The Consequences of Restatements for Outside Directors

By Daniel Street July 13, 2018 by renholding

Serving on a public company’s board of directors carries responsibilities and risks as well as benefits for directors. If directors do not carry out their duties effectively, they risk damaging their reputation, losing their board seats, and facing shareholder lawsuits. …

Davis Polk Discusses Ruling on Statute of Limitations for N.Y.’s Martin Act

By Paul J. Nathanson, Martine M. Beamon, Angela T. Burgess, Neil H. MacBride and Avi Gesser July 10, 2018 by renholding

On June 12, 2018, the New York Court of Appeals overruled longstanding Appellate Division precedent and held that fraud claims brought by the New York Attorney General (“NYAG”) under the Martin Act (General Business Law article 23-A, § 352…

Financial Misreporting: Hiding in the Shadows or in Plain Sight?

By Delphine Samuels, Daniel J. Taylor and Robert E. Verrecchia June 13, 2018 by renholding

It’s widely assumed that executives are less likely to inflate earnings at high profile companies under a good deal of regulatory oversight. And yet it’s also widely known that managers in high profile companies have an incentive to overstate their …

Sense and Nonsense About Securities Litigation

By Richard A. Booth June 4, 2018 by renholding

In a forthcoming article, I contend that Professor James Spindler has it wrong in his recent critique[1] of scholarly opposition to securities fraud class actions (SFCAs). Spindler argues that the opposition is based on two mistaken ideas: (1) that …

Cleary Gottlieb Discusses Second Circuit’s Reversals of RMBS Trader’s Fraud Conviction

By Robin M. Bergen, Joon H. Kim, Rishi N. Zutshi, Nowell D. Bamberger and Alex Janghorbani May 11, 2018 by renholding

On May 3, the Second Circuit vacated on evidentiary grounds Jesse Litvak’s conviction – after a second trial – on a single count of securities fraud related to trades of residential mortgage backed securities (“RMBS”) and remanded the case to …

Fried Frank Discusses Key Delaware Decisions on M&A and Corporate Governance

By Gail Weinstein, Philip Richter, Warren S. de Wied, Steven Epstein and Steven J. Steinman May 7, 2018 by renholding

New Risk of Below-Deal-Price in Appraisal Results

Last quarter, the Delaware courts issued the first post-Dell appraisal decisions—Aruba and AOL (issued by the Court of Chancery) and SWS Group (issued by the Delaware Supreme Court, affirming the Court …

Insider Trading’s Legality Problem

By Miriam H. Baer May 1, 2018 by renholding

Last year, when the Supreme Court revisited the topic of insider trading in Salman v. United States, scholars rehearsed a familiar debate: Should Congress enact a statute that explicitly defines insider trading? Or should it stick with the status …

Detection of Insider Abuse and Fraud Among U.S. Failed Banks

By John P. O’Keefe and Chiwon A. Yom April 18, 2018 by renholding

The U.S. banking industry has exhibited increasing vulnerability to economic cycles since the easing of post-depression era measures designed to insulate banking from economic instability. Between 1934 and 2017 there were 2,758 commercial and savings bank failures.[1] Nearly 80 …

Whistleblower Provisions of Dodd-Frank Deter Aggressive Financial Reporting

By Christine I. Wiedman and Chunmei Zhu March 5, 2018 by renholding

In 2011, the Securities and Exchange Commission (SEC) introduced a Whistleblower (WB) program as part of the Dodd-Frank Act to protect investors through greater deterrence of securities law violations and more effective enforcement. The program offers financial incentives to provide …

SEC Commissioner Jackson Talks Mandatory Arbitration

By Robert J. Jackson, Jr. February 28, 2018 by renholding

I’m so glad to be back home here in New York. It’s an incredible honor to be speaking after Mayor Bloomberg today. And I’m sure the Mayor will be pleased to know that I plan to return and speak in

…

From Texas Gulf Sulphur to Chiarella: A Tale of Two Duties

By Donald C. Langevoort January 8, 2018 by renholding

The Second Circuit’s en banc decision in SEC v. Texas Gulf Sulphur Corp.[1] (“TGS”) is approaching its 50th anniversary, and it’s still well-known for several important holdings. Perhaps the most celebrated (or condemned) accepted the SEC’s argument …

How Effective Is the SEC in Identifying Financial Reporting Errors?

By Matthew Kubic December 22, 2017 by renholding

The Securities and Exchange Commission (SEC) Division of Corporate Finance (DCF) reviews and regulates information in public filings to “deter fraud and facilitate investor access to information necessary to make informed investment decisions.”

Commentators criticize the SEC for …

Who Falls Prey to the Wolf of Wall Street?

By Christian Leuz, Steffen Meyer, Maximilian Muhn, Eugene F. Soltes and Andreas Hackethal December 21, 2017 by renholding

“Seniors [are] particularly vulnerable to investment scams” read one headline. “We are taking further steps to find and eliminate from our system pump-and-dump scammers, those who prey on retirees,” noted Jay Clayton, chairman of the Securities …

How Five Jurisdictions Enforce Financial Market Manipulation and Insider Trading Laws

By Lev Bromberg, George Gilligan and Ian Ramsay December 18, 2017 by renholding

Insider trading and market manipulation — two of the most high-profile categories of financial misconduct — have resulted in several major cases, and significant sanctions in recent years. Our recent article examines the type, frequency, and severity of sanctions imposed …

Do Corporate Whistleblower Laws Deter Accounting Fraud?

By Heemin Lee November 17, 2017 by renholding

Whistleblowers play a significant role in detecting corporate fraud. For example, recent high-profile financial frauds such as the Enron scandal and Bernard Madoff’s Ponzi scheme were brought to light by whistleblowers. To encourage more whistleblowers to come forward, the Securities …

Admissions in SEC Enforcement Cases: The Revolution that Wasn’t

By David Rosenfeld October 26, 2017 by renholding

In 2013, the Securities and Exchange Commission announced a new policy of sometimes requiring admissions when settling enforcement actions. The policy was a radical departure from the agency’s more than four decades-old practice of allowing companies and individuals to settle …

PwC Explains Why Fraud Governance Means More Than Just Compliance

By Julien Courbe, Sean Joyce, Jeff Lavine, Genevieve Gimbert, Brian Castelli and Roberto Rodriguez August 18, 2017 by renholding

Fraud incidents have increased by over 130 percent in the past year, resulting in significant monetary and reputational losses for financial institutions. Many of these incidents — including high-profile crimes such as the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) …

Skadden Discusses How Second Circuit Raised Bar for Class Certification in Petrobras Securities Case

By Boris Bershteyn, Jay B. Kasner and Scott D. Musoff July 12, 2017 by renholding

On July 7, 2017, the U.S. Court of Appeals for the Second Circuit offered significant guidance regarding the circuit’s class certification requirements in In re Petrobras Securities, No. 16-1914. In addressing an issue of first impression, the Second Circuit …

Counterarguments to SEC Statistical Analysis in Enforcement Actions and Inquiries

By Tiago Duarte-Silva and Nicolas Morgan February 13, 2017 by renholding

In recent years, the Securities and Exchange Commission has focused on using quantitative analysis to identify statistical outliers and anomalies through programs like the Aberrational Performance Inquiry, which evaluates hedge fund returns,[1] and the Accounting Quality Model (informally known …

Paul Weiss Discusses FCPA Enforcement and Anti-Corruption Developments

By Farrah Berse, Peter Jaffe, Justin Lerer, Mark Mendelsohn and Alex Oh February 8, 2017 by Jeff Himelson

2016 was, by any measure, an extraordinary year for the enforcement of the Foreign Corrupt Practices Act. The Department of Justice and the Securities and Exchange Commission assessed a record-shattering total of nearly $2.5 billion in penalties. But despite those …

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The CLS Blue Sky Blog

Columbia Law School's Blog on Corporations and the Capital Markets

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