SEC Announces $7 Million Whistleblower Award

The Securities and Exchange Commission today announced an award of more than $7 million split among three whistleblowers who helped the SEC prosecute an investment scheme.

One whistleblower provided information that was a primary impetus for the start of the SEC’s investigation.  That whistleblower will receive more than $4 million.  Two other whistleblowers jointly provided new information during the SEC’s investigation that significantly contributed to the success of the SEC’s enforcement action.  Those two whistleblowers will split more than $3 million.

“Whistleblowers played an important role in the success of this case as they helped our agency detect and prosecute a scheme preying on vulnerable investors,” said Jane Norberg, Chief of the SEC’s Office of the Whis... Read More

SEC Establishes Supervisory Cooperation Arrangement With Hong Kong SFC

The Securities and Exchange Commission today announced that it has established a comprehensive arrangement with the Hong Kong Securities and Futures Commission (SFC) as part of the SEC’s long-term strategy to enhance the oversight of regulated entities that operate across national borders. 

Hong Kong is a major financial center and the new supervisory cooperation arrangement will augment the SEC’s and the SFC’s ability to share information about regulated entities that operate in the U.S. and Hong Kong, including investment advisers, broker-dealers, securities exchanges, market infrastructure providers, and credit rating agencies.  The new comprehensive arrangement expands upon the one from 1995 that was limited to investment management activities.

“By creating a form... Read More

Jennifer Diamantis Named Chief of Office of Market Intelligence

The Securities and Exchange Commission today announced that Jennifer A. Diamantis has been named Chief of the Enforcement Division’s Office of Market Intelligence, which is responsible for the collection, analysis, and monitoring of the hundreds of thousands of tips, complaints, and referrals that the SEC receives each year.

Before arriving at the SEC in September 2016 to become Deputy Chief of the office, Ms. Diamantis held various positions in the private sector and at federal agencies, including the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, and Commodity Futures Trading Commission.  She supervised, investigated, litigated, and managed enforcement actions and oversaw the implementation of complex regulations in the financial space.

Financial Company Charged With Improper Accounting and Impeding Whistleblowers

The Securities and Exchange Commission today announced that Seattle-based financial services company HomeStreet Inc. has agreed to pay a $500,000 penalty to settle charges that it conducted improper hedge accounting and later took steps to impede potential whistleblowers.

HomeStreet’s treasurer Darrell van Amen agreed to pay a $20,000 penalty to settle charges that he caused the accounting violations.

According to the SEC’s order, HomeStreet originated approximately 20 fixed rate commercial loans and entered into interest rate swaps to hedge the exposure.  The company elected to designate the loans and the swaps in fair value hedging relationships, which can reduce income statement volatility that might exist absent hedge accounting treatment.  Companies are required ... Read More

SEC Chief of Staff Andrew J. Donohue to Leave Agency

The Securities and Exchange Commission today announced that SEC Chief of Staff Andrew J. ”Buddy” Donohue will be leaving the agency at the end of January.

SEC Chair Mary Jo White named Mr. Donohue as Chief of Staff in May 2015. As Chief of Staff, Mr. Donohue was a senior adviser to the Chair on all policy, management, and regulatory issues. Mr. Donohue had previously served as the Director of the SEC’s Division of Investment Management from May 2006 to November 2010.

“Buddy is a seasoned professional whose deep knowledge of the securities laws and broad market expertise have been invaluable to me and the Commission,” said SEC Chair Mary Jo White.  “I am very grateful to Buddy for agreeing to return to the Commission so that all of us could benefit from his leadership,... Read More

General Counsel Anne K. Small to Leave SEC

The Securities and Exchange Commission today announced that General Counsel Anne K. Small will leave the agency later this month. 

Ms. Small has served as the SEC’s General Counsel since April 2013.  As the agency’s chief legal officer, Ms. Small has provided counsel on virtually all of the legal and policy issues before the Commission. This has included providing advice on a record number of enforcement actions, representing and counseling the Commission on high-profile appeals throughout the country on issues ranging from the scope of the anti-fraud provisions to insider trading, advising the Commission on more than 50 significant rulemaking initiatives including those implementing the Dodd-Frank Wall Street Reform and Consumer Protection and the Jumpstart Our Business Star... Read More

Company Settles Charges Over Undisclosed Perks and Improper Use of Non-GAAP Measures

The Securities and Exchange Commission today announced that New York-based marketing company MDC Partners has agreed to pay a $1.5 million penalty to settle charges that it failed to disclose certain perks enjoyed by its then-CEO and separately violated non-GAAP financial measure disclosure rules.

The SEC’s order finds that MDC Partners disclosed an annual $500,000 perquisite allowance for its senior-most executive, but failed to disclose additional personal benefits the company paid on the CEO’s behalf such as private aircraft usage, club memberships, cosmetic surgery, yacht and sports car expenses, jewelry, charitable donations, pet care, and personal travel expenses.  The CEO later resigned and returned $11.285 million worth of perks, personal expense reimbursements, and o... Read More

SEC Deputy Chief of Staff Nathaniel Stankard to Leave Agency

The Securities and Exchange Commission today announced that Nathaniel Stankard, deputy chief of staff for policy, will be leaving the agency. 

Since being named deputy chief of staff in May 2013, Mr. Stankard has served as a senior advisor to Chair Mary Jo White on a broad range of complex legal and policy matters, including all aspects of rulemakings before the Commission, significant market events, and the agency’s implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Jumpstart Our Business Startups Act.  He has also been responsible for coordinating teams from across the agency to implement the rulemaking agenda of the Commission and has served as the Chair’s principal policy liaison to the Financial Stability Oversight Council and other f... Read More

General Motors Charged With Accounting Control Failures

The Securities and Exchange Commission today announced that General Motors has agreed to pay a $1 million penalty to settle charges that deficient internal accounting controls prevented the company from properly assessing the potential impact on its financial statements of a defective ignition switch found in some vehicles.

According to the SEC’s order, when loss contingencies such as a potential vehicle recall arise, accounting guidance requires companies like General Motors to assess the likelihood of whether the potential recall will occur, and provide an estimate of the associated loss or range of loss or otherwise provide a statement that such an estimate cannot be made.  The SEC’s order finds that the company’s internal investigation involving the defective ignition swi... Read More

Medical Device Company Charged With Accounting Failures and FCPA Violations

The Securities and Exchange Commission today announced that Texas-based medical device company Orthofix International has agreed to admit wrongdoing and pay more than $14 million to settle charges that it improperly booked revenue in certain instances and made improper payments to doctors at government-owned hospitals in Brazil in order to increase sales.

Four then-executives at Orthofix also agreed to pay penalties to settle cases related to the accounting failures, which according to the SEC’s order involved Orthofix improperly recording certain revenue as soon as a product was shipped despite contingencies requiring certain events to occur in order to receive payment in the transaction.  In other instances, Orthofix immediately recorded revenue when it had provided custome... Read More

SEC Charges Businessman With Misusing EB-5 Investments

The Securities and Exchange Commission today announced fraud charges against an Oakland, Calif.-based businessman accused of misusing money he raised from investors through the EB-5 immigrant investor program intended to create or preserve jobs for U.S. workers.

The SEC alleges that Thomas M. Henderson and his company San Francisco Regional Center LLC falsely claimed to foreign investors that their $500,000 investments would help create at least 10 jobs within several distinct EB-5 related businesses he created, including a nursing facility, call centers, and a dairy operation.  This would qualify the investors for a potential path to permanent U.S. residency through the EB-5 program.

But according to the SEC’s complaint, Henderson jeopardized investors’ residency pro... Read More

Allergan Paying $15 Million Penalty for Disclosure Failures During Merger Talks

The Securities and Exchange Commission today announced that Allergan Inc. has agreed to admit securities law violations and pay a $15 million penalty for disclosure failures in the wake of a hostile takeover bid.

The SEC’s order finds that Allergan failed to disclose in a timely manner its negotiations with potentially friendlier merger partners in the months following a tender offer from Valeant Pharmaceuticals International and co-bidders in June 2014.  Allergan publicly stated in a disclosure filing that the Valeant bid was inadequate and it was not engaging in negotiations that could result in a merger.  It was required to amend the filing if a material change occurred.  According to the SEC’s order, Allergan never publicly disclosed material negotiations it entered with ... Read More