Whitepapers
SEC to Permit Voluntary Filing Using Inline XBRL
The Securities and Exchange Commission today announced that it will allow companies to voluntarily file structured financial statement data in a format known as Inline XBRL. This initiative represents another step in the SEC’s continuing efforts to modernize and enhance its requirements to facilitate transparency of, and access to, companies’ disclosures.
The Commission’s rules require operating companies to structure financial statement data in their filings, including annual and quarterly reports, using eXtensible Business Reporting Language (XBRL), which is a machine-readable format. Companies currently are required to provide this XBRL structured data as an exhibit to these filings. Since these requirements were first adopted, technology has evolved... Read More
Investment Fraud Victims Include Online Daters
The Securities and Exchange Commission today announced fraud charges and an asset freeze obtained against a Connecticut man accused of misleading people into investing in his company and then taking their money for his personal use. His victims include several women he met through an online dating website.
The SEC alleges that Thomas J. Connerton told investors that his company Safety Technologies LLC was developing a material to make surgical gloves better resistant to cuts or punctures. He claimed that several major glove manufacturers wanted the technology and Safety Technologies was on the brink of imminent deals that would result in large payouts for investors in his company. But no deals have ever been anywhere close to materializing, and Connerto... Read More
Consultant to Chinese Private Equity Firms Settles Insider Trading Charges
The Securities and Exchange Commission today announced that a former consultant to two China-based private equity firms has agreed to pay more than $756,000 to settle insider trading charges.
The SEC alleges that Guolin Ma traded on confidential information he obtained while advising the two firms as they pursued a buyout of Silicon Valley-based OmniVision Technologies, a maker of optical semiconductor devices. Ma, an optical physicist who primarily resides in China, attended key meetings and performed technical due diligence related to the potential acquisition of OmniVision, and he received timeline and strategy documents from the firms.
According to the SEC’s complaint filed in federal court in San Jose, Calif., one of the fir... Read More
SEC Issues $17 Million Whistleblower Award
The Securities and Exchange Commission today announced a whistleblower award of more than $17 million to a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.
The award is the second-largest issued by the SEC since its whistleblower program began nearly five years ago. The SEC issued a $30 million award in September 2014 and a $14 million award in October 2013.
“Company insiders are uniquely positioned to protect investors and blow the whistle on a company’s wrongdoing by providing key informati... Read More
SEC: Ethiopia’s Electric Utility Sold Unregistered Bonds in U.S.
The Securities and Exchange Commission today announced that Ethiopia’s electric utility has agreed to pay nearly $6.5 million to settle charges that it violated U.S. securities laws by failing to register bonds it offered and sold to U.S residents of Ethiopian descent.
According to the SEC’s order instituting a settled administrative proceeding:
- Ethiopian Electric Power (EEP) conducted the unregistered bond offering to help finance the construction of a hydroelectric dam on the Abay River in Ethiopia.
- EEP held a series of public road shows in major cities across the U.S. and marketed the bonds on the website of the U.S. Embassy of Ethiopia as well as through radio and television advertising aimed at Ethiopians living in the U.S.... Read More
SEC: Morgan Stanley Failed to Safeguard Customer Data
The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney LLC has agreed to pay a $1 million penalty to settle charges related to its failures to protect customer information, some of which was hacked and offered for sale online.
The SEC issued an order finding that Morgan Stanley failed to adopt written policies and procedures reasonably designed to protect customer data. As a result of these failures, from 2011 to 2014, a then-employee impermissibly accessed and transferred the data regarding approximately 730,000 accounts to his personal server, which was ultimately hacked by third parties.
“Given the dangers and impact of cyber breaches, data security is a critically important aspect of investor ... Read More
SEC Adopts Trade Acknowledgment and Verification Rules for Security-Based Swap Transactions
The Securities and Exchange Commission today announced that is has adopted rules that will establish timely and accurate trade acknowledgment and verification requirements for security-based swap (SBS) entities that enter into SBS transactions. The rules are designed to promote the efficient and effective operation of the SBS market.
“These rules will result in more accurate and timely documentation for security-based swap transactions, which is a cornerstone of effective risk management,” said SEC Chair Mary Jo White. “They mark another significant step in completing the comprehensive regulatory framework for security-based swaps required by the Dodd-Frank Act.”
Under the new rules, SBS entities must provide a trade acknowledgment... Read More
SEC Bars Corporate VP and Controller for False Accounting
The Securities and Exchange Commission today announced that it has barred a former corporate vice president and suspended a former controller behind false accounting at a New York-based electronics company.
An SEC investigation found that IEC Electronics Corp. improperly overstated the company’s profits in financial statements by using false inventory accounting as orchestrated by IEC’s then-executive vice president of operations Donald Doody and the controller of one of IEC’s subsidiaries at the time, Ronald Years. When the subsidiary wasn’t performing well financially, Doody and Years inappropriately inflated the work-in-process inventory in order to meet budgeted gross profit margins.
Doody is barred from serving as an officer... Read More
SEC Announces Two Non-Prosecution Agreements in FCPA Cases
The Securities and Exchange Commission today announced non-prosecution agreements (NPAs) with two unrelated companies that will forfeit ill-gotten gains connected to bribes paid to Chinese officials by foreign subsidiaries.
Massachusetts-based internet services provider Akamai Technologies has agreed to pay $652,452 in disgorgement plus $19,433 in interest. According to the NPA, Akamai’s foreign subsidiary arranged $40,000 in payments to induce government-owned entities to purchase more services than they actually needed. Employees at the foreign subsidiary violated the company’s written policies by providing improper gift cards, meals, and entertainment to officials at these state-owned entities to build business relationships.
Childhood Friends Charged With Insider Trading in Pharmaceutical Stocks
The Securities and Exchange Commission today charged two Rhode Island men with insider trading in the securities of deal targets being pursued by the pharmaceutical company where one of them worked.
The SEC alleges that Michael J. Maciocio obtained confidential clinical and business data about other pharmaceutical firms being considered by his company for potential acquisitions and business relationships, and he used the nonpublic information to trade in their stocks. Maciocio made approximately $116,000 in illegal profits trading in such pharmaceutical companies as Medivation Inc., Ardea Biosciences, and Furiex Pharmaceuticals.
The SEC further alleges that Maciocio illegally tipped his friend since childhood, stockbroker David P... Read More
Stephen L. Cohen, Associate Director of Enforcement, to Leave SEC After Nearly 12 Years of Service
The Securities and Exchange Commission today announced that Stephen L. Cohen, Associate Director of the SEC’s Enforcement Division, is planning to leave the agency later this month.
Since he was appointed Associate Director in 2011, Mr. Cohen has overseen a staff of nearly 60 attorneys and other professionals responsible for investigating potential violations of the federal securities laws by a wide range of market participants. Mr. Cohen has worked closely with and provided assistance to numerous international regulators and domestic law enforcement partners. In addition, Mr. Cohen has played a leading role in SEC programs, including the launch of the Division’s Enforcement Advisory Committee and the implementation of a new hiring process now widely ado... Read More
SEC: Forex Trader Misrepresented Track Record and Hid Massive Losses
The Securities and Exchange Commission today charged a New York City-based trader with defrauding investors out of millions of dollars by misrepresenting her investment track record, the profitability of her investments, and her use of investor funds.
The SEC alleges that Haena Park touted her supposedly profitable futures and foreign currency (forex) trading strategy when soliciting friends, family, former Harvard classmates, and individuals with connections to them. She proceeded to pool investor funds and incur heavy trading losses month after month in the futures and forex markets, yet repeatedly told investors that their investments were profitable and sent them monthly account statements showing fictitious profits. At times, Park used new investor ... Read More