Insights from Winston & Strawn

On Thursday, November 19, 2015, the SEC entered into a settlement with Sands Brothers Asset Management LLC (“Sands Brothers” or the “firm”), its co-owners, and the firm’s former chief compliance officer/chief operating officer regarding year-old charges that the firm repeatedly violated Rule 206(4)-2 (the “Custody Rule”) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”).  Sand Brothers and its co-founders agreed to pay $1 million in fines and to be suspended for one year from raising money from new or existing investors.  The firm’s former chief compliance officer/chief operating officer was ordered to pay a $60,000 penalty and was suspended for one year from acting as a chief operating officer or appearing or practicing before the SEC as an attorney. Additionally, the firm must have compliance monitoring for three years.

The Custody Rule imposes specific conditions on registered investment advisers when they can access or control client funds or securities. Among other things, the Custody Rule requires that firms obtain independent verification of assets and distribute audited financial statements to private fund investors within 120 days of the end of the fiscal year, so investors know they are protected from misuse or theft.

Sands Brothers and its co-founders were previously the subject of an SEC enforcement action in 2010 for violation of the Custody Rule’s account statements and independent verification requirements (and other violations of the Advisers Act), in which the firm was ordered to cease and desist from violating the custody rule, censured and required to pay a $60,000 penalty.  A second administrative proceeding was instituted on October 29, 2014, which alleged that Sands Brothers was “repeatedly late” in providing investors with audited financial statements across 10 private funds, with delays ranging from 40 days to eight months for the fiscal years 2010, 2011 and 2012.  Significantly, the 2014 SEC Order noted that “[Sands Brothers] took no remedial action in response to the 2010 Order to implement policies or procedures aimed at ensuring compliance with the custody rule.”

Compliance with the custody rule was among the SEC’s top exam and enforcement priorities for 2014 and 2015.  The 2014 charges and subsequent settlement serves as a reminder to registered investment advisers that the SEC continues to focus on compliance with the Custody Rule and takes the technical aspects of the rule, such as mandated time periods for audited financial statements, very seriously.  As Andrew Calamari, director of the SEC’s New York Regional Office, , stated “[t]he custody rule is not a technicality…[i]t is a critical investor protection provision designed to help ensure that investor assets are safe.” Further, the settlement sends the message that the SEC will not tolerate recidivism; Andrew Calamari stated in a Thursday press conference “[t]he Sands brothers missed their opportunity to right a previous wrong and instead merely repeated their custody rule violations, so now they face more severe consequences.”

Feature: White-Collar Crime and Cooperation Credit

For several years there has been mounting criticism from lawmakers and public interest groups on the U.S. Department of Justice’s (“DOJ”) record on prosecuting white-collar crime. Critics have complained that the DOJ treats executive wrongdoing lightly by relying too heavily on deep-pocket settlements with companies without instead prosecuting the individuals actually responsible for the misconduct. In response to that criticism, and mainly in the wake of the 2008 financial crisis, the DOJ is now changing its white-collar crime policy by going ahead with its effort to pursue actions against individual company executives and not just the corporations that employ them.

The DOJ on November 16th released changes to its white-collar crime prosecution policy, which is used by federal white-collar crime prosecutors in determining how to pursue criminal cases, by listing new rules geared towards encouraging more charges against individuals in corporate investigations. The DOJ announced that it has formally incorporated Deputy Attorney General Sally Quillian Yates’ September memo, “Principles of Federal Prosecution of Business Organizations,” into the U.S. Attorney’s Manual. According to the revised policy, instead of stating that individual executives are not always charged in corporate investigations, prosecutors are now instructed to “focus on wrongdoing by individuals from the very beginning of any investigation of corporate misconduct.”

Cooperating Companies Can Earn ‘Cooperation Credit’

In revealing the policy changes, Yates stated in a speech at the American Banking Association and American Bar Association Money Laundering Enforcement Conference in Washington, D.C. on November 16th that, “in the white-collar context, one of the most effective ways to ensure this accountability and to deter future misconduct is by pursuing not just corporate entities, but also the individuals through which these corporations act.” Referring to the revised U.S. Attorney’s Manual, which essentially raises the standard for companies to earn “cooperation credit” from the DOJ, Yates continued, “[a]n important component of the individual accountability policy and the new revisions to the factors involves corporate cooperation … If a company wants credit for cooperating – any credit at all – it must provide all non-privileged information about individual wrongdoing. Companies seeking cooperation credit are expected to do investigations that are timely, appropriately thorough and independent and report to the government all relevant facts about all individuals involved, no matter where they fall in the corporate hierarchy.”

How the SEC Currently Utilizes a Cooperation Credit

In an address at the American Conference Institute’s 32nd Foreign Corrupt Practices Act (“FCPA”) Conference on November 17th, Securities and Exchange Commission (“SEC”) Enforcement Division director Andrew Ceresney referenced the SEC’s policy change (unrelated to the DOJ’s policy change) requiring companies to self-report in order to be eligible for deferred or non-prosecution agreements in FCPA cases. He said that, in fiscal year 2015 alone, the SEC gave significant cooperation credit in several cases, which Ceresney noted “should send the message loud and clear that the SEC will reward self-reporting and cooperation with significant benefits.” These can include reduced charges and penalties, deferred or non-prosecution agreements, or even no charges at all where the violations are minimal. Ceresney listed other incentives of self-reporting, including the fact that companies that do not practice self-reporting risk having the Enforcement Division find out about the misconduct through its own investigation or from a whistleblower – the consequences to the company in those cases would probably be worse and the chance to earn additional cooperation credit may be lost completely.

Feedback on the DOJ’s New Policy

Critics of the DOJ’s new policy have already questioned whether the changes will produce significant results. They say that prosecutors will still face serious obstacles in pursuing white-collar crime, as employees may be less willing to cooperate with their company’s internal investigation if the details could then be given to federal prosecutors. Others see the new policy as the DOJ finally “cracking down” on corporate crime. And there are those who even raise the possibility that the new policy might encourage corporate executives to throw lower-level employees “under the bus” in exchange for leniency for corporate defendants in the form of deferred and non-prosecution agreements.

“The requirement that corporations must identify culpable individuals to receive cooperation credit is a new approach that would be beneficial if it results in greater cooperation from companies, but could be harmful if it results in scapegoating of individual employees,” said David M. Uhlmann, a law professor at the University of Michigan and former DOJ employee.

In reading the revisions to the U.S. Attorney’s Manual, Steve Spiegelhalter, a fraud expert at Ernst & Young and former government prosecutor, said that the changes will have a significant effect on how companies and investigators currently investigate internal issues before approaching the government. He noted that, while it is too early to tell how the new policy will play out, “[w]hat is certain is that the DOJ is taking a well-settled practice that varied relatively little between cooperating companies and shaking it up.”

Jesse Eisinger of ProPublica said that prosecuting individuals “is essential to deterring white-collar crime … In outlining new rules and guidelines for how corporations are supposed to cooperate with DOJ investigations, the Yates [initiative implicitly] acknowledges that prosecutors don’t have the tools and skills to consistently police corporations when they aren’t cooperating. My fear is that this new policy will result more often in the government prosecution of scapegoats and schmoes rather than directors and CEOs.”

The new policy goes further than expected, said Brandon Garrett, a law professor at University of Virginia School of Law. “The DOJ is rethinking the entire approach to corporate prosecutions … They are going to tighten their focus on cooperation, prioritize self-reporting, and do a better job at tracking these cases … But I don’t think this is going to be enough to reassure skeptics worried that companies are largely getting let off the hook for the most serious crimes.”

In particular, there have been questions on whether corporate attorneys might be forced to hand over information that is privileged, such as memos and notes from interviews conducted during internal corporate investigations. There have also been concerns raised about whether the policy may lead to broader and more costly internal investigations.

In defending the new policy, Yates stated that while the focus on “culpable individuals may make some employees nervous … [the DOJ is] not asking companies to pin a scarlet letter on their employees or provide [the DOJ] with prosecutable cases against them in order to get the benefits of cooperation. Cooperation does not require a company to characterize anyone as ‘culpable.’ Cooperation does require that a company provide us with all facts about the all individuals involved.”

Yates also said that the DOJ is making other changes to the U.S. Attorney’s Manual concerning civil investigations and updates on how attorneys should communicate during parallel civil and criminal investigations.

Banking Agency Developments

FDIC

FDIC Updates Brokered Deposit FAQs and Seeks Comments on Revised Document

On November 13th, the Federal Deposit Insurance Corporation (“FDIC”) updated a document that provides Frequently Asked Questions (“FAQs”) on identifying, accepting, and reporting brokered deposits. The FDIC also sought comment on the revised FAQs. FDIC Press Release.

Federal Reserve

Federal Reserve Announces TDF Test Operation

On November 19th, the Federal Reserve announced that it plans to continue its previously announced periodic testing of the Term Deposit Facility (“TDF”) with one operation to be conducted on December 3, 2015, for seven-day term deposits. These test operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. Federal Reserve Press Release.

CFPB

CFPB Takes Action Against Online Lender for Deceiving Borrowers

On November 18th, the Consumer Financial Protection Bureau (“CFPB”) took action against an online lender and its CEO for deceiving consumers about the cost of short-term loans. The CFPB alleged that the company’s contracts did not disclose the costs that consumers would pay under the default terms of the contracts. The CFPB also alleged that the company unfairly used remotely created checks to debit consumers’ bank accounts even after the consumers revoked authorization for automatic withdrawals. The CFPB filed an administrative lawsuit seeking redress for harmed consumers, as well as a civil money penalty and injunctive relief. CFPB Press Release.

Treasury Department Developments

Treasury International Capital Data for September

On November 17th, the Treasury Department released Treasury International Capital (“TIC”) data for September 2015. The next release, which will report on data for October 2015, is scheduled for December 15, 2015. The sum total in September of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $175.1 billion. Of this, net foreign private outflows were $136.1 billion, and net foreign official outflows were $39 billion. Treasury Department Press Release.

Deputy Secretary Raskin Speaks at Clearing House Annual Conference

On November 17th, Treasury Department Deputy Secretary Sarah Bloom Raskin gave a speech at The Clearing House. Raskin discussed cybersecurity, cyber threats, and related challenges within the financial sector. Raskin Speech.

Acting Under Secretary Szubin Speaks at ABA/ABA Money Laundering Enforcement Conference

On November 16th, Treasury Department Acting Under Secretary Adam Szubin gave a speech at the ABA/ABA Money Laundering Enforcement Conference. Szubin discussed “de-risking” as applied in the context of cross-border financial relationships, as well as a supposed push by financial institutions to indiscriminately terminate, restrict, or deny services in these areas. Szubin Speech. Also see FinCEN Director Calvery Speech.

Securities and Exchange Commission

Proposed Rules

SEC Proposes New Rules to Shed Light on Dark Pools

At its November 18th Open Meeting, the SEC voted to propose rules that would amend Regulation ATS to increase regulatory oversight and transparency of alternative trading systems (“ATSs”) by requiring additional disclosures about their operations. The proposed rule would require ATSs that trade stocks listed on a national securities exchange (“NMS stocks”) to file new Form ATS-N, which would include disclosure of information regarding the activities of an ATS’s broker-dealer operator and affiliates, including the use of smart order routers or algorithms, differences between services or procedures available to subscribers in comparison to the broker-dealer operator and affiliates, and safeguards and procedures in place to protect confidential trading information. ATSs would also be required to disclose more detailed information about their operations including information regarding their subscribers, trading services, use of market data, and market quality statistics they may provide to certain subscribers. The information disclosed on Form ATS-N would be made publically available on the SEC website and ATSs would be required to include a link to the information on their websites. Form ATS-N would also be subject to SEC review for compliance. Comments on the proposed rules should be submitted within 60 days of publication in the Federal Register, which is expected shortly. SEC Press Release. The SEC Commissioners all voted in favor of the proposal, although Commissioners Luis Aguilar and Kara Stein expressed concern that the disclosure requirements did not extend to platforms that trade in government and other fixed income securities. Chair Mary Jo White noted that the decision to leave those platforms out of the proposal reflects an incremental approach that addresses the need to implement rules that account for “the significant differences between the equity markets and fixed income markets.” See also supporting statement of Commissioner Michael Piwowar.

Guidance

Division of Investment Management Clarifies Guidance Regarding Communications to Non-ERISA 403(b) Plans

On November 16th, the SEC’s Division of Investment Management issued a no-action letter responding to a request by the Investment Company Institute to clarify certain elements of its previous no-action letter issued February 18, 2015, in which it agreed to treat Department of Labor (“DOL”) Required Investment Information furnished by a plan administrator to non-Employee Retirement Income Security Act (“Non-ERISA”) 403(b) Plans, and participants and beneficiaries in such plans, as if it were a communication that satisfies the requirements of Rule 482 under the Securities Act. Among other things, the no-action letter clarified that the term “Investment Vendor” includes broker-dealer, banks, or other entities, that are selected by the employer to offer Other Investment Options to participants in the Non-ERISA plans; the terms “written agreement” and “written notice” include electronic communications; and the requirement to furnish information to plan participants at least annually may be interpreted to mean once in any 14-month period in accordance with DOL guidance under Rule 404a-5(d) of ERISA.

Exemptive Orders

SEC Exempts Certain Broker-Dealers from Immediate Confirmation Requirements for Transactions in Institutional Prime Money Market Funds

On November 19th, the SEC issued an order granting a conditional exemption to broker-dealers from the immediate confirmation requirements of Rule 10b-10 of the Securities Exchange Act for transactions effected in shares of institutional prime money market funds. The exemption applies to broker-dealers effecting transactions in money market funds operating in accordance with Investment Company Act  Rule 2a-7(c)(1)(ii) that attempt to maintain a stable net asset value (“NAV”) when no sales load or redemption fee is charged and would allow these broker-dealers to provide transaction information to money market shareholders on a monthly basis provided they comply with the provisions of  Rule 10b-10(b)(2) and Rule 10b-10(b)(3) and notify customers of their ability to request immediate confirmation and do not receive such a request. The SEC clarified that customer notifications may be made on a one-time basis rather than transaction by transaction. SEC Release No. 34-76480.

Speeches and Statements

White Highlights SEC’s Priorities for Fiscal Year 2017 in Testimony before the House Financial Services Committee

On November 18th, SEC Chair Mary Jo White testified before the U.S. House of Representatives’ Committee on Financial Services to explain how the agency’s Fiscal Year 2017 budget request will support its priorities, which include initiatives related to asset manager oversight, equity market structure, and disclosure effectiveness review, among others. White Testimony. According to Investment News, Committee Chair Jeb Hensarling  pressed White on whether the SEC would conduct a detailed analysis of the potential impact of a proposed uniform fiduciary standard and make the information available prior to issuing a proposed rule.  Fiduciary Analysis.

Corporation Finance Director Considers Future Priorities for Executive Compensation Disclosure

In a speech before the National Institute on Executive Compensation on November 17th, SEC Division of Corporation Finance Director Keith F. Higgins discussed the future of executive compensation regulation as the SEC’s recent Dodd-Frank rulemaking initiatives draw to a close. Higgins highlighted the SEC’s Disclosure Effectiveness project and its objective to examine the methods companies use to disclose business and financial information in annual and quarterly reports as well as executive compensation and corporate governance information contained in proxy statements. Higgins Remarks.

Piwowar Criticizes Pay Ratio and Conflict Minerals as Non-Material, Special Interest Disclosures

On November 16th , SEC Commissioner Michael S. Piwowar delivered remarks to the 34th Annual Current Financial Reporting Issues Conference in which he discussed the future role of international financial reporting standards (“IFRS”) for financial statements filed with the SEC, potential improvements to the quality of interactive data filed in reports with the SEC, and concerns regarding the SEC’s recent efforts to improve corporate disclosures. In his remarks, Piwowar expressed concern over the lack of progress toward a single set of high quality global accounting standards. He also suggested that a move to in-line XBRL in financial statements would improve accuracy in interactive filings data. Finally, Piwowar took issue with recent efforts by the SEC to improve corporate disclosure, including pay ratio and conflict minerals disclosures, arguing that these efforts represent a “focus on non-material, special interest disclosure … [that] is a deplorable corruption of [the SEC’s] mission” and that SEC needs to turn its attention to material disclosures. Piwowar Remarks.

Other Developments

Government-Business Forum on Small Business Capital Formation

On November 19th, the SEC held its annual Government-Business Forum on Small Business Capital Formation in Washington, D.C. The agenda for the meeting included panel presentations on exempt offerings and registered offerings post-JOBS Act implementation, as well as breakout discussion groups focused on making recommendations regarding exempt securities offerings, smaller reporting companies, and the proposed amendments to Rules 147 and 504. SEC Chair Mary Jo White provided an overview of recent regulatory initiatives affecting small businesses and provided some observations regarding their initial impact.  SEC Commissioners AguilarPiwowar, and Stein addressed the forum, noting that the forum represents an opportunity for the SEC to receive important input on how to adapt regulatory initiatives to facilitate capital formation while still protecting investors.

Schnurr Proposes Supplemental Use of IFRS for U.S. Companies

The SEC’s Chief Accountant James Schnurr has recommended that the SEC permit U.S. companies to provide financial statements calculated using IFRS to supplement their main financial statements calculated according to generally accepted accounting principles (“GAAP”), according to a report in the Wall Street Journal on November 17th. The article notes that Schnurr’s recommendation strikes a compromise which will allow companies to make use of the global accounting rules without requiring a full adoption of the rules in the U.S. IFRS Recommendation.

Aguilar to Depart the SEC by the End of the Year

On November 16th, SEC Commissioner Luis A. Aguilar announced that his last day with the SEC will be the end of December 2015 or the date his successor assumes his position, whichever is earlier. Aguilar Statement.

SEC Financial Report for Fiscal Year 2015

On November 16th, the SEC released its Fiscal Year 2015 Agency Financial Report.

Draft EDGAR Filer Manual

On November 13th, the SEC published the Draft EDGAR Filer Manual (Volume I) General Information (Version 24).

Commodity Futures Trading Commission

Preliminary Reports

CFTC Requests Comments on Swap Dealer De Minimis Exception Preliminary Report

On November 18th, staff from the Division of Swap Dealer and Intermediary Oversight and the Office of the Chief Economist of the U.S. Commodity Futures Trading Commission (“CFTC”) issued a preliminary report regarding the swap dealer de minimis exception. Under CFTC rules, market participants who exceed $8 billion in gross national swap dealing activity over a 12-month period are required to register with the CFTC as swap dealers during the phase-in period currently in effect. This phase-in period is scheduled to end, and the threshold will fall, to $3 billion in December 2017, unless the CFTC takes action to amend the de minimis exception. Comments on the preliminary report may be submitted electronically though the CFTC’s Comments Online process through January 19, 2016. CFTC Press Release.

No-Action Relief

CFTC Divisions Provide Time-Limited No-Action Relief for Certain Affiliated Counterparties

On November 17th, the CFTC’s Divisions of Clearing and Risk (“DCR”) and Market Oversight (“DMO”) each extended previously-issued no-action relief for certain affiliated swap transactions. CFTC Press Release.

Meetings

CFTC to Hold Open Commission Meeting to Consider Proposal on Automated Trading

On November 17th, the CFTC announced that it will be holding an open meeting at its headquarters in Washington, D.C. on November 24th at 9am to consider the Notice of Proposed Rulemaking for Regulation of Automated Trading. CFTC Meeting.

Other Developments

CFTC to Discontinue Collecting and Issuing Reports on Index Investment Data

On November 20th, the CFTC announced that it will discontinue the collection and release of the monthly Index Investment Data Report (“IID Report”) for select commodity index position data. This data collection predates the enhanced reporting regime implemented by the Dodd-Frank Act and the IID Reports are not being utilized when compared to larger CFTC reporting initiatives. The final release of the IID Report will be issued on November 25, 2015, for data collected from the month of October 2015. CFTC Press Release.

Federal Rules Effective Dates

Click here to view table.

Exchanges and Self-Regulatory Organizations

BATS Exchange, Inc.

BATS Proposes Generic Listing Standards for Managed Fund Shares

On November 19th, the SEC announced the filing of a proposed rule change by BATS Exchange, Inc. (“BATS”) that would adopt generic listing standards for Managed Fund Shares listed under BATS Rule 14.11(i). Among other things, the proposed amendments would specify that BATS may approve Managed Fund Shares for listing pursuant to SEC Rule 19b-4(e) under the Securities Act, which will allow the exchange to list Managed Fund Shares without filing separate proposals with the Commission prior to listing. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of November 23, 2015). SEC Release No. 34-76478.

Chicago Board Options Exchange, Inc.

CBOE Gains Approval of Proposed Amendments to Margin Requirements

On November 18th, the SEC approved the Chicago Board Options Exchange, Inc.’s (“CBOE”) proposal to amend its rules related to margin requirements that would extend exceptions to margin requirements applied to underlying stock baskets to index mutual funds, index portfolio receipts, and index portfolio shares, among other things. SEC Release No. 34-76469.

Financial Industry Regulatory Authority

SEC Designates Longer Period to Consider FINRA Proposed Merger of Its Dispute Resolution and Regulatory Subsidiaries

On November 16th, the SEC designated January 11, 2016, as the date by which it will approve, disapprove, or institute disapproval proceedings regarding the Financial Industry Regulatory Authority’s (“FINRA”) proposed rule change that would merge FINRA’s dispute resolution subsidiary into and with its regulatory subsidiary, as well as amend the FINRA Regulation By-Laws to increase the total number of directors who could serve on the FINRA Regulation board. SEC Release No. 34-76444.

ICE Clear Credit LLC

SEC Approves ICC’s Once-a-Year Waiver for Missed Submissions

On November 19th, the SEC issued an order approving ICE Clear Credit LLC’s (“ICC”) proposal to amend its rules related to the ICC rule enforcement process for Missed submissions to allow a conditional once-a-year waiver for Missed Submissions caused by technical failures for ICC Clearing Participants. The proposed rule change will replace ICC’s current once-in-a-lifetime waiver for Missed Submissions. SEC Release No. 34-76479.

Municipal Securities Rulemaking Board

Municipal Market Statistics Register Ten-Year Low in Municipal Securities Trading Volume

On November 19th, the Municipal Securities Rulemaking Board (“MSRB”) published municipal market statistics for the third quarter of 2015. The data indicates that the total par traded of municipal securities was $551 billion, which reflects an 18 percent decline from the same period last year and the lowest par amount traded since 2005. MSRB Press Release.

National Securities Clearing Corporation

SEC Greenlights NSCC’s Proposal to Require Real Time Reporting of Correspondent Clearing Trades

On November 17th, the SEC announced that it had granted approval to a proposed rule change by National Securities Clearing Corporation (“NSCC”) that would require correspondent clearing trades to be reported in real time. SEC Release No. 34-76462.

SCC Gains SEC Approval of Proposed Changes to Settlement of Fixed Income Securities

On November 17th , the SEC approve NSCC’s proposed rule change to permit certain fixed income securities trades, including trades in corporate and municipal bonds and unit investment trusts, that are scheduled to settle on the day after trade date (“T+1”) to settle through NSCC’s Continuous Net Settlement system or through its Balance Order Accounting Operation on a trade-for-trade basis when eligible for settlement through these services. SEC Release No. 34-76458.

NYSE

SEC Extends Consideration Period for NYSE Arca’s Proposed Equity Trading Rules for Pillar Auctions

On November 20th, the SEC designated January 11, 2016, as the date by which it will approve, disapprove, or institute disapproval proceedings regarding NYSE Arca, Inc.’s (“NYSE Arca”) proposal to adopt new equity trading rules relating to auctions for its new trading technology platform, Pillar. SEC Release No. 34-76493.

SEC Seeks Comment on Amendments to NYSE’s Proposed Changes to Disciplinary Rules

On November 13th, the SEC requested comment on two amendments filed by the New York Stock Exchange, LLC (“NYSE”) to its proposed rule change to revise its disciplinary rules to facilitate the reintegration of certain regulatory functions from FINRA. Comments should be submitted on or before December 10, 2015. SEC Release No. 34-76436.

Judicial Developments

Court Need Not Consider Global Economic Downturn Where Hedge Fund Manager Exposed Investors to Risks.

Ex-hedge fund manager Balboa appealed from a district court judgment convicting and sentencing him to 48 months’ imprisonment for securities fraud. Balboa argued that the global economic downturn, not his scheme, was the ultimate cause of the victims’ loss and so the actual loss attributable to the fraud was $0. On November 18th, the Second Circuit affirmed, finding that the district court reasonably held that no offset was warranted for losses resulting from changed economic circumstances, as the investors would not have been exposed to the risks had Balboa not fraudulently induced them into investing. Balboa.

Starting Point for FDCPA Limitations Period Clarified as Data Account is Frozen

Plaintiff’s bank account was frozen after the bank received a restraining notice from a debt collector. Plaintiff’s Fair Debt Collection Practices Act (“FDCPA”) claim was brought within one year of the date the account was frozen, but more than one year from the date of the restraining notice. District court dismissed the claim as untimely. On November 16th, the Second Circuit held that an FDCPA violation “occurs” when the bank freezes the account, not when the restraining notice is sent to the bank, remanding for a determination of whether the plaintiff’s claim was timely under that standard. Benzemann.

Industry News

SEC Says That Most Whistleblowers Report Wrongdoing to Their Company First

On November 17th, MarketWatch reported that the SEC stated in its annual report on the Dodd-Frank Whistleblower Program that nearly 80 percent of whistleblowers are reporting misconduct to their company before telling the SEC. Whistleblowers.