC Charges Medical Device Company and Founder with Fraud for Failing to Make Disclosures and Misappropriating Investor Funds On April 5, 2018, the SEC announced ( here ) that it had charged convicted felon and former NHL te

Ameriprise Settles with The SEC for Overcharging Retirement Account Customers for Mutual Fund Shares On February 28, 2018, just a few weeks after launching its Share Class Selection Disclosure Initiative (discussed below), the Securities and Exchange Commission (“SEC”) announced ( here ) that Ameriprise Financial Services Inc. (“Ameriprise”), the Minnesota-based broker-dealer and investment adviser, agreed to settle charges for recommending and selling higher-fee mutual fund