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Elizabeth Vicens’ practice focuses on a broad spectrum of securities enforcement, investigations and compliance, as well as securities litigation, with a concentration in complex, cross-border issues.

On September 2 and 3, 2021, the Securities and Exchange Commission (“SEC”) announced settlements with Pareteum Corporation (“Pareteum”) and Kraft Heinz Co.[1] (“KHC”) for accounting fraud following years of alleged accounting improprieties and financial restatements at both companies.  The underlying facts differed in significant ways, including with respect to the alleged involvement of senior executives, but both companies apparently received cooperation credit for their prompt and proactive remediation and cooperation with the SEC Division of Enforcement’s investigations.  The messaging in relation to the announcement of these cases and their timing, coming in the early days of new Enforcement Director Gurbir Grewal’s tenure, is instructive.  We expect the SEC to continue to focus on accounting fraud and to credit companies who provide cooperation in these challenging and resource-intensive investigations.  To see a meaningful increase in the frequency and nature of cooperation, the SEC would be well-served to provide even more explicit guidance on how cooperation results in improved settlement terms.  That said, these recent settlements are helpful in understanding the benefits of cooperation at this time.
Continue Reading Two Recent Settlements Highlight Heightened SEC Focus on Accounting Fraud and Potential Benefits of Cooperation

On August 9, 2021, the SEC issued a cease-and-desist order against digital asset exchange Poloniex, Inc. for allegedly operating an unregistered exchange in violation of Section 5 of the Exchange Act in connection with its operation of a trading platform that facilitated the buying and selling of digital asset securities.[1]

In the cease-and-desist order, the SEC alleged that Poloniex met the definition of an “exchange” because it “provided the non-discretionary means for trade orders to interact and execute through the combined use of the Poloniex website, an order book, and the Poloniex trading engine.”  The SEC also found, based on internal communications, that Poloniex decided to be “aggressive,” ultimately listing token(s) it had internally determined carried a “medium” risk of being considered securities under the Securities Act of 1933 pursuant to the test set forth by the U.S. Supreme Court in SEC v. W.J. Howey.[2]  However, the SEC did not identify what digital asset(s) it determined were securities nor why, simply stating that Poloniex facilitated trading of “digital assets that were investment contracts and therefore securities.”

Without admitting or denying the SEC’s findings, Poloniex agreed to the entry of the order and a payment of $10,388,309 in disgorgement, prejudgment interest, and a civil penalty.
Continue Reading SEC Enforcement Action Against Poloniex Signals Heightened Scrutiny for Crypto Exchanges

On May 12, 2021, Telefonaktiebolaget LM Ericsson (“Ericsson”) announced that it had reached an agreement to settle a claim by a competitor, Nokia Corporation, for €80 million (approximately $97 million).[1]  Although Nokia’s complaint against Ericsson was not filed publicly, and therefore the details of the claim are not known, Ericsson’s announcement stated that “[t]he settlement relates to events that were the subject of a 2019 resolution with the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) of investigations into Ericsson’s violations of the U.S. Foreign Corrupt Practices Act (FCPA).”[2]  This appears to be a rare instance in which a company that allegedly paid bribes to obtain business from a government entity agreed to compensate a competitor that lost out on the business opportunity as a result of the corrupt conduct, and demonstrates a further, significant risk of follow-on litigation relating to FCPA violations.
Continue Reading Recent Settlement Highlights Risk of Follow-On Litigation Related to FCPA Investigations

On March 5, 2021, the Securities and Exchange Commission (“SEC”) filed a lawsuit in federal court against AT&T, Inc. (“AT&T”) for violating Regulation FD, and also charged three of AT&T’s Investor Relations executives with aiding and abetting this violation.[1]  Reg FD (which stands for “Fair Disclosure”) prohibits companies from selectively disclosing material nonpublic information to certain categories of individuals, including analysts and investors, and is intended to promote full and fair disclosure of such information in order to ensure that all investors have equal access to potential market-moving information.[2]

Continue Reading SEC Brings Rare Litigated Enforcement Action for Violation of Regulation FD

The Colombian Corporations Commission (La Superintendencia de Sociedades) (“Superintendencia”) has issued Resolution 100-006261, which requires the overwhelming majority of companies that are supervised by the Superintendencia and engage in international transactions to adopt and implement a compliance program – called a Business Transparency and Ethics program – by April 30, 2021.  The program must be designed to prevent and detect violations of anti-bribery laws, in accordance with 2016 guidance.
Continue Reading Colombian Corporate Regulatory Authority Expands Application of Compliance and Transparency Program Guidelines

The tumultuous events of 2020, including the ongoing pandemic and the election of a new U.S. President, will have direct and lasting impacts on white-collar and regulatory enforcement in the years to come. As we enter 2021, we anticipate that white-collar and regulatory enforcement will be more active under the Biden administration, as policy priorities shift toward financial and corporate fraud, as well as ESG issues, environmental and social justice, more generally. At the same time, we expect the already-visible pandemic and recession-related enforcement trends to continue, with a sustained focus on financial statement and accounting fraud. Finally, we expect that the increased reliance on whistleblowers will continue (and potentially grow) in 2021.
Continue Reading Priorities, Trends and Developments in Enforcement and Compliance

On September 30, 2020, amidst a blizzard of cases filed at the end of the Securities and Exchange Commission’s fiscal year, the SEC announced a settlement with BGC Partners, Inc. (“BGC”) involving allegedly misleading disclosures concerning how it calculated a key non-GAAP financial measure (“NGFM”).[1]   This settlement is the latest in a string of enforcement actions relating to what the SEC views as improper uses of NGFMs.  In advance of year-end reporting, this action is a useful reminder to companies to carefully consider the SEC guidance and recent enforcement actions related to NGFMs.  At least 95% of all Fortune 500 companies publish NGFMs, and the SEC has indicated that it will be reviewing NGFMs with particular scrutiny this year-end in light of the challenges of reporting on performance during the COVID-19 pandemic.
Continue Reading SEC Brings Enforcement Action Against Global Brokerage Company, Finding False and Misleading Statements In Connection With Non-GAAP Financial Measures

On June 1, 2020, the Criminal Division of the U.S. Department of Justice (the “Department”) released revisions to its guidance regarding the Evaluation of Corporate Compliance Programs, which the Department uses in assessing the “adequacy and effectiveness” of a company’s compliance program in connection with any decision to charge or resolve a criminal investigation, including

As the COVID-19 pandemic continues to rapidly unfold, with breathtaking effects on everyday life barely imaginable just weeks ago, enforcement agencies have responded with pronouncements prioritizing investigations into COVID-19-related frauds and have proceeded with some significant non-COVID-19 law enforcement actions likely planned before the full impact of the pandemic could have been predicted.  At the same time, enforcement agencies are having to respond to the same practical challenges and constraints that the rest of society and other large organizations around the world face.  They, like the rest of us, are facing severe travel restrictions, learning to work remotely, and dealing with colleagues and family members who are sick from the virus.  Over the coming weeks and months, enforcement agencies will be managing the COVID-19-focused enforcement priorities and moving forward with their existing matters, while they deal with the practical realities and uncertainties presented by the pandemic.
Continue Reading Law Enforcement Priorities and Practicalities During the COVID-19 Pandemic

On June 17, 2019, in a decision interpreting the Fifth Amendment’s Double Jeopardy Clause, the United States Supreme Court in Gamble v. United States upheld the doctrine of dual-sovereignty.[1]  In doing so, the Court confirmed that one sovereign may prosecute a defendant under its laws even if another sovereign has already prosecuted the defendant for the same conduct, notwithstanding the Fifth Amendment’s prohibition against multiple prosecutions for the “same offence.”[2]  While Gamble does not represent a shift in the law, the Court’s opinion has implications for companies facing parallel investigations by the Department of Justice (“DOJ”) and other prosecutors, whether state or foreign authorities.
Continue Reading Supreme Court Upholds Dual-Sovereignty Doctrine Allowing Parallel Criminal Prosecutions At Home and Abroad