Category Archives: Securities Exchange Commission (SEC)

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New Bill Seeks to Bring Clarity to Insider Trading Law

On May 7, 2019, Representative James Himes (D-Conn) introduced the “Insider Trading Prohibition Act” (H.R. 2534). The proposed legislation would amend the Securities and Exchange Act of 1934, §§15 U.S. Code § 78a et seq. (the “Act”) by inserting a new section that defines the elements of criminal insider trading. The bill’s objective is to eliminate … Continue Reading

SEC Issues Risk Alert on Customer Privacy Safeguards

Earlier this month, the Securities and Exchange Commission (“SEC”) took a break from its recent focus on digital assets and the Best Interest fiduciary standard to publish a Risk Alert encouraging investment advisers and broker-dealers to revisit their policies and procedures relating to Regulation S-P (“Reg S-P”) (17 C.F.R. Part 248, Subpart A), which sets … Continue Reading

Where is the Love? Exchanges Sue SEC Over Market Access Fee Pilot Program

Three prominent trading exchanges did not exactly show their government overseer the love this Valentine’s week.  On February 14, 2019, the New York Stock Exchange (“NYSE”) filed a petition for review to the U.S. Court of Appeals for the District of Columbia Circuit against the Securities Exchange Commission (“SEC”), seeking review of a controversial transaction … Continue Reading

FINRA ANNOUNCES 2019 REGULATORY PRIORITIES

On January 22, 2019, the Financial Industry Regulatory Authority, Inc. (“FINRA”) released its annual priorities letter highlighting its regulatory program’s points of emphasis for the coming year. The most immediately recognizable difference between this year’s edition and previous ones is that its traditional title, “Examination Priorities,” has been updated to include “Risk Monitoring,” the process by … Continue Reading

SEC Enforcement’s Annual Report Prioritizes Retail Investors, Cryptocurrency, Cybercrime, and Individual Accountability

The Enforcement Division of the United States Securities and Exchange Commission (“SEC”) recently released its annual enforcement report (“Report”) for fiscal year 2018. The Report reflects an increased focus on retail investors, cryptocurrency, cybercrime, and individual accountability. Further, it showcases that SEC enforcement continues to be robust under the Trump administration, despite industry and media … Continue Reading

Fool Me Twice…SEC’s latest Cyber-Fraud ROI Indicates Future Enforcement Against Hacker Victims

In the aftermath of the Securities and Exchange Commission’s (“SEC”) latest Report of Investigation (“Report”) regarding cyberattacks via “spoofed or manipulated electronic communications,” companies should prepare to adjust and update their internal controls or face possible enforcement actions for violation of federal securities law.  Released as a warning to public companies about recent cyberattacks, the Report’s … Continue Reading

New York Federal Court’s View on Cryptocurrency as Securities

On September 11, 2018, the U.S. District Court for the Eastern District of New York denied[1] a motion to dismiss an indictment of a Brooklyn real estate entrepreneur in relation to two virtual currency investment schemes and initial coin offerings (“ICOs”). The indictment, which charged securities fraud against Maksim Zaslavskiy, was based, in part, on … Continue Reading

SEC Tightens Alternative Trading Platform Oversight

On July 18, 2018, the SEC ramped up its oversight of alternative trading systems (“ATSs”) by adopting a series of rule amendments imposing public disclosure requirements on ATSs that trade NMS (“National Market System”) stocks (i.e., stocks listed on a national securities exchange). The amendments also require ATSs to establish written procedures to protect subscribers’ … Continue Reading

Hello, Newman. A Second Circuit Panel Revives U.S. v. Newman’s Personal Benefit Test, Maybe.

On June 25, 2018, the Second Circuit Court of Appeals issued a revised opinion in United States v. Martoma, No. 14-3599, Dkt No. 226. (2d Cir. Jun. 25, 2018) (“Martoma”). While the outcome for Matthew Martoma does not change—his conviction for insider trading still stands—other defendants facing insider trading charges may once again, at least … Continue Reading

New York Court of Appeals Rules that Civil Securities Fraud Claims Brought Under Martin Act Are Subject to Three-Year Statute of Limitations

In People v. Credit Suisse Securities (USA) LLC, No. 40, 2018 WL 2899299 (June 12, 2018) (DiFiore, Ch. J), the Court of Appeals for the State of New York ruled that the three-year statute of limitations of Section 214(2) of the New York Civil Practice Law & Rules (“CPLR”) applies to civil enforcement actions brought … Continue Reading

Supreme Court Resolves Circuit Split on Scope of Whistleblower Protections

On February 21, 2018, the Supreme Court issued a pivotal decision narrowing the definition of a whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank,” or the “Act”). In Digital Realty Trust, Inc. v. Somers, the Court unanimously held that to qualify as a whistleblower, a person must first report … Continue Reading

The Numbers Don’t Lie: The SEC Pursues a More Streamlined Enforcement Agenda

One of the most eye-catching items in the recently released 2017 Annual Report of the Enforcement Division of the Securities and Exchange Commission (SEC or the Commission) is the significant decline in enforcement activity from 2017. The report, issued on November 15th and summarizing the agency’s activity from October 1, 2016 to September 30, 2017, … Continue Reading

Supreme Court Deals Blow to SEC By Applying Five-Year Statute of Limitations to Disgorgement Remedies in SEC Enforcement Actions

On June 5, 2017 the Supreme Court dealt a significant setback to the Securities and Exchange Commission (“SEC”) by limiting its power to extract ill-gotten profits from securities laws violators. Ruling 9-0 in Kokesh v. S.E.C., No. 16– 529, — S. Ct. — (June 5, 2017), the Court held that in SEC enforcement actions, “disgorgement” … Continue Reading

Financial Regulators Take Note: The Supreme Court’s Newest Member is a Tough Taskmaster

On April 10, 2017, Neil Gorsuch was sworn in as the Supreme Court’s 113th justice. While his experience on the Tenth Circuit Court of Appeals with cases involving financial regulation may be limited, certain of his decisions reflect an identifiable hostility towards executive agencies that, in his view, act in excess of the powers accorded … Continue Reading

The Cybersecurity Race: Executive Branch Takes The Lead While Congress Watches From The Bleachers

The federal government sector has been abuzz lately with whispers and shouts about pending cybersecurity regulations, frameworks, and requirements. This attention is not particularly surprising, especially given the recent high-profile data breaches, the litigation threats surrounding those breaches, the recent identification of the encryption-disabling, consumer data threatening “Heartbleed SSL” OpenSSL vulnerability, and recent reports that … Continue Reading
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