Selected Enforcement Actions
SEC issues second whistleblower award. The SEC awarded three whistleblowers a total of 15 percent of the money that the agency ultimately collects from its enforcement action against sham hedge fund Locust Offshore Management LLC and its CEO Andrey C. Hicks, who defrauded investors of US$2.7 million. To date, the SEC has not collected any amounts on these judgments, so no immediate payments will be made to the whistleblowers. (6/12/2013) In the Matter of the Claim for Award in Connection with SEC v. Audrey C. Hicks, SEC Release No. 34-69749. Corporate Counsel discussed the implications of the whistleblower awards, noting that the SEC’s action reemphasizes the importance of robust internal reporting programs. (6/18/2013) Implications.
Facebook friend allegedly tipped insider information. The SEC announced that it has obtained an emergency court order freezing the assets of a trader in Bangkok, Thailand, who made more than $3 million in profits by trading in advance of last week’s announcement that Smithfield Foods had agreed to a multi-billion dollar acquisition by China-based Shuanghui International Holdings. The SEC alleges that Badin Rungruangnavarat purchased thousands of out-of-the-money Smithfield call options and single-stock futures contracts in an account at Interactive Brokers LLC. Rungruangnavarat allegedly made these purchases based on material, nonpublic information about the potential acquisition. (6/6/2013) SEC press release.
Consolidated Audit Trail. Reuters discussed the difficulties that regulators and exchanges are encountering as they try to build a consolidated audit trail system capable of monitoring the equities market. Creating such a system became a priority after the 2010 “flash crash,” when it took regulators several months to obtain the information needed to analyze the causes of that unprecedented market volatility. (6/17/2013) CAT.
Money market proposal and state law. According to Fitch Ratings, states may need to amend their laws if the SEC’s proposed money market rules become final. (6/13/2013) State impact.
Investor alert. An investor alert warning of emailed “pump-and-dump” schemes has been jointly issued by the SEC and the Financial Industry Regulatory Authority. (6/12/2013) SEC press release.
SEC and CFTC investor alert on binary options. A joint Investor Alert warning of fraudulent promotional schemes involving binary options and binary options trading platforms has been issued by the SEC and CFTC. The alert notes that much of the binary options market operates through Internet-based trading platforms that may not comply with US laws. (6/6/2013) SEC press release; CFTC press release.
Division of Risk renamed. The SEC has changed the name of its Division of Risk, Strategy, and Financial Innovation to the “Division of Economic and Risk Analysis.” (6/6/2013) SEC press release.