On November 22, the Securities and Exchange Commission announced its enforcement results for the 2024 fiscal year with a record $8.2 billion in financial remedies.[1] At the same time, a few cases and sweeps comprised the vast bulk of that amount, and the number of cases brought dropped by 26%. In a press release announcing the results, Acting Enforcement Director Sanjay Wadhwa touted the agency’s “high impact enforcement actions” and noted “stepped up efforts” by market participants to self-report their own potential wrongdoing, cooperate in SEC investigations, and remediate any shortcomings. Chair Gary Gensler, who recently announced he will step down at the start of the next Trump presidency, described the Enforcement Division as a “steadfast cop on the beat.” Set forth below are key highlights on enforcement trends from the past year, as well as predictions for what the next year may hold under a new administration.Continue Reading SEC FY 2024 Enforcement Results: Record Dollars But Many Fewer Cases
Trio of SEC Enforcement Actions Underscores Importance of Internal Controls, Including in M&A Context
In the past few weeks, the Securities and Exchange Commission (“SEC”) has announced three settled enforcement actions alleging violations of the internal controls provisions of the federal securities laws. The cases are notable less for the SEC penalties involved—which ranged from no penalty to $400,000—but rather for the other, more dire consequences the companies experienced as a result of internal controls failures, such as financial restatements, delayed SEC filings that led to an exchange delisting, and serious employee misconduct that went unchecked. The cases underscore the importance of establishing and maintaining effective systems of internal control over financial reporting. Continue Reading Trio of SEC Enforcement Actions Underscores Importance of Internal Controls, Including in M&A Context
2023 Year-in-Review: Developments and Trends in White Collar Enforcement Litigation
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) both accelerated their enforcement efforts in 2023, and seem poised to further intensify these efforts in 2024. At the same time, the SEC disseminated new disclosure requirements across sectors, including disclosures related to cybersecurity and artificial intelligence (AI), and renewed its focus on the corporate and social aspects of environmental, social and governance (ESG) guidance. Its Enforcement Division remained focused on litigating high-stakes cases in the digital assets space and expanded its sweep related to off-channel communications. Continue Reading 2023 Year-in-Review: Developments and Trends in White Collar Enforcement Litigation
SEC Announces FY 2023 Enforcement Results with Second-Highest Penalties on Record
On November 14, the Securities and Exchange Commission announced its enforcement results for the 2023 fiscal year,[1] with case numbers up from fiscal year 2022 and monetary sanctions at the second highest level in the agency’s history, though down significantly from last year’s record highs. In a press release announcing the results, Enforcement Director Gurbir Grewal noted that the past year’s cases demonstrate how the agency “work[s] with a sense of urgency, using all the tools in our toolkit.” This post evaluates how the SEC used its enforcement tools in the past year and surveys the enforcement highlights in key substantive areas.Continue Reading SEC Announces FY 2023 Enforcement Results with Second-Highest Penalties on Record
U.S. District Court Tosses FIFA Bribery Convictions, Finding Honest Services Statute Does Not Reach Foreign Commercial Bribery
On September 1, 2023, U.S. District Judge Pamela K. Chen of the Eastern District of New York granted a judgment of acquittal in the latest FIFA bribery prosecution, holding that the federal honest services statute, 18 U.S.C. § 1346, does not cover foreign commercial bribery in light of recent Supreme Court precedent.Continue Reading U.S. District Court Tosses FIFA Bribery Convictions, Finding Honest Services Statute Does Not Reach Foreign Commercial Bribery
DOJ and SEC Charge Healthcare Executive With Insider Trading Through a Rule 10b5-1 Trading Plan, Marking DOJ’s First Such Indictment
On March 1, 2023, the U.S. Department of Justice and the Securities and Exchange Commission announced insider trading charges against Terren Peizer, the CEO and Chairman of a California-based healthcare services company called Ontrak, Inc. (the “Company”) for allegedly selling Company securities while in possession of material, non-public information (“MNPI”) that one of the Company’s major customers was likely to cancel its contract. Continue Reading DOJ and SEC Charge Healthcare Executive With Insider Trading Through a Rule 10b5-1 Trading Plan, Marking DOJ’s First Such Indictment
Accelerated Pace and Increased Regulatory Expectations in Enforcement and Compliance Investigations
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2023”.
The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) ramped up their enforcement efforts in 2022, often in highly coordinated actions, including with other regulatory agencies such as the Commodity
U.S. SEC Enforcement 2022 Year in Review
The U.S. Securities and Exchange Commission recently announced the Division of Enforcement’s results for fiscal year 2022, the first full year for the Division under the leadership of both Chair Gary Gensler and Director of Enforcement Gurbir Grewal.
Results were up from the year before, with a record $4.2 billion in civil penalties reflecting the
SEC Charges Company Executives with Insider Trading for Allegedly Setting Up 10b5-1 Trading Plan While in Possession of MNPI
On September 21, 2022, the Securities and Exchange Commission announced settled insider trading charges against the CEO and the former President and Chief Technology Officer of Cheetah Mobile Inc. (the “Company”), a China-based mobile internet company. The executives allegedly possessed material nonpublic information (“MNPI”) when they set up a trading plan under Rule 10b5-1 of the Securities Exchange Act.
Continue Reading SEC Charges Company Executives with Insider Trading for Allegedly Setting Up 10b5-1 Trading Plan While in Possession of MNPI
SEC Imposes Penalties and Sweeping Independent Consultant on CohnReznick for Alleged Audit Failures in Case Underscoring SEC’s Focus on “Gatekeepers”
On June 8, 2022, the SEC announced a notable settlement with national audit firm CohnReznick LLP, charging it with failure to uphold several professional standards during its 2017 audits of two public companies that had previously been sued by the SEC for accounting fraud. In its order, the SEC specifically alleged that CohnReznick violated professional standards and contributed to materially misleading financial statements by, among other things, failing to exercise sufficient professional skepticism and accepting assertions from company management without sufficient supporting evidence. The SEC fined CohnReznick $1.9 million, levied fines and suspensions against several of its audit partners, and imposed an independent consultant with a sweeping mandate to demand various audit-related and internal process reforms and veto new audit clients. This action is consistent with the SEC’s repeated warnings that “gatekeepers” such as auditors are in the agency’s crosshairs.
Continue Reading SEC Imposes Penalties and Sweeping Independent Consultant on CohnReznick for Alleged Audit Failures in Case Underscoring SEC’s Focus on “Gatekeepers”