As the Fenwick & West law firm noted in its February 22, 2019 memo about the SEC’s and the DOJ’s actions (here), “The government’s aggressive action here is a reminder that securities regulators and law enforcement agencies are increasingly scrutinizing statements made by private companies, especially statements that create investor fervor and lead to inflated share valuations.”
The SEC previously made it clear in its actions against Theranos that the agency would pursue alleged securities law violations even against private companies. But what is interesting to me about this latest action is that the SEC’s willingness to pursue private company executives for securities law violations is not limited just to high-flying high-profile Silicon Valley firms. The agency clearly is willing to go after even private companies in the heartland if it believes the violation warrants the action.
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