Whitepapers
Jane Norberg Named Chief of SEC Whistleblower Office
The Securities and Exchange Commission today announced that Jane Norberg has been promoted to chief of the SEC’s Office of the Whistleblower.
Ms. Norberg joined the SEC in 2012 as the first deputy chief of the Office of the Whistleblower and helped establish the office, which intakes and reviews whistleblower tips received by the agency, evaluates whistleblower award claims, and makes recommendations on whether claimants have satisfied eligibility requirements to receive an award.
Ms. Norberg has served as acting chief since the departure of the office’s inaugural chief Sean McKessy.
“In its short history, our whistleblower program has had a transformative impact on our agency, and Jane has played a sign... Read More
SEC Proposes Rule Amendment to Expedite Process for Settling Securities Transactions
The Securities and Exchange Commission today voted to propose a rule amendment to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2). The proposed amendment is designed to reduce the risks that arise from the value and number of unsettled securities transactions prior to the completion of settlement, including credit, market, and liquidity risk directly faced by U.S. market participants.
“Today’s proposal to shorten the standard settlement cycle is an important step in the SEC’s ongoing efforts to enhance the resilience and efficiency of the U.S. clearance and settlement system,” said SEC Chair Mary Jo White. “The benefits... Read More
SEC Adopts Rules for Enhanced Regulatory Framework for Securities Clearing Agencies
The Securities and Exchange Commission voted today to adopt new rules to establish enhanced standards for the operation and governance of securities clearing agencies that are deemed systemically important or that are involved in complex transactions, such as security-based swaps. The Commission also voted to propose to apply the enhanced standards established by the new rules to other categories of securities clearing agencies, including all SEC-registered central counterparties.
“Securities clearing agencies are a vital part of the infrastructure underpinning the U.S. financial system,” said SEC Chair Mary Jo White. “The Commission has taken an important step today toward enhancing investor protection and ensuring that clearing agencies continue to be subjec... Read More
SEC Files Insider Trading Charges Against Peruvian Traders Using Overseas Accounts
The Securities and Exchange Commission today charged two lawyers and a brokerage firm manager in Peru with insider trading prior to the merger of two mining companies.
The SEC alleges that Nino Coppero del Valle, who worked at Canadian-based HudBay Minerals Inc., tipped his close friend and fellow attorney Julio Antonio Castro Roca with material nonpublic information about a tender offer his company submitted to acquire the shares of Arizona-based Augusta Resource Corp. Castro allegedly traded on the inside information through a brokerage account held by a shell company he set up in the British Virgin Islands in an attempt to avoid having the trades traced back to him and Coppero. According to the SEC’s complaint, Castro and Coppero made more than $112,0... Read More
SEC Charges UBS With Supervisory Failures in Sale of Complex Products to Retail Investors
The Securities and Exchange Commission today announced that UBS Financial Services has agreed to pay more than $15 million to settle charges that it failed to adequately educate and train its sales force about critical aspects of certain complex financial products it sold to retail investors.
The SEC’s order finds that UBS failed to develop and implement policies and procedures reasonably designed to educate and train UBS registered representatives in connection with the sale of reverse convertible notes (RCNs) so that they could form a reasonable basis to make suitable recommendations. RCNs are complex securities that feature embedded derivatives whose performance is driven by the concept of implied volatility. Without adequate education and training, ... Read More
SEC Charges Anheuser-Busch With Violating FCPA and Whistleblower Protection Laws
The Securities and Exchange Commission today announced that Anheuser-Busch InBev has agreed to pay $6 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) and chilled a whistleblower who reported the misconduct.
An SEC investigation found that the company used third-party sales promoters to make improper payments to government officials in India to increase the sales and production of Anheuser-Busch products in that country. Despite repeated complaints from employees, Anheuser-Busch had inadequate internal accounting controls to detect and prevent the improper payments, and the company failed to ensure that transactions involving the promoters were recorded properly in its books and records.
The SEC... Read More
SEC to Hold Forum to Discuss Fintech Innovation in the Financial Services Industry
The Securities and Exchange Commission today announced it will host a public forum to discuss financial technology (Fintech) innovation in the financial services industry. The forum is designed to foster greater collaboration and understanding among regulators, entrepreneurs and industry experts into Fintech innovation and evaluate how the current regulatory environment can most effectively address these new technologies.
The proliferation of Fintech innovation has the potential to transform virtually every aspect of our nation’s financial markets. The panels will discuss issues such as blockchain technology, automated investment advice or robo-advisors, online marketplace lending and crowdfunding, and how they may impact investors.
The Fintec... Read More
Oil Services Company Paying $140 Million Penalty for Accounting Fraud
The Securities and Exchange Commission today announced that oil services company Weatherford International has agreed to pay a $140 million penalty to settle charges that it inflated earnings by using deceptive income tax accounting. Two of the company’s senior accounting executives at the time have agreed to settle charges that they were behind the scheme.
According to the SEC’s order, Weatherford fraudulently lowered its year-end provision for income taxes by $100 million to $154 million each year so the company could better align its earnings results with its earlier-announced projections and analysts’ expectations. James Hudgins, who served as Weatherford’s vice president of tax, and Darryl Kitay, who was a tax manager, made numerous post-closing adj... Read More
SEC Charges CEO and Boiler Room Operator With Fraud
The Securities and Exchange Commission today charged a former microcap company CEO and a boiler room operator with defrauding seniors and others who were pressured to invest in a pair of penny stock companies and promised lucrative profits.
The SEC alleges that Craig V. Sizer founded Sanomedics Inc. and Fun Cool Free Inc., which were purportedly in the business of selling non-contact infrared thermometers and software applications respectively, and he hired Miguel “Michael” Mesa to help him attract and defraud investors in both companies. Sizer allegedly provided Mesa with a list of pitch points for use by boiler-room agents hired by Mesa to sell shares of the stocks based on misrepresentations that investor funds would be used for research and developmen... Read More
Merrill Lynch Charged With Trading Controls Failures That Led to Mini-Flash Crashes
The Securities and Exchange Commission today announced that Merrill Lynch has agreed to pay a $12.5 million penalty for maintaining ineffective trading controls that failed to prevent erroneous orders from being sent to the markets and causing mini-flash crashes.
An SEC investigation found that Merrill Lynch caused market disruptions on at least 15 occasions from late 2012 to mid-2014 and violated the Market Access Rule because its internal controls in place to prevent erroneous trading orders were set at levels so high that it rendered them ineffective. For example, Merrill Lynch applied a limit of 5 million shares per order for one stock that only traded around 79,000 shares per day. Other trading strategies had limits set as high as 25 million shares, which Merrill... Read More
”Movie Studio” Executives Charged With Microcap Fraud
The Securities and Exchange Commission today charged three company executives with defrauding investors in a purported project to construct the largest movie studio in North America at a suburban location outside Savannah, Georgia.
The SEC alleges that Manu Kumaran, the founder and former chairman and CEO of a startup movie production company called Medient Studios and later Moon River Studios, schemed with his successor CEO Jake Shapiro to make an assortment of false and misleading statements in press releases and corporate filings. They allegedly claimed that construction was underway and projected dates by which the studio would be operational while knowing full well they did not have anywhere near sufficient funding to begin building the touted "Studi... Read More
Blank Check Company Manufacturer Charged With Fraud
The Securities and Exchange Commission today announced fraud charges against a Florida man who was part of a scheme to register and sell stock in blank check companies masked as promising startups to illicitly profit off the investing public.
The SEC's order finds that Sheldon R. Rose created more than a dozen blank check companies, which have no operations and no value other than their registered status to sell stock. Rose installed friends and family as figurehead company officers and shareholders so he could secretly control the companies and their securities. Registration statements and other corporate filings made it falsely appear that these companies were pursuing real business ventures. The companies were actually bound for nothing more than rev... Read More