The SEC has adopted final whistleblower rules under Section 922 of the Dodd-Frank Act. A controversial issue with respect to the proposed rules was the impact of the whistleblower program on companies’ internal compliance processes. The final rules do not to include a requirement that whistleblowers report violations internally, but... Read More
[Update: The case against TradingScreen was ultimately dismissed. Interested readers should refer to subsequent case history.] Egan v. TradingScreen Inc. (S.D.N.Y. May 4, 2011) is the first case dealing with the Dodd-Frank Act’s whistleblower provisions that we are aware of. Plaintiff Patrick Egan was employed by TradingScreen. It seems to fall... Read More
It is no secret that the SEC is expected to review disclosures regarding loss contingencies this year. To see what may be ahead, we looked at some recent SEC comment letters regarding loss contingencies. If the SEC notes a significant potential loss, they may ask pointed questions about it. And... Read More
The SEC brought civil insider trading charges against Rajat Gupta in an administrative proceeding. In so doing, the SEC used newly granted authority under the Dodd-Frank Act to seek civil penalties in an insider trading case. Mr. Guta has now sued the SEC, claiming the provisions of the Dodd-Frank Act... Read More
Section 929P of the Dodd-Frank Act amended, among other things, Section 21B(a) of the Securities Exchange Act to permit the SEC to impose civil monetary penalties in administrative cease-and-desist proceedings before an administrative law judge. The provision eliminates the need for the SEC to seek a court order imposing civil... Read More
The SEC has announced a settlement with the chief executive officer of an Atlanta-based homebuilder to recover several million dollars in bonus compensation and stock profits that he received while the company was committing accounting fraud. According to the SEC’s complaint filed in federal court in Atlanta, CEO Ian J.... Read More
In Pezza v. Investors Capital Corp., (D. Mass. Civ. Ac. No. 10-10113-DPW), the plaintiff claimed he was wrongfully retaliated against, in violation of the Sarbanes-Oxley Act, after having raised concerns regarding misconduct by the defendants in connection with securities transactions. The defendants raised the obligation to arbitrate as an affirmative... Read More
The first public company received credit for its cooperation as a result of the SEC’s policy with respect to cooperation in investigations and enforcement actions announced in January 2010. The public company, Carter’s, Inc., entered into a non-prosecution agreement. The SEC charged a former Executive Vice President of Carter’s Inc.... Read More
In Morrison v. National Australia Bank, the Supreme Court limited the extraterritorial scope of Section 10(b) of the Securities and Exchange Act of 1934 by holding that the antifraud provision only applies to domestically listed security transactions. 130 S. Ct. 2869, 2884 (2010). Notwithstanding this decision, the Securities and Exchange... Read More
The SEC has published its proposed whistleblower rules, complete with almost 30 pages of forms for whistleblowers to use. Employers (and let’s not forget that this applies to all employers, public and private) have rightly been concerned about the provisions of Section 21F of the Securities Exchange Act, as set... Read More