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Enforcement Action

  "Enforcement Action" is written by Bruce Carton, a former senior counsel in the SEC's Division of Enforcement. A "blawg pioneer" (according to The Wall Street Journal), Carton was the creator of Securities Litigation Watch, a blog that he wrote for more than three years while he was vice president of ISS' Securities Class Action Services. He is now editor of Securities Docket, an online publication that tracks securities litigation and enforcement developments on a global basis. Carton welcomes questions, comments and statements from readers on enforcement and litigation issues; he can be reached via email at

Astellas Pharma Pays $7.3 Million for False Claims Act Violations

April 16, 2014

Pharmaceutical company Astellas Pharma today reached a $7.3 million settlement with the Department of Justice over allegations that it violated the False Claims Act in connection with the marketing and promotion of its drug Mycamine for pediatric use. So far, the Justice Department has recovered a total of more than $19.1 billion through FCA cases. Details inside.

GSK Faces Bribery Probe in Poland

April 14, 2014

GlaxoSmithKline confirmed today that it is facing a criminal investigation into possible violations of the Foreign Corrupt Practices Act and the U.K. Bribery Act, even as it faces similar corruption probes for improper payments made in China and Iraq. Details inside.

SEC Employee's Goodbye Party Leads to More than Cake and Farewells

April 11, 2014

Somehow, James Kidney's SEC goodbye party departed from standard employee party protocol into an SEC-bashing session eagerly jumped on by the national media. Is the incident suggestive of poor morale at the regulator? More details inside.

SEC Adds Two New Defendants to the Familial Betrayal Tree

April 10, 2014

On March 31, 2014, the SEC brought two unrelated cases that they announced together because of a common denominator we have tracked here for several years: familial betrayal.

CFPB Slaps BofA With $747 Million Penalty For Credit Card Tactics

April 09, 2014

Bank of America has agreed to pay $727 million in restitution to nearly 1.4 million consumers the Consumer Financial Protection Bureau says were harmed by the deceptive marketing of credit card add-on products, along with a $20 million civil penalty. The bank is also prohibited from marketing credit protection or credit monitoring products until it submits a compliance plan. More details inside.

H-P to Pay $108 Million for FCPA Violations

April 09, 2014

Hewlett-Packard agreed to pay a total of $108 million to the Securities and Exchange Commission and the Department of Justice to settle civil and criminal charges of violating the Foreign Corrupt Practices Act. According to the SEC, H-P's subsidiaries made improper payments to government officials in three different countries to win lucrative public contracts. The SEC also said H-P didn't have the proper internal controls to prevent the corruption. Details inside.

GSK Launches Bribery Probe in Iraq

April 07, 2014

GlaxoSmithKline has launched an internal investigation into potential violations of the Foreign Corrupt Practices Act for alleged bribery payments made to doctors in Iraq, just nine months after becoming embroiled in a similar corruption probe for improper payments made in China. Details inside.

Award Payment to SEC's First-Ever Whistleblower Quadruples

April 07, 2014

Last week the Securities and Exchange Commission quadrupled its first-ever whistleblower award under the Dodd-Frank Act with an additional $150,000 payment to the anonymous informer. The SEC says it is making the additional payment to the whistleblower, who first received $50,000 in 2012, after collecting an additional $500,000 from a defendant involved in the case. More details inside.

Anadarko Petroleum Pays Record $5.1 Billion Settlement for Environmental Contamination

April 04, 2014

The Justice Department yesterday entered into a record $5.1 billion settlement with Anadarko Petroleum in an environmental contamination case—the largest environmental enforcement recovery in the agency's history.

SBM Offshore Probe Finds Evidence of Bribery

April 03, 2014

Following the conclusion of a two-year internal investigation, Dutch oil and gas company SBM Offshore announced this week that it has uncovered evidence that some of its agents may have made bribery payments to government officials in Angola and Equatorial Guinea. Details of the investigation, and the consequential remedial measures the company has taken, are inside.

SEC Chair White Testifies for FY 2015 Budget, Details Enforcement Initiatives

April 02, 2014

SEC Chairman Mary Jo White called on Congress to provide the agency with the $1.7 billion in funding outlined in President Obama's fiscal year 2015 budget. White explained in testimony that the funds would allow the SEC to hire an additional 639 new staffers and enhance IT. She also laid out a list of initiatives in the enforcement area, including the need to "keep pace with today's high-tech, high-speed markets." More inside.

Three Joint Venture Companies Fined $17 Million in Bribery Case

April 01, 2014

The African Development Bank Group last month fined three joint venture companies a total of $17 million for funneling bribes to government officials in Nigeria. The settlement is a "clear signal to multinational companies that corrupt practices in bank-financed projects will be aggressively investigated and severely sanctioned," said Anna Bossman of the African Development Bank. Details inside.

OSHA Fines DISH Network $250K for Blacklisting Whistleblower

March 31, 2014

The Occupational Safety and Health Administration has ordered DISH Network to pay a former employee more than $250,000 for violating the anti-retaliatory provisions of the Sarbanes-Oxley Act. "A worker has a right to report wrongdoing to their employer without fear of retaliation," said Robert Kulick, OSHA's regional administrator in New York. Full details inside.

Antitrust Division: Criminal Fines Hit Record Levels in 2013

March 31, 2014

The Department of Justice's Antitrust Division obtained significant fines and prison sentences in 2013, according to the latest edition of its annual newsletter. Expect the trend toward stricter enforcement to continue. "We remain steadfast in our efforts to ensure that markets are free of anti-competitive restraints and consumers benefit from robust competition," Assistant Attorney General William Baer said in a statement. Details inside.

60 Minutes: How High-Frequency Traders Have 'Rigged' the U.S. Stock Market

March 31, 2014

Last night on CBS' 60 Minutes, Steve Kroft interviewed author Michael Lewis. Lewis' new book, "Flash Boys," looks at the subject of high-frequency trading, and presents Lewis' conclusion that the U.S. stock market is "rigged."

FINRA Fines Broker-Dealer $950K for Supervisory Lapses

March 28, 2014

The Financial Industry Regulatory Authority slapped LPL Financial, an independent broker-dealer, with a $950,000 fine last week for supervisory lapses. According to FINRA, LPL failed to supervise adequately the sales of alternative investments that violated concentration limits, kept poor records, and didn't properly train supervisors. Details inside.

SEC Charges Company and Founder With False Disclosures on Existence of CFO

March 28, 2014

The SEC announced fraud charges today against L&L Energy Inc., which operates out of China and Taiwan, and its founder for making numerous false disclosures, including a misrepresentation that the company had a CFO at all.

Alstom Faces FCPA Probe

March 28, 2014

French power and transportation company Alstom confirmed yesterday that it is cooperating with the Department of Justice in connection with a bribery probe into possible violations of the Foreign Corrupt Practices Act. The bribery probe centers on allegations that Alstom, and Japanese trading company Marubeni, bribed foreign government officials in Indonesia to secure a $118 million contract to provide power-related services in the country. Details inside.

Antitrust Division Streamlines Procedures to Modify, Terminate Old Settlements

March 28, 2014

The Justice Department's Antitrust Division this week announced a new streamlined procedure for parties seeking to modify or terminate old antitrust settlements and litigated judgments. Bill Baer, Assistant Attorney General in charge of the Antitrust Division, said the new streamlined procedure will help "expedite the review process for legacy decrees." Details inside.

'Dark Web' Does Not Make Insider Traders Invisible

March 27, 2014

Even assuming that insider traders will be willing to bet their liberty and careers on the supposed anonymity of the Dark Web, there still seem to be a few problems with the argument that, going forward, only those insider traders too antiquated to use the Dark Web will be caught.

Please Join Me at the 'West Coast SEC Directors Roundtable' -- May 8 in San Francisco

March 25, 2014

Please join me in San Francisco on Thursday, May 8, 2014, where I will be hosting an historic "West Coast SEC Directors Roundtable." The event will feature a panel of six current and former Directors from the SEC's San Francisco and Los Angeles Regional Offices.

Marubeni Pays Justice Department $88 Million for FCPA Violations

March 25, 2014

Marubeni, a Japanese trading company, last week agreed to pay a total of $88 million to the Department of Justice to resolve criminal charges over violations of the Foreign Corrupt Practices Act in connection with bribes paid to foreign government officials in Indonesia. Details inside.

Orthofix International Launches FCPA Probe

March 25, 2014

Orthofix announced this week in a Form 10-K filing with the Securities and Exchange Commission that it has launched an internal investigation into potential violations of the Foreign Corrupt Practices Act with respect to its subsidiary in Brazil. The FCPA probe comes at a time when Orthofix is still under a three-year deferred prosecution agreement that it entered into with the Justice Department in 2012. Details inside.

Madoff Staff Roundup: Jury Convicts All Five Defendants on All 31 Counts

March 25, 2014

After four days of deliberations, the 11-person jury hearing the marathon criminal trial against five former members Bernard Madoff's staff returned its unanimous verdict, finding all five defendants guilty on all of the 31 combined counts. Here are the key facts you need to know.

Justice Department Publishes New FCPA Advisory Opinion

March 24, 2014

The Justice Department has published its first Foreign Corrupt Practices Act opinion release of 2014, this time addressing the unusual situation of how to handle an employee at an overseas subsidiary who later becomes a foreign government official himself. The good news: with care, you're not violating the FCPA. More details inside.

Juror No. 6 in Madoff Staff Trial Goes Down After One Day of Deliberations

March 21, 2014

However bad your week is going, I'm betting it is still going better than that of Juror No. 6 in the marathon criminal trial of five former associates of Bernard Madoff. After devoting 6 months to hearing the evidence, Juror No. 6 fell ill on day two of jury deliberations and had to be removed from the case.

SEC Says Insider Ring Ate Napkins, Created Phony Documents to Hide Scheme

March 19, 2014

The SEC alleges that the defendants engaged in several maneuvers in an effort to avoid being caught and to avoid liability if they were caught, including eating napkins and creating bogus research and emails.

Six Months Later, Case Against Madoff Staff Finally Reaches the Jury

March 18, 2014

The longest criminal trial in the history of the Southern District of New York has finally reached the jury. On Monday, jurors in the case against five former associates of Bernard Madoff began weighing the evidence following closing arguments in a record six-month trial.

OECD: Anti-Bribery Efforts in Chile and South Africa

March 18, 2014

The Organization for Economic Co-operation and Development issued critical reports of the anti-bribery efforts of Chile and South Africa, after conducting reviews of their implementation of the OECD's Anti-Bribery Convention. The reports cited concerns that neither country is doing enough to eradicate the bribery of foreign public officials involving international business transactions. Details of the report's findings are inside.

Cisco Systems Launches FCPA Probe

March 14, 2014

Cisco Systems announced last month in a Form 10-Q filing with the Securities and Exchange Commission that it has launched an internal investigation into potential violations of the Foreign Corrupt Practices Act.

SEC Strikes Again at S.A.C. Capital Affiliate With New Insider Trading Case

March 13, 2014

Almost exactly one year after the SEC announced a record $600 million insider trading settlement with hedge fund advisory firm CR Intrinsic Investors, it announced a new, unrelated insider trading case and settlement against a former analyst at the S.A.C. Capital affiliate.

SEC: Lions Gate's Takeover Battle Led to Disclosure Lapses

March 13, 2014

Movie studio Lions Gate Entertainment has agreed to pay a $7.5 million fine to settle charges by the Securities and Exchange Commission that it failed to disclose to investors an important aspect of its effort to thwart a hostile takeover bid by activist investor Carl Icahn. As part of the settlement, the company agreed to admit wrongdoing. More inside.

Jury Returns Mixed Verdict in SEC's Twelfth Trial in FY 2014

March 12, 2014

After a mixed verdict in SEC v. Jacobs, the SEC's scorecard in FY 2014 now includes 12 completed trials. In those 10 cases, the SEC has three outright victories (in which it won on all of its claims), five losses (in which it lost on all of its claims), and four mixed verdicts (in which it won on some claims and lost on others).

Texas Becomes First State to Halt a Bitcoin Investment Deal

March 12, 2014

Officials in Texas have issued an emergency cease and desist order against an oil and gas exploration company that accepted Bitcoin from investors, making the state the first securities regulator to intervene in transactions based on the virtual currency. Also this week, the Financial Industry Regulatory Authority warned investors of Bitcoin's inherent risks. More inside.

Playboy Must Pay SOX Whistleblower Record $6 Million

March 07, 2014

A federal jury in California ordered Playboy Enterprises to pay $6 million to a whistleblower arising from violations of the Sarbanes-Oxley Act. The jury award is believed to be the largest ever imposed for whistleblower violations under the Act. Details inside.

SEC Sues Five From Dewey & LeBoeuf for Allegedly Fraudulent Bond Offering

March 07, 2014

On top of criminal charges brought by the Manhattan D.A. yesterday, the SEC announced its own case against five defendants from collapsed law firm Dewey & LeBoeuf LLP. The SEC alleged that the defendants resorted to a "grab bag of accounting gimmicks" to artificially inflate the firm's income and distort financial performance in advance of a bond offering.

Justice Department Joins Rolls-Royce Bribery Probe

March 07, 2014

Aerospace and defense company Rolls-Royce announced last week that the U.S. Department of Justice has joined the U.K. Serious Fraud Office in an ongoing formal criminal investigation relating to allegations of widespread foreign bribery and corruption. Details inside.

Compliance Lessons From Doug Cornelius' Dog

March 06, 2014

Usually when the headline to a post reads something like, "What Tibetan Goatherders Can Teach us About Lawyering," the true answer is -- nothing. Bucking this trend, however, is compliance guru Doug Cornelius' Great Dane, Ghost, who actually does dispense some wisdom in Cornelius' post today entitled, "Compliance Lessons From My Dog."

SEC Issues Record Fine for Short-Selling Violations

March 05, 2014

The Securities and Exchange Commission today slapped a record $7.2 million fine on a proprietary trading firm and its owner for short-selling violations. "Rule 105 is an important safeguard designed to protect the market against manipulative trading, and we will continue to aggressively pursue violators," said Andrew Calamari, director of the SEC's New York Regional Office. Details inside.

President Requests SEC Budget of $1.7B for FY 2015, But Will Congress Go Along?

March 05, 2014

Yesterday, President Barack Obama proposed a fiscal year 2015 budget of $1.7 billion for the Securities and Exchange Commission--a 26% increase over the agency's FY 2014 budget. The fact that the president is seeking $1.7 billion for the SEC is hardly the end of the agency's budget story for FY 2015, however.

Mexican Woes Spark Scrutiny of Citigroup's Compliance Efforts

March 04, 2014

Citigroup said it suffered a $400 million loss due to fraudulent bad loans at its Mexican subsidiary this week, and that it has received subpoenas from the Federal Reserve and the U.S. Attorney's Office related to the loans and compliance with Bank Secrecy Act and anti-money laundering regulations. Citigroup also notified the SEC that it would restate earnings due to the fraud. More details inside.

Justice Department, HHS Recover Record $4.3 Billion for Healthcare Fraud

March 03, 2014

The Department of Justice and the Department of Health and Human Services recovered a record $4.3 billion in fiscal year 2013, resulting from joint enforcement efforts to combat healthcare-related fraud and abuse, surpassing the previous year's record of $4.2 billion, according to a recent government report. The agencies also obtained records in the numbers of new cases, charges, guilty pleas, and jury convictions reached. Details inside.

FINRA Fines Suffered a Double-Digit Drop in 2013

March 03, 2014

While the SEC and other government regulators hit companies with record fines in 2013, the self-regulatory organization Financial Industry Regulatory Authority doled out smaller fines and penalties to financial firms last year. Although fines declined by an average of 27 percent, FINRA filed roughly the same number of disciplinary actions in 2013 as it did the year before. More inside.

Details on the Case Underlying the SEC's $14 Million Whistleblower Award

February 27, 2014

Details on the most significant whistleblower award issued to date by the Securities and Exchange Commission's Office of the Whistleblower finally emerged. The $14 million award, issued in September, is the result of a case filed in February 2013 that returned over $147 million to investors. More inside.

Morgan Stanley Discloses Tentative $275 Million SEC Settlement

February 26, 2014

In its Form 10-K filed yesterday, Morgan Stanley disclosed that it has reached a tentative agreement to pay $275 million to resolve an SEC investigation into subprime RMBS transactions the firm sponsored and underwrote in 2007. The disclosure appears to signal the end of Morgan Stanley's distinction of being the only major bank to avoid paying a fine to the U.S. government related to its conduct leading up to the financial crisis.

Are You a "Rat Trader?"

February 24, 2014

Are you a "rat trader?" Probably not, but if that phrase is new to you (as it was to me until today), allow me to enlighten you.

Walmart: FCPA Probe Could Reach $240 Million

February 21, 2014

Walmart disclosed in a quarterly earnings report last week that it could end up shelling out as much as $240 million in the next fiscal year for compliance enhancements and investigation costs related to possible violations of the Foreign Corrupt Practices Act. Details inside.

Mark Cuban "Wearing a Hoodie and Tweeting Up a Storm" at SEC Speaks

February 21, 2014

Mark Cuban is still in D.C. today, and has surfaced at the annual SEC Speaks conference "wearing a hoodie and tweeting up a storm!"

SEC's Binger Named Director of Philadelphia Regional Office

February 21, 2014

The SEC has named Sharon B. Binger as the new director of its Philadelphia Regional Office. Binger fills the vacancy created in October 2013, when Dan Hawke stepped down as director to focus on leading the Enforcement Division's Market Abuse Unit.

SEC Targets Never-Before Examined Investment Advisers

February 20, 2014

The Securities and Exchange Commission has launched an initiative directed at investment advisers that have never been examined, in particular those that have been registered with the Commission for three or more years. Examination priorities for those advisers will include an assessment of compliance programs and the effectiveness of their chief compliance officer.
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