Whitepapers
SEC Issues Partial Stay of Conflict Minerals Rules
The Securities and Exchange Commission today issued an order staying the effective date for compliance with the portions of Exchange Act Rule 13p-1 and Form SD that would require statements by issuers that the Court of Appeals held would violate the First Amendment (see Nat’l Ass’n of Mfrs. v. SEC, No. 13-5252, D.C. Cir., Apr. 14, 2014).
In its order, the SEC denied the motion filed by the National Association of Manufacturers, Chamber of Commerce, and Business Roundtable for a stay of the entire rule.
The Commission stated that a stay of these portions of the rule avoids the risk of First Amendment harm pending further proceedings. The Commission also stated that staying only these portions of the rule furthers the public’s interest in... Read More
Chief Economist and Division of Economic and Risk Analysis Director Craig Lewis to Leave SEC
The Securities and Exchange Commission today announced that Chief Economist and Division of Economic and Risk Analysis (DERA) Director Craig M. Lewis will leave the agency today. He will return to his position as the Madison S. Wigginton Professor of Finance at Vanderbilt University’s Owen Graduate School of Management.
Dr. Lewis has headed the division since May 2011 and led a broad range of activities, including providing economic analysis to support SEC rulemaking and developing sophisticated analytical tools to assist in risk assessment and enforcement.
“Craig has demonstrated extraordinary leadership, judgment and vision during his tenure as chief economist,” said SEC Chair Mary Jo White. “Under Craig’s direction, the Division of Economic and Risk Analysis... Read More
SEC Charges NYSE, NYSE ARCA, and NYSE MKT for Repeated Failures to Operate in Accordance With Exchange Rules
The Securities and Exchange Commission today announced an enforcement action against the New York Stock Exchange and two affiliated exchanges for their failure to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with Commission-approved exchange rules and the federal securities laws. Also charged was the NYSE exchanges’ affiliated routing broker Archipelago Securities.
The NYSE exchanges agreed to settle the SEC’s charges by retaining an independent consultant and together with Archipelago Securities paying a $4.5 million penalty.
“The SEC regulates exchanges, in part, by reviewing rules proposed by the exchanges that govern exchange activities and allow market participa... Read More
SEC Charges Utah-Based Retirement Plan Administrator With Defrauding Investors
The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Utah-based retirement plan administrator who defrauded investors in self-directed individual retirement accounts (IRAs), causing them to lose millions of dollars of savings. The SEC alleges that American Pension Services Inc. (APS) and its founder, president and CEO Curtis L. DeYoung squandered more than $22 million of investor funds on high-risk investments. DeYoung hid the losses by issuing inflated account statements, allowing him to continue collecting fees and further victimizing his customers. “This misconduct jeopardized retirement security for thousands of APS customers,” said Karen L. Martinez, director of the SEC’s Salt Lake Regional Office. According to the SEC’s compl... Read More
SEC Charges Six Individuals With Insider Trading in Stock of E-Commerce Company Prior to Acquisition by eBay
The Securities and Exchange Commission today charged a former executive with insider trading in advance of eBay’s acquisition of the e-commerce company where he worked by tipping friends and relatives with confidential information about the pending deal so they could attain more than $300,000 in illegal profits. In a case that the SEC unraveled in part due to extensive cooperation by some of the tippees, the SEC also charged five traders and entered into a non-prosecution agreement with a trader who provided extraordinary cooperation in the investigation. It’s the agency’s first non-prosecution agreement with an individual. The SEC’s investigation is continuing into trading by other individuals.
SEC Issues Stop Order to Prevent Northern California Company From Issuing Stock Under Amended Registration Statement
The Securities and Exchange Commission today issued a stop order to prevent a Northern California-based company from issuing stock after including false and misleading information in its amended registration statement for an initial public offering (IPO).
Stop orders prevent the sale of privately held shares to the public under a registration statement that is materially misleading or deficient. If a stop order is issued, no new shares can enter the market under that registration statement until the company has corrected the deficiencies or misleading information.
According to the SEC’s stop order against Comp Services Inc., its registration statement fails to disclose the identity of the control person and promoter behind the company, and false... Read More
SEC Charges Former Stock Promoter With Defrauding Investors in Florida Real Estate Venture
The Securities and Exchange Commission today filed fraud charges against a former Florida-based stock promoter currently serving a two-year prison sentence for lying to SEC investigators.
The SEC’s complaint filed in U.S. District Court in the Southern District of Florida alleges that Robert J. Vitale defrauded investors in a Florida real estate venture, sold unregistered securities, and acted as an unregistered broker-dealer. Vitale and his firm Realty Acquisitions & Trust Inc. raised at least $8.7 million from investors, including many senior citizens. Vitale allegedly told investors their funds were “100% protected” when they were not, and he claimed to be a financial expert with a business degree from Notre Dame when he never attended college after gradu... Read More
SEC Charges Technology Company Insider in California With Tipping Confidential Information Exploited by Hedge Funds
The Securities and Exchange Commission today filed insider trading charges against a former accounting manager at Nvidia Corp. who tipped a friend with confidential company information that set in motion a chain of tipping and illegal trading among a network of hedge fund traders who reaped millions of dollars in illicit gains.
The SEC alleges that Chris Choi of San Jose, Calif., tipped his friend Hyung Lim with nonpublic information about Nvidia’s financial performance in advance of the technology company’s quarterly earnings announcements in 2009 and 2010. Lim relayed Choi’s information to a fellow poker player Danny Kuo, who was a hedge fund manager at Whittier Trust Company. Kuo illegally traded on the inside information for his firm and passed it along to a... Read More
Mauri Osheroff to Retire After Nearly 40 Years at SEC
The Securities and Exchange Commission today announced that Mauri L. Osheroff, associate director for regulatory policy in the Division of Corporation Finance, is retiring on April 30 after nearly 40 years at the SEC.
"Mauri Osheroff's career is an inspiration to all those called to public service,” said SEC Chair Mary Jo White. “For nearly four decades, Mauri has worked tirelessly on behalf of American investors and I am deeply grateful for her efforts and expertise."
Ms. Osheroff began her SEC career as a summer employee in 1973 and returned the following year after graduating from law school. She started as an attorney adviser in the Division of Corporation Finance and was promoted to a special counsel position in 1980. She was named as the division’s deputy... Read More
SEC Charges a Former Biopharmaceutical Company Executive and Two Others with Insider Trading
The Securities and Exchange Commission today charged a former biopharmaceutical company executive and two others with insider trading on confidential information about the company’s key developmental drug. The company’s stock price fell sharply when it announced clinical trial results for the drug.
Dr. Loretta Itri, president of pharmaceutical development and chief medical officer of Genta, Inc., her longtime friend, Dr. Neil Moskowitz, an emergency room physician, and one of his patients, were named in the insider-trading action. In a complaint filed in U.S. District Court in New Jersey, the SEC alleged that Itri obtained material nonpublic information about Genta’s clinical trial results for an experimental drug designed to treat advanced melanoma. In a telephone conv... Read More
SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants
The Securities and Exchange Commission today announced that on Tuesday it filed charges against the Massachusetts-based operators of a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the U.S. The charges were filed under seal, in connection with the Commission’s request for an immediate asset freeze. That asset freeze, which the U.S. District Court in Boston ordered on Wednesday, secured millions of dollars of funds and prevented the potential dissipation of investor assets. After the SEC staff implemented the asset freeze, at the SEC’s request the court lifted the seal today, permitting public announcement of the SEC’s charges. The SEC alleges that TelexFree, Inc. and TelexFree, LLC claim to run a multilevel marketing company that sells telephone s... Read More
SEC Proposes Rules for Security-Based Swap Dealers and Major Security-Based Swap Participants
The Securities and Exchange Commission voted yesterday to propose new rules for security-based swap dealers and major security-based swap market participants. The proposed rules cover recordkeeping, reporting, and notification requirements for security-based swap dealers and major security-based swap participants and would establish additional recordkeeping requirements for broker-dealers to account for their security-based swap activities.
The rulemaking is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorizes the SEC and other regulators to put in place a comprehensive framework to regulate the over-the-counter swaps and security-based swaps markets.
The SEC will seek public comment on the proposed rules for 60 days followi... Read More