SEC and DOJ release FCPA Guide
The SEC and Department of Justice (DOJ) have released a joint guide, "A Resource Guide to the U.S. Foreign Corrupt Practices Act". The guide provides a detailed analysis of the US Foreign Corrupt Practices Act (FCPA) and examines the apporach to FCPA enforcement taken by the SEC and DOJ. The guide considers, amongst other matters, the following issues:
- who and what is covered by the FCPA's anti-bribery and accounting provisions;
- the definition of a "foreign official";what constitutes proper and improper gifts, travel, and entertainment expenses;
- facilitation payments;
- how successor liability applies in the mergers and acquisitions context;
- the hallmarks of an effective corporate compliance program; and
- the different types of civil and criminal resolutions available in the FCPA context.
SEC charges insurance executive with insider trading
The SEC has charged an insurance executive with insider trading based on confidential information that he received in advance of a private investment firm acquiring a significant stake in an oil and gas company. The SEC alleges that Michael Van Gilder bought stock and highly speculative options contracts in advance of an announcement regarding the investment. As a result of his actions, Van Gilder and his associates made $161,000 in illegal profits. The SEC's investigation is ongoing. A copy of the complaint has also been published.
SEC charges executive for role in Galleon insider trading scheme
The SEC has charged a former senior executive at a Silicon Valley technology company for illegally tipping convicted hedge fund manager Raj Rajaratnam with non-public information that allowed Galleon hedge funds to make illegal profits in the region of $1 million. Kris Chellam, the former executive in question, tipped off Rajaratnam that a company would fall short of revenue projections that it had previously made public. Chellam has agreed to settle the SEC's charges for more than $1.75 million, although it should be noted that the settlement is subject to court approval. A copy of the complaint has also been published.
The SEC has now charged 32 defendants in Galleon-related enforcement actions. The SEC considers that Galleon engaged in insider trading in respect of more than 15 companies and may have gained illicit profits of approcimately $93 million.
SEC adopts risk management and operations standards for clearing agencies
The SEC has adopted a final rule that establishes standards for how registered clearing agencies should manage their risks and operations. The rule has been adopted in accordance with the SEC's additional authority to establish standards for clearing agencies under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new rule would require registered clearing agencies that provide central counterparty services to maintain certain standards with respect to risk management and operations. Among other things, the rules would set standards with respect to measurement and management of credit exposures, margin requirements, financial resources and margin model validation. The rule also establishes certain recordkeeping and financial disclosure requirements for all registered clearing agencies as well as several new operational standards for these entities. The SEC has also published a webpage setting out the regulatory regime for security-based swaps detailing what happens as a transaction occurs. The new rule will come into force 60 days after the date of publication in the Federal Register.
SEC charges trio for defrauding investors
The SEC has charged three men for defrauding investors in a $5.77 million investment scheme called the ".44 Magnum Leveraged Financing Program". The men claimed to work for Dresdner Financial, which was not a real company and was not in any way related to the German bank of a similar name. The men claimed that they could turn an investment of just $44,000 into $2 million within 10 to 12 banking days. The SEC complaint has also been published.
SEC reaches settlement with Hong Kong firm for insider trading charges
The SEC has announced that it has reached a settlement with a Hong Kong based firm, Well Advantage, to pay more than $14 million to settle insider trading charges. The settlement represents double the amount of its alleged illicit profits and is subject to judicial approval. The SEC found that Well Advantage had stockpiled shares of a firm based on confidential information that it was about to be acquired by another firm. Well Advantage subsequently sold those shares for a profit of more than $7 million. The SEC previously filed an emergency action against Well Advantage to freeze its assets les than 24 hours after the firm placed an order to liquidate its holdings in the acquired firm.
SEC seeks stop order to prevent sale of shares
The SEC has announced that it has issued administrative proceedings seeking a stop order to prevent the sale of shares in Caribbean Pacific Marketing, Inc on the grounds that the company's disclosure is misleading. The SEC alleges that the company's statement is materially misleading because it fails to make any mention of William J. Reilly and his position within the company as a de facto executive officer and controlling person. The SEC's Enforcement Division contends that Reilly is a disbarred attorney and is the subject of a court order barring him from any penny stock offering, serving as a corporate officer and director and from violating certain federal securities laws. The proceedings will allow the company to respond to the SEC's allegations and determine whether or not a stop order should be issued