Category: Financial Fraud

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Highlights from Transnational Crime Conference: Expanding Anti-Corruption Enforcement & Cross-Border Cooperation

Last month, attorneys from around the world descended upon Buenos Aires to tango with criminal justice and anti-corruption experts at the International Bar Association’s 22nd Annual Transnational Crime Conference.  Conference highlights included remarks from distinguished members of the Argentine government, including the Minister of Justice and Human Rights, President of the Financial Information Unit, and … Continue Reading

Supreme Court Declines to Resolve Circuit Split Over Liability in Tender Offer Suits

Section 14(e) of the Securities Exchange Act prohibits deceptive conduct when making a tender offer to shareholders.  Recently, in Emulex Corp. v. Varjabedian, the United States Supreme Court declined to resolve a split among the circuit courts about what a plaintiff alleging a violation of Section 14(e) must prove.  As a result, the Ninth Circuit … Continue Reading

Novel Spoofing Case Against Software Developer Ends in Mistrial

Following a week of trial proceedings in the case of defendant Jittesh Thakkar—a software programmer indicted in February 2018 on conspiracy and aiding and abetting charges related to a spoof trading scheme—the government’s case against Thakkar ended in a mistrial.  The jurors could not reach a unanimous verdict on the two aiding-and-abetting spoofing counts charged … Continue Reading

Forward at Your Own Risk – U.S. Supreme Court Expands the Scope of Rule 10(b)-5 Liability

The U.S. Supreme Court recently handed down a win for the SEC and private securities litigants, significantly broadening the scope of primary liability under Rule 10b-(5).  In Lorenzo v. SEC, the Court held that liability under Rules 10b-5(a) and (c)—which make it unlawful to employ a scheme to defraud or engage in any practice that … Continue Reading

Supreme Court Ruling Narrows Dodd-Frank Whistleblower Protections

Perhaps no part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) has garnered as much attention as its whistleblower provisions, which pay corporate whistleblowers bounties under some circumstances, and prevent employers from retaliating against whistleblowing employees. Often times, the bounties paid to whistleblowers under Dodd-Frank warrant the most attention-grabbing headlines.  But Dodd-Frank’s … Continue Reading

Michael Coscia’s Spoofing Conviction Upheld by the Seventh Circuit

In a move that will have commodities traders on high alert, the Seventh Circuit Court of Appeals has upheld the conviction of Michael Coscia, who was sentenced to three years in prison after a federal jury found the former trader guilty of spoofing and commodities fraud. In its 42-page opinion, a three-judge panel denied Coscia’s … Continue Reading

March Madness in the Municipal Bond Market – A Focus on Gatekeepers

The month of March has brought with it the first-ever criminal municipal bond securities fraud conviction, the resolution of enforcement actions targeting banks and senior executives accused of shirking duties to oversee municipal bond issuances, and proposed rule amendments intended to improve municipal securities disclosures—continuing a trend of intensified regulatory enforcement that targets industry “gatekeepers” … Continue Reading

Uncertainty Looms Over SEC Enforcement Staff

The air of uncertainty was palpable as current and former members of the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement spoke at the Securities Regulation Institute’s 44th Annual Conference in Coronado, California earlier this week.  Important questions went largely unanswered about the impact of the recent resignations of both SEC Chair Mary Jo … Continue Reading

Will the Panama Papers Lead to Criminal Charges Against U.S. Taxpayers?

The massive Panama Papers leak has attracted attention to the use of offshore business entities and implicated 2,400 U.S.-based clients of Mossack Fonseca. U.S. taxpayers with offshore assets should be wary of increased scrutiny by federal regulators, which may lead to criminal cases brought by U.S. Department of Justice. In this update we detail the … Continue Reading

DOJ Brings Largest Kleptocracy Asset Recovery Action For Over $1 Billion Misappropriated From 1MDB

In the largest action brought under the Kleptocracy Asset Recovery Initiative, the DOJ seeks to recover over $1 billion in assets bought with laundered funds misappropriated from 1Malaysia Development Berhad (“1MDB”), a Malaysian sovereign wealth fund. 1MDB was created by the Malaysian government to promote economic development through international partnerships and foreign direct investment. The … Continue Reading

SEC Charges Private Fund Administrator with Gatekeeping Failures

The Securities and Exchange Commission (SEC) recently announced an administrative settlement with Apex Fund Services (US) Inc., a firm providing administrative services to private funds, based on its alleged failure to heed red flags and correct faulty accounting by two private equity managers. The SEC alleged that, in carrying out its contractual fund administration functions, … Continue Reading

The SEC Turns Up The Heat On Financial Reporting Fraud

[Editor’s Note:  This past Friday, Perkins Coie Partner Lou Mejia, former SEC Chief Litigation Counsel, joined the chair of the SEC Enforcement Division’s Financial Reporting and Audit Group on a panel to discuss the agency’s latest enforcement efforts surrounding financial reporting fraud]. Margaret McGuire, the chair of the SEC Enforcement Division’s Financial Reporting and Audit Group … Continue Reading

Why We Should Expect More Criminal Cases Charging Illegal Coordination Between Campaigns and Super PACs

Note: An earlier post on Perkins Coie’s In the Arena: Law and Politics Update discussed, from a campaign finance lawyer’s perspective, why the prosecution in United States v. Harber signals greater jeopardy in the future for operatives in down-ballot races who coordinate with hastily-formed “super PACs.” And an earlier version of this post, which offers … Continue Reading

SEC Awards First Whistleblower Payout to Former Company Officer

The Securities and Exchange Commission announced this week that it has awarded its first whistleblower payout to a former company officer. The redacted order indicates that the former officer will receive an award between $475,000 and $575,000 for reporting high-quality, original information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 … Continue Reading

Second Circuit Narrows Scope of Remote Tippee Liability in Landmark Insider Trading Decision

In a ground-breaking decision, the Second Circuit dealt a substantial blow to federal prosecutors’ epic crackdown on insider trading by raising the bar for the government’s burden of proof in “remote tippee” cases that have plagued the financial industry in recent years. The decision in United States v. Newman (available here) places significant restrictions on the ability … Continue Reading

Supreme Court Questions Deference to SEC in Insider Trading Cases

At first glance, the 24-pages of orders issued by the Supreme Court on November 10, 2014, appear to be nothing more than the usual proscriptions, including a long list of cases for which the Supreme Court has declined to consider further appeals.  However, at the end of a perfunctory list of certiorari denials is a three-page Statement … Continue Reading

Third Circuit Permits Insurers to Limit Fraud Defense Coverage

Companies should carefully evaluate their insurance policy provisions for fraud coverage in light of the Third Circuit’s recent decision enforcing a sub-limit on fraud defense coverage in the context of an employee theft. In Camico Mutual Insurance Co. v. Heffler Radetich & Saitta LLP, the Court of Appeals for the Third Circuit affirmed the lower court’s decision granting summary … Continue Reading

CFPB Fires Warning Shot Over Deceptive Credit Card Interest Rate Promos

Taking aim at credit card issuers who promote offers to consumers such as “convenience checks,” deferred interest/promotional interest rate purchases and balance transfers, the Consumer Financial Protection Bureau (CFPB) released a Bulletin on September 3, 2014, putting those issuers on notice of the risk that those practices could constitute deceptive and/or abusive acts.  CFPB Director Richard … Continue Reading

Danger, Will Robinson? – The SEC’s “Robocop” Not on the Beat

In recent years, the SEC has touted a new enforcement tool known as “Robocop,” purportedly designed to detect fraud in the financial statements of public companies. Robocop’s architect, Craig Lewis, then the Director of the SEC’s Division of Economic and Risk Analysis, described the virtues of Robocop in a speech in December 2012. Last year, … Continue Reading

Directors Beware – The SEC’s High Expectations for Gatekeepers

In a recent speech, SEC Chair Mary Jo White put directors of public companies on notice of their responsibility as “essential” and “important” gatekeepers upon whom their investors and the SEC rely.  Chair White described directors as the SEC’s “partners” in preventing, detecting, and stopping violations of the federal securities laws.  She set forth a … Continue Reading

Revisiting SEC Consent Decrees in the Wake of SEC v. Citigroup

With the Second Circuit’s recent reaffirmation of the SEC’s substantial discretion in negotiating the terms of settlement—notably vacating Judge Jed Rakoff’s rejection of the proposed $285 million settlement in SEC v. Citigroup Global Markets, Inc.—eyes are turning to the decision’s immediate impact on at least one other high-stakes case:  a $602 million insider trading settlement … Continue Reading

Will Rakoff’s “Legal Error” Change SEC’s View of Settlement Admissions?

On June 4, 2014, the Second Circuit Court of Appeals vacated Judge Rakoff’s November 28, 2011 Order that had rejected the Citigroup-SEC settlement on a number of grounds, including that the SEC had allowed Citigroup to avoid admitting guilt. The Appellate Court found that Judge Rakoff abused his discretion and committed “legal error” in requiring … Continue Reading
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