Throughout the week over at Securities Docket I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending March 5.
Critics question cost as consultants nip and tuck SEC
Sarah N. Lynch, Reuters
The U.S. Securities and Exchange Commission is spending millions of dollars on consultants to streamline the agency, but SEC insiders and at least one lawmaker are questioning whether the SEC is getting its money's worth.
At a time when the SEC is fighting Congress for more funds, some agency employees are concerned that the SEC has spent over $8.5 million in just under a year on dozens of consultants from Booz Allen Hamilton to advise on reforming workflows and back-office operations, according to documents and people familiar with the matter.
Behind the Crackdown on Insider Trading
Peter J. Henning, DealBook
The Federal Bureau of Investigation stated that it had identified 120 “targets” in its insider trading investigations, and another “120 subjects” in the inquiries…. This number comes on top of the 64 defendants charged since the arrest of Mr. Rajaratnam in October 2009 set off the current wave of investigations and prosecutions. The potential for more than 200 defendants being charged makes the insider trading push one of the largest white-collar crime campaigns since the savings and loan crisis in the early 1990s.
Lessons from the SEC Speaks in 2012 – Enforcement Themes
Last Friday, the U.S. Securities and Exchange Commission held its annual “SEC Speaks” conference, which offers a glimpse into the prevailing trends and priorities at the Commission. As always, the Commission devoted a significant amount of time to exploring and explaining the undertakings of its Division of Enforcement. During the conference, some noteworthy themes and trends emerged with regard to the SEC's enforcement priorities, which we address below.
Broker-Dealer Lawyer Who Spotted Fraud Rewarded With Five-Year SEC Ordeal
Ellen Rosen, Bloomberg
When Theodore Urban, general counsel at Ferris, Baker Watts Inc., spotted and questioned a broker's suspicious trading patterns in 2007, he triggered a five-year probe by U.S. regulators who said he failed as a supervisor.
After the U.S. Securities and Exchange Commission began its investigation, Urban, who had worked at the SEC and U.S. Commodity Futures Trading Commission before joining the broker- dealer, said he had urged senior executives to fire the broker. Even though an administrative law judge exonerated him, his ordeal didn't end until Jan. 26, when the full commission dismissed the matter without an opinion.
The Second Circuit Takes a Whack at Morrison's Second Prong
Kevin LaCroix, The D&O Diary
In a March 1, 2012 opinion, the Second Circuit in the Absolute Activist Value Master Fund Limited v. Ficeto case for the first time examined the requirements under Morrison's second prong, holding that in order to establish that existence of a domestic transaction in other securities, a plaintiff “must allege facts suggesting that either irrevocable liability was incurred or title transferred within the United States.” The opinion helpfully suggests the kinds of allegations that would satisfy this test, and also clarifies that certain allegations that are not relevant in determining whether or not this standard has been satisfied.