Earlier last week, the SEC filed a complaint in the Northern District of California alleging insider-trading charges that may signal a more aggressive approach to enforcement under the agency’s new leadership. In SEC v. Panuwat, the SEC charged a corporate executive who learned about an impending acquisition of his employer and then traded in the securities of an unrelated company in the same industry that he anticipated would materially increase in price when his employer’s acquisition was publicly announced.
The SEC’s complaint alleges that Mathew Panuwat was a business development executive at Medivation, Inc., a mid-cap oncology-focused biopharmaceutical company. … Read more
In yet another important signal of the SEC’s increasing focus on how public companies respond to, and issue disclosures concerning, significant cyber breaches, the Commission announced yesterday that it had entered into a settled administrative order with Pearson plc, finding violations of the negligence-based antifraud provisions of the Securities Act and imposing a $1 million civil penalty. Pearson neither admitted nor denied the Commission’s findings.
The Order recites that a substantial volume of personal data concerning students and school administrators was stolen by a “sophisticated threat actor” from Pearson’s academic performance assessment services that were provided to 13,000 school districts … Read more
On March 5, the SEC brought an enforcement action charging a public company and three of its investor relations personnel with violations of Regulation FD, alleging that the company’s IR personnel had fed non-public information to sell-side research analysts in order to bring their consensus revenue views more into line with the company’s own internal estimates. The defendants are all contesting the charges, and the case will be litigated in federal court. While some commentators may see this as an instance of the SEC pushing the Regulation FD envelope, our view is this: if the SEC is ultimately able to … Read more
On June 21, in a much anticipated decision, the Supreme Court held that SEC Administrative Law Judges (“ALJs”), who have historically been appointed by SEC staff, are “Officers of the United States” and, hence, under the Appointments Clause, can be appointed only by the President or by the SEC itself. Lucia v. SEC. The Court further ruled that any litigant who has made a “timely challenge” to the validity of an ALJ’s appointment is entitled to a new hearing before a different, properly appointed ALJ or the SEC itself.
In addition to possibly reopening past cases, the Court’s opinion … Read more
The past year has seen continued evolution in the political, legal and economic arenas as technological change accelerates. Innovation, new business models, dealmaking and rapidly evolving technologies are transforming competitive and industry landscapes and impacting companies’ strategic plans and prospects for sustainable, long-term value creation. Tax reform has created new opportunities and challenges for companies too. Meanwhile, the severe consequences that can flow from misconduct within an organization serve as a reminder that corporate operations are fraught with risk. Social and environmental issues, including heightened focus on income inequality and economic disparities, scrutiny of sexual misconduct issues and evolving views … Read more
In our memo last year, we acknowledged that it was close to impossible to predict the likely impact that the newly elected Trump administration would have on white-collar and regulatory enforcement. (White Collar and Regulatory Enforcement: What to Expect in 2017) Instead, we set out a list of initiatives we urged the new administration to consider, including clarifying standards for when cooperation credit would be given, reducing the use of monitors, and giving greater weight to a company’s pre-existing compliance program when exercising prosecutorial discretion, among other suggestions. While the DOJ under Attorney General Jeff Sessions has, for … Read more
[On December 10, 2014] the Second Circuit Court of Appeals issued an important decision overturning the insider trading convictions of two portfolio managers while clarifying what the government must prove to establish so-called “tippee liability.” United States v. Newman, et al., Nos. 13-1837-cr, 13-1917-cr (2d Cir. Dec. 10, 2014). The Court’s decision leaves undisturbed the well-established principles that a corporate insider is criminally liable when the government proves he breached fiduciary duties owed to the company’s shareholders by trading while in possession of material, non-public information, and that such a corporate insider can also be held liable if he … Read more
In a recent speech, Andrew Ceresney, the co-director of the SEC’s Division of Enforcement, suggested that the monetary penalties imposed by the SEC should grow to reflect the size of the relevant companies and transactions. According to press reports, he observed that “Ten years ago we would not have been speaking about $10 billion transactions or billions in income in a quarter and now we are. . . . I sometimes worry that, given the profits of companies and banks, penalties cannot be at a level that would meaningfully impact their bottom line in a way that will deter misconduct.”… Read more
Earlier this week, the SEC announced that it had entered into a non-prosecution agreement (NPA) with Ralph Lauren Corporation to resolve an investigation under the Foreign Corrupt Practices Act (FCPA). While the Department of Justice also announced that it had entered into an NPA with Ralph Lauren, it is the SEC agreement that is most notable. This agreement, only the fourth publicly reported NPA that the SEC has entered since it announced that it would begin using such agreements – and the first such agreement in an FCPA case – illustrates the potential benefits of cooperation.
The SEC’s press release … Read more