SEC Proposes Amendments to Require Use of Universal Proxy Cards

The Securities and Exchange Commission today voted to propose amendments to the proxy rules to require parties in a contested election to use universal proxy cards that would include the names of all board of director nominees.  The proposal gives shareholders the ability to vote by proxy for their preferred combination of board candidates, similar to voting in person.

“The proposed changes would allow shareholders to vote by proxy in a manner that more closely replicates how they can vote in person at a shareholder meeting,” said SEC Chair Mary Jo White.  “This change would allow shareholders through the proxy process to more fully exercise their vote for the director nominees they prefer.”

The proposed rules would require proxy contestants to provide shareholders ... Read More

Embraer Paying $205 Million to Settle FCPA Charges

The Securities and Exchange Commission today announced a global settlement along with the U.S. Department of Justice and Brazilian authorities that requires aircraft manufacturer Embraer S.A. to pay more than $205 million to resolve alleged violations of  the Foreign Corrupt Practices Act (FCPA).

The SEC’s complaint alleges that Embraer made more than $83 million in profits as a result of bribe payments from its U.S.-based subsidiary through third-party agents to foreign government officials in the Dominican Republic, Saudi Arabia, and Mozambique.  Embraer allegedly created false books and records to conceal the illicit payments, and also engaged in an alleged accounting scheme in India.

According to the SEC’s complaint, $3.52 million in bribes were paid to an officia... Read More

John W. Berry Named Associate Regional Director for Enforcement in Los Angeles Office

The Securities and Exchange Commission today announced that John W. Berry has been named Associate Regional Director for Enforcement in the agency’s Los Angeles Regional Office.  

Mr. Berry succeeds C. Dabney O’Riordan, who became Co-Chief of the Enforcement Division’s Asset Management Unit in June 2016.  In his new role, Mr. Berry will oversee the Los Angeles office’s enforcement efforts in southern California, Arizona, Nevada, and Hawaii along with fellow Associate Regional Director Alka Patel.

Since 2011, Mr. Berry has led the Los Angeles office’s litigation program as its regional trial counsel, managing cases pending both in federal courts and administrative proceedings.  The trial unit has nine senior trial attorneys.

As regional trial counsel, Mr. Berry... Read More

SEC Charges Board Member With Insider Trading During and After Board Meeting

The Securities and Exchange Commission today charged a Tennessee-based lawyer who served on the executive committee of the board of directors at Nashville-based Pinnacle Financial Partners with insider trading based on nonpublic information he learned about an impending merger.

The SEC alleges that James C. Cope obtained more than $56,000 in ill-gotten gains by purchasing securities in Pinnacle’s acquisition target, Avenue Financial Holdings, prior to the banks’ joint public announcement later that month.  According to the SEC’s complaint, Cope learned confidential details about the planned merger during a board executive committee meeting on Jan. 5, 2016, and proceeded to place his first order to purchase Avenue Financial stock while that executive committee meeting was stil... Read More

Company and Former Executives Paying Penalties for Accounting Violations

The Securities and Exchange Commission today announced that a Houston-based technology solutions company has agreed to pay a $2.5 million penalty to settle charges that it overstated profits in one of its business segments.  Two then-executives at the company agreed to settle charges that they caused the violations to meet internal targets.

The SEC’s order finds that after being pressured to improve the financial performance of the energy infrastructure segment at FMC Technologies, the segment’s controller Jeffrey Favret and a business unit controller Steven Croft artificially reduced the value of a liability the company recorded for employee paid time off.  The improper adjustments overstated the segment’s pre-tax operating profits by $800,000 and enabled an internal targe... Read More

SEC Charges Bank Leumi With Conducting Unregistered U.S. Cross-Border Business

The Securities and Exchange Commission today announced that Israeli-based Bank Leumi has agreed to pay $1.6 million and admit wrongdoing to settle charges that it provided investment advice and induced securities transactions for U.S. customers for more than a decade without registering as an investment adviser or broker-dealer as required under U.S. securities laws.

The SEC’s order finds that Bank Leumi maintained several hundred securities accounts that were beneficially owned by U.S. customers and managed more than $500 million in securities assets for U.S. customers.  To manage and mitigate the risk of violating U.S. laws, Bank Leumi began exiting the U.S. cross border business in 2008.  But despite these efforts, approximately 100 U.S. customer securities accounts remain... Read More

Ernst & Young to Pay $11.8 Million for Audit Failures

The Securities and Exchange Commission today announced that Ernst & Young LLP has agreed to pay more than $11.8 million to settle charges related to failed audits of an oil services company that used deceptive income tax accounting to inflate earnings.

Ernst & Young’s payment will be combined with the $140 million penalty agreed to last month by the audit client, Weatherford International, and money collected from two charged Weatherford employees for a total of more than $152 million that will be returned to investors who were harmed by the accounting fraud.

Also charged in the SEC’s order are the Ernst & Young partner who coordinated the audits, Craig Fronckiewicz, and a former tax partner... Read More

SEC Charges Energy Services Company and Executives With Accounting Fraud

The Securities and Exchange Commission today charged an energy services provider and four executives for their roles in an accounting fraud in which the company recognized revenue earlier than allowed in order to meet internal targets.

Lime Energy Co. agreed to pay $1 million to settle the charges, and its four now-former executives also agreed to settlements.

The SEC’s complaint alleges that Lime Energy improperly recognized $20 million in revenue from at least 2010 to 2012.  Two then-executives in the company’s utilities division – vice president of operations Joaquin Alberto Dos Santos Almeida and director of operations Karan Raina – developed procedures to enable the company to recognize revenue on newly signed contracts based on documentation received before year... Read More

Melissa Hodgman Named Associate Director in SEC Enforcement Division

The Securities and Exchange Commission today announced that Melissa Hodgman has been named Associate Director in the SEC’s Enforcement Division.  Ms. Hodgman succeeds Stephen L. Cohen, who left the SEC in June.

Ms. Hodgman began working in the Enforcement Division in 2008 as a staff attorney.  She joined the Market Abuse Unit in 2010 and was promoted to Assistant Director in 2012.

Ms. Hodgman has investigated or supervised dozens of enforcement recommendations spanning a variety of misconduct, including:

• The SEC’s first case against a brokerage firm for failing to file SARs when appropriate.
• Fraud charges against a Wa... Read More

Company to Pay Penalty for Stock Picking Game That Was An Unregistered Swap

The Securities and Exchange Commission today announced that a New York-based company has agreed to pay a $50,000 penalty for illegally offering complex derivatives products to retail investors through mobile phone games that were described as “fantasy sports for stocks.”

An SEC investigation found that Forcerank LLC failed to file a registration statement for what constituted a security-based swap offering, and the company also failed to sell the contracts through a national securities exchange.  Both are requirements under the Dodd-Frank Act to ensure information about an offering is fully transparent to retail investors and the transactions are limited to platforms subject to the highest level of regulation.

According to the SEC’s order, Forcerank ran mobile pho... Read More

SEC Adopts Rules to Modernize Information Reported by Funds, Require Liquidity Risk Management Programs, and Permit Swing Pricing