As we reported here, on May 5, 2023, the SEC issued an award of $279 million to a whistleblower. This is the largest award the SEC has issued to an individual whistleblower in the history of the SEC Office of the Whistleblower’s program.
Securities
SEC Examinations 2022 Priorities: Reg BI, ESG, Private Funds, Information Security & Operational Resiliency, and Crypto
By Jim Lundy
The SEC Division of Examinations recently released its 2022 Division of Examinations “Priorities.” The 2022 Priorities provide critical insight into what the Division of Examinations (the “Division”) considers the most significant and highest potential risk areas for investors, and provides guidance for regulated entities on where to focus their compliance efforts. Retail Investors and Working … Continue reading “SEC Examinations…
FINRA Wades into the Controversial Deep-End of CCO Supervisory Liability
By Jim Lundy
The lack of specific guidance regarding failure to supervise liability for chief compliance officers (“CCOs”) has been a controversial and opaque topic that both FINRA and the SEC have struggled with for well over a decade. Back on September 30, 2013, the SEC’s Division of Trading and Markets issued guidance with “FAQs” entitled “Frequently Asked … Continue reading “FINRA Wades…
The SEC Sues Investment Advisory Firm in Connection with Alleged Failure to Disclose Revenue Sharing and Other Financial Conflicts, as Well as Converting Clients to Wrap Accounts Without Considering Whether it is in Clients’ Best Interests
By Jim Lundy
In recent years, the SEC has been conducting a nationwide and industry-wide “sweep” of investment advisory firms, pursuant to which it has opened investigations and brought enforcement actions against a multitude of investment advisory firms related to their disclosures and practices concerning revenue sharing and other alleged financial conflicts.1 We have previously blogged about litigated … Continue reading “The SEC…
SEC Charges Texas School District and Former CFO with Fraud Related to Bond
By Jim Lundy
On March 16, 2022, the Securities and Exchange Commission charged Crosby (Texas) Independent School District (Crosby) and its former Chief Financial Officer, Carla Merka, with misleading investors in a $20 million municipal bond sale, which was issued to pay down outstanding construction liabilities and fund new construction projects. The SEC’s civil complaint alleges that Crosby … Continue reading “SEC Charges…
Cryptocurrency Exchange Founders Plead Guilty to Bank Secrecy Act Violations
By Jim Lundy
On February 24, 2022, two of three founders of an off-shore cryptocurrency derivatives exchange, the Bitcoin Mercantile Exchange or “BitMEX,” pled guilty to violating the Bank Secrecy Act (BSA) by failing to maintain an anti-money laundering program. Pursuant to their respective plea agreements, defendants Arthur Hayes and Benjamin Delo each agreed to pay a $10 … Continue reading “Cryptocurrency Exchange…
BlockFi to Pay $100 Million Over Crypto Lending Platform
By Jim Lundy
On February 14, 2022, the SEC announced charges against BlockFi Lending LLC – a New Jersey-based cryptocurrency lending platform – for failing to register its crypto lending product and violating the Investment Company Act of 1940. BlockFi agreed to a settlement in which it will pay a $50 million penalty, cease unregistered offers and sales … Continue reading “BlockFi to…
SEC Proposes New Cybersecurity Risk Management Rules for Registered Investment Advisers and Funds
By Jim Lundy
On Wednesday, the Securities and Exchange Commission announced proposed new cybersecurity risk management rules and amendments for investment advisers and investment companies. The proposed rules are designed to address concerns about advisers’ and funds’ cybersecurity preparedness and incident response in an effort to strengthen client and investor protection. The proposed rules include the following: Cybersecurity … Continue reading “SEC Proposes…
SEC Disgorgement Claim Challenged After Supreme Court’s Decision in Liu
By Jim Lundy
The SEC’s disgorgement request in a litigated proceeding in federal district court is being challenged in the wake of the Supreme Court’s 2020 decision in Liu v. SEC, which limited how much the agency can seek in disgorgement. In April 2015, the SEC filed a complaint in the U.S. District Court for the Northern District … Continue reading “SEC Disgorgement…
Ubiquitous Use of WhatsApp and Other Unrecorded Internal Communications Result in Substantial Penalties in Recent SEC, CFTC Actions
By Jim Lundy
The SEC has, for many years, used broker-dealer and associated persons’ failure to create and maintain books and records as a basis for the imposition of serious penalties. In recent actions, it appears to be continuing—and upping the ante on—its enforcement in this area. Simply stated, it is increasingly imperative for broker-dealers and investment advisory … Continue reading “Ubiquitous Use…