Welcome to the 2016 Mid-Year Report From the BakerHostetler Securities Litigation and Regulatory Enforcement Practice Team.
The purpose is to provide a periodic survey, apart from our team Executive Alerts, on matters we believe to be of interest to sophisticated general counsel, chief compliance officers, compliance departments, legal departments, and members of the securities and commodities industries at financial institutions, private investment funds and public companies.
We issue this Securities Litigation and Enforcement Highlights Report at mid-year and shortly after year-end. We hope you find the information and commentary useful and welcome your comments and suggestions. We encourage you to contact any of the practice team members listed at the end of the Report.
This Report highlights recent, significant developments, including, but not limited to:
- Supreme Court Cases, including determining the extent to which Section 27 of the Securities Exchange Act of 1934 ("Exchange Act") confers federal jurisdiction over state law claims; declining to review the constitutionality of the United States Securities and Exchange Commission's ("SEC") in-house courts; and the upcoming determination of the meaning of "personal gain" in the insider trading context;
- Securities Law Cases, including post-Omnicare standards on opinions and omissions; challenges to Halliburton II; the application of the business judgment rule in two-step and going-private mergers; application of Section 2462's statute of limitations to declaratory relief and disgorgement; and the impact on the American Pipe tolling rule Circuit split;
- SEC Cooperation and Whistleblower Programs, including emphasizing timely self-reporting for cooperation credit in Foreign Corrupt Practices Act ("FCPA") cases; individual deferred prosecution agreements; additional settlements pursuant to the Municipalities Continuing Disclosure Cooperation Initiative ("MCDC Initiative"); incentivizing brokerdealers to self-report potential violations of the Customer Protection Rule; sanctioning violations of the Whistleblower Protection Rule; and awarding significant amounts to whistleblowers;
- Insider Trading Cases, including the continued post-Newman impact and other recent, noteworthy insider trading cases;
- Settlements, including historic settlements with financial institutions stemming from the SEC's strong enforcement trend with respect to the critical importance of corporate oversight;
- Investment Adviser and Hedge Fund Cases, including enforcement actions by the SEC, as well as settlements, relating to misrepresentations about the calculation of fees and fund strategy and performance; misstatements in marketing materials; and the defrauding of investors by the misappropriation of funds collected for investment;
- Commodities and Futures Regulation and Cases, including numerous actions focusing on spoofing, benchmark manipulation, anti-fraud enforcement and compliance with regulatory requirements; and
- Securities Policy and Regulatory Developments, including adoption of rules by the SEC relating to amendments to Exchange Act requirements under the Jumpstart Our Business Startups Act (the "JOBS Act"); cross-border security-based swap rules related to activity in the U.S.; proposals of incentive-based compensation rules (along with other agencies); proposal of a plan for a consolidated audit trail; proposal of amendments to the definition of "smaller reporting company;" and proposal of a rule requiring investment advisers to adopt business continuity and transition plans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.