Insider Trading

SEC Pursues Small Company Over Lax Internal Controls

November 22, 2011

The SEC is sending a message to small companies that it will pursue cases where internal controls are so poor that they don't reasonably assure accurate financial reporting. Case in point: Koss Corp., where CEO Michael Koss agreed to pay back $450,000 in compensation because he failed to recognize a fraud by another senior executive. "It's a shot across the bow," says Cynthia Krus, a partner at law firm Sutherland Asbill & Brennan.
 

SEC May Pursue More Negligence Cases

October 18, 2011

The SEC may be more willing to bring charges on the basis of negligence rather than the harder-to-prove standard of fraud with intent or recklessness. In a recent case, it charged three executives with fraud and a fourth, the chief financial officer, with negligence for signing off on the 10-K without checking the numbers. More details inside.
 

London Improves Insider Dealing Record

June 14, 2011

Insider trading is on the decline in Britain, according to data released by market regulator Financial Services Authority. The level of suspicious share price movements ahead of takeover announcements last year—21 percent—was the lowest since 2003, and dropped from 31 percent in 2009.
 

FCPA Officers Aim for Global Anti-Corruption Program

June 01, 2011

Compliance officers at CW 2011 debated the challenges of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, and mapped out strategies to craft one common anti-bribery policy that could be applied worldwide as more and more risks pile up around corruption and improper payments. The full discussion is inside.
 

Companies Fear Lawsuits, Higher Costs From Whistleblower Rules

April 26, 2011

As the SEC prepares to issue final rules on the whistleblower provisions of the Dodd-Frank Act, companies are raising concerns that the regulations will lead to more frivolous claims, more lawsuits, and higher compliance costs. Worse, companies say they will face fraud claims from unnamed sources that will be nearly impossible to investigate. Details inside.
 

At Two Companies, Directors Under Fire

March 15, 2011

The SEC is pursuing enforcement actions against corporate directors in two separate cases. But rest easy; the cases seem to be isolated incidents of rogue directors stepping over the line, rather than an indication of a concerted effort by the SEC to pursue wrongdoing by board members.
 

Time to Clamp Down on Access to Non-Public Information

February 15, 2011

The SEC has widened its nets on insider trading with its probe of expert networks. Inside, Columnist Louis Thompson looks at what it means for compliance officers. He also examines a questionable roadshow arrangement that could be next on the list of practices that are drawing attention from regulators.
 

SEC Investigation Takes a Broader View of Insider Information

February 15, 2011

The Securities and Exchange Commission is taking a tough stance on trading on inside information communicated through so-called "expert networks." "These cases have a number of relatively unusual features a lot of people will want to look at," says Thomas Gorman, a partner at law firm Dorsey & Whitney.
 

More Charges in Expert Network Insider-Trading Scheme

February 08, 2011

The SEC is widening its insider-trading case against a hedge fund, analysts, and former technology company employees and members of a so-called "expert network." The case could redefine what constitutes insider trading and put companies on notice to do a better job of guarding material, non-public information.
 

OIG Issues Recs to Overhaul SEC Bounty Program

April 02, 2010

The Securities and Exchange Commission's bounty program for rewarding whistleblowers is sorely in need of an overhaul, according to the agency's Inspector General, which issued nine recommendations for improving the program.An OIG review of the program, which stemmed from an issue identified during its investigation of the SEC Madoff examination...
 

NERA: 2009 SEC Settlements Hit Post-SOX Low

December 08, 2009

For the second consecutive year, the number of Securities and Exchange Commission settlements declined in fiscal 2009, representing the lowest number of settling defendants since the Sarbanes-Oxley Act was implemented in 2002.The SEC also saw fewer settlements for the third quarter, according to the latest data tracked by NERA Economic...
 

A Zero Percent Chance of Success

September 22, 2009

I'm astounded and almost (but not quite!) speechless after reading the SEC's complaint from last week against a former Nixon Peabody associate for insider trading.  The SEC alleges that a client, Teleplus Consumer Services Inc., called the lawyer and asked her to draft a letter of intent about a possible...
 

New Form of Familial Betrayal: Siblings

September 01, 2009

We've already seen SEC insider trading cases alleging husband betraying wife, wife betraying husband, boyfriend betraying girlfriend, brother-in-law betraying brother-in-law, and even divorcee betraying divorcee, but here's a new one: brother betraying sister.Yesterday, the SEC filed a settled insider trading action against Sarath B. Gangavarapu alleging that he misappropriated inside...
 

NERA: SEC Settlements Values Remain High

August 10, 2009

Corporate and white-collar defendants wondering what the cost of settling a Securities and Exchange Commission enforcement action is these days should take note—it isn't cheap.That's according to the latest research by NERA Economic Consulting, which shows that the median value of SEC settlements for both companies and individuals in 2009...
 

Wrap Up: Hot Tips, Twitter and Insider Trading

July 23, 2009

Today, Wayne State University law professor Peter Henning and I hashed through the various issues raised in “Hot Tips, Twitter and Insider Trading” in an online discussion. We also explored the recent Mark Cuban decision, the 2nd Circuit's opinion yesterday in the Dorozhko case, and the bill now before Congress...
 

Hot Tips, Twitter and Insider Trading, Part 2

July 21, 2009

A few weeks ago I offered the following hypothetical and questions:An executive at publicly-traded ABC Corp. learns that his company is about to be acquired at a significant premium to its current stock price.  He goes on Twitter and posts the following:“I’m about to become a rich man.  My company,...
 

Court Dismisses SEC's Case v. Mark Cuban

July 17, 2009

This morning, U.S. District Judge Sidney A. Fitzwater dismissed the SEC’s insider trading case against Dallas Mavericks owner Mark Cuban. A copy of the Court's Order is available here.In his ruling, Judge Fitzwater focused heavily on the issue of whether the SEC had adequately alleged that Cuban entered into an...
 

Hot Tips, Twitter and Insider Trading

June 26, 2009

As more people learn daily, Twitter is a way to get a message out to the entire world. The twist, of course, is that your message will only be seen by people who have chosen to follow your updates. A "tweet" by a person who has no followers is the...
 

Sen. Grassley and I Still Trying to Get SEC IG's Report

June 18, 2009

In a letter addressed to SEC Chairman Mary Schapiro on Monday, Senator Chuck Grassley says he is tired of waiting for an unredacted copy of the recent Inspector General report (discussed here) about the activities of SEC attorneys who may have engaged in insider trading and violations of the SEC's...
 

The Odyssey of Odyssey Marine

June 08, 2009

An article Saturday in the AmLaw Daily about a case pending in federal court down in Tampa brings to the fore one of my favorite types of public companies: the treasure hunters.Odyssey Marine Exploration is a public company that makes its money (or tries to) by going out on the...
 

Australia: ML Accused of Massive Insider Trades

May 29, 2009

Down under, Merrill Lynch and one of its subsidiaries face allegations from a Sydney businessman that they engaged in what would reportedly be "the biggest case of insider trading in [Australia's] corporate history."The allegations against Merrill Lynch by David Waterhouse relate to certain short-selling by Merrill Lynch of $55 million...
 

SEC Strengthens Rules on Staff Securities Trading

May 26, 2009

On the heels of reports of a criminal investigation into possible insider trading by two Securities and Exchange Commission attorneys, the agency announced measures to beef up its internal compliance program to guard against inappropriate employee securities trading.The announcement follows a May 14 CBS News report of a criminal investigation...
 

FSA Prepares to Bring High-Profile Case vs. Two Lawyers

May 20, 2009

The UK's newly-aggressive Financial Services Authority (FSA) is pursuing another high-profile insider trading case, as reports emerged today that a partner at the London office of Dorsey & Whitney and a former partner of McDermott Will & Emery will be charged criminally next month with insider trading.  Bloomberg reports that...
 

More Guidance on 10b5-1

April 21, 2009

Heads up: In light of recent clarifications by the SEC’s Division of Corporation Finance staff on Rule 10b5-1 and heightened scrutiny by the Enforcement Division, experts say careful consideration should be given to the timing of the creation, alteration, or suspension of any Rule 10b5-1 stock sale plans.The Division of...
 

International Insider Trading Case Map: Q1 Update

April 02, 2009

For whatever reason, the International Insider Trading Case Map that we introduced on November 26, 2008 has become wildly popular, with over 20,000 page views to date!  I am updating it quarterly now, so with Q1 in the books it is time to take a look at the latest and...
 

Reminder to Review Insider Trading Compliance

March 20, 2009

A recent enforcement action should serve as a reminder to companies to review their insider-trading compliance programs.A recent settled administrative proceeding against Merrill Lynch should serve as a reminder to all companies to review their programs and make sure they’re tailored specifically to their business, says Tom Gorman, a partner...
 

Enforcement Director Chatman Thomsen to Leave SEC

February 09, 2009

Just days after the Securities and Exchange Commission’s new chairman announced moves to shake things up in the agency’s enforcement division, the SEC announced the departure of director Linda Chatman Thomsen.An SEC press release said Thomsen plans to return to the private sector.While no offical announcement has been made about...
 

The Five Levels of Familial Betrayal, SEC Edition

December 22, 2008

On Thursday of last week, the SEC filed a insider trading lawsuit against a ring of seven individuals, including Matthew Devlin.  According to the SEC, for over four years Devlin secretly obtained, traded on, and shared with friends inside information from his unknowing wife, who had access to the information...
 

Minkow's FDI the Latest Example of "Legal Insider Trading"

December 07, 2008

Last month I wrote here that although there are virtually no “repeatable” ways to legally trade and profit off of inside information, every once in a while a scenario or idea emerges that puts that proposition to the test.  I cited two examples: (1) the recent assertion that some people...
 

Surge in International Insider Trading Cases Continues

November 26, 2008

As previously discussed on this blog (click here), enforcement of insider trading laws around the world is on the rise.  In the prior post, I pointed out recent enforcement actions in countries including Holland, Colombia, UK, India, Bangladesh, and Hong Kong.  In the two months since that post, a host...
 

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