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Cady Bar the Door Insight & Commentary on SEC Enforcement Actions and Related Issues

Category Archives: SEC Litigation

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Judge Rakoff Reversed by Second Circuit on SEC-Citi case, Still Sort of Wins

Posted in SEC Litigation, Structured and New Products

You’d be forgiven if you’d forgotten at this point, but way back in Obama’s first term, the SEC once investigated and sued Citigroup for its involvement in a collateralized debt obligation deal.  As the SEC said in its complaint, Citigroup told investors that a CDO fund had been populated with assets selected by an independent… Continue Reading

SEC Not Kidding about Subpoena Enforcement Actions, Obtains Coronati’s Arrest

Posted in SEC Litigation

Here’s one of the questions I get from some individual clients when they receive subpoenas from the SEC:  Could I get arrested over this?  Well, no.  First things first – The SEC has civil authority, not criminal authority.  Unless the Justice Department or some state criminal authority gets involved, you’re not going to be arrested…. Continue Reading

Thinking about SEC Disgorgement

Posted in SEC Litigation

Upon starting work at on SEC enforcement cases – on either side – one quickly learns that the SEC isn’t authorized to seek money damages in its cases.  Instead, the SEC seeks disgorgement of what it contends is a defendant’s illicit profits.  Disgorgement?  What’s that?  A number of cases call it “an equitable remedy designed… Continue Reading

JPMorgan Chase Admissions May Be Less Than Meet the Eye

Posted in SEC Litigation, SEC Structure

Drama continues with JPMorgan Chase’s London Whale trades.  For the few who don’t remember, the debacle emerged early last year, when trader Bruno Iksil, now known as the “London Whale,” lost a then-estimated $2 billion as a result of a series of derivatives transactions involving credit default swaps.  The trades, supposedly part of a JPMorgan… Continue Reading

SEC Puts Some Color on Its New Admissions Policy

Posted in Hedge Funds, Microcap Fraud, SEC Litigation

Earlier this summer, SEC chair Mary Jo White told a Wall Street Journal conference that the Commission would in some circumstances depart from its longstanding policy of allowing defendants to settle cases without admitting or denying wrongdoing.  She didn’t let Labor Day hit before putting the new plan into action. You may remember that the… Continue Reading

SEC Buys Itself a Headache

Posted in SEC Litigation, SEC Structure

If you’re reading this, you’re surely aware of the several-years-old-now fight between the SEC and some federal judges regarding the SEC’s policy of settling cases while allowing defendants to neither admit nor deny the claims against them.  Very briefly, the SEC contends that its policy allows it to settle cases against companies that would otherwise… Continue Reading

SEC Sues Badin for Insider Trading in Smithfield Foods Acquisition

Posted in Insider Trading, SEC Litigation

The May 29th announcement that China-based Shuanghui International Holdings had agreed to acquire Virginia-based Smithfield Foods came with a lot of news value.  First, the $4.7 billion price tag for Smithfield is large by any measure.  Second, this deal – the largest-ever acquisition of a U.S. company by a Chinese company – has offered great… Continue Reading

Several Thoughts about the Largest Insider Trading Case in History

Posted in Insider Trading, Investment Advisers, Parallel Proceedings, SEC Litigation

The SEC and Justice Department filed a massive insider trading case in the Southern District of New York yesterday.  The actual defendants include University of Michigan neurology professor Sidney Gilman, hedge fund advisory firm CR Intrinsic Investors LLC, and Matthew Martoma, a portfolio manager at CR Intrinsic between 2006 and 2010.  According to the Wall… Continue Reading

Three More Thoughts about Securities Enforcement Forum 2012

Posted in Insider Trading, SEC Litigation, Whistleblowers

Several more things from the Securities Enforcement Forum 2012 occurred to me after my last post, and I thought I would note them here. Rajat Gupta First, in a discussion of recent insider trading cases, Judge Sporkin supposed that Rajat Gupta might have avoided criminal prosecution if he had settled the SEC’s initial administrative case… Continue Reading

Back from the Securities Enforcement Forum 2012

Posted in FCPA, SEC Litigation

Yesterday I attended the Securities Enforcement Forum 2012 at the Mayflower Hotel in D.C.  Bruce Carton organized an excellent day of panels devoted to a number of securities enforcement topics.  Here is the full agenda from the day.  Several things jumped out at me as noteworthy. More Use of Section 21(a) Reports The Hon. Stanley… Continue Reading

Breaking: Study Confirms What I Think

Posted in SEC Litigation, SEC Structure

In the wake of the 2008 financial crisis and the Bernard Madoff scandal, there was no shortage of commentators suggesting that the SEC’s “revolving door” had contributed to both situations.  The idea was that SEC staff had gone soft on major players in the financial industry with the hope that lucrative employment by those players… Continue Reading

Wells Notices May Not Compel Disclosure, at Least for Now

Posted in SEC Litigation, Structured and New Products

On June 21st, Judge Paul Crotty largely denied a motion to dismiss in Richman v. Goldman Sachs Group, Inc. (S.D.N.Y.), private litigation surrounding the same CDOs that were the subject of the SEC’s famous enforcement action against Goldman in 2010.  While many of the plaintiffs’ claims survived to reach discovery, the court rejected one: a… Continue Reading