‘Enforcement 40’ for 2020
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Guest Column: Commission Alleges Violation of SOX 304
Guest columnists Nader H. Salehi and Elizabeth A. Marino of the law firm Bingham McCutchen LLP write that in SEC v. Maynard L. Jenkins, the Commission has broken new ground, essentially interpreting SOX 304 to have a strict liability standard.
Guest Column: “Straightforward Theory of Fraud” Leads Second Circuit Onto Slippery Slope
Guest columnist Amy Greer, a partner at Reed Smith LLP, writes that in its Dorozhko opinion, the Second Circuit stopped short of analyzing the facts, leaving it to the district court to determine whether this hack included a fraudulent misrepresentation. However, this decision vindicates a theory that the SEC has used before, in SEC v. Lohmus Haavel & Viisemann, and given the prevalence of computer hacking, other technology-based frauds, and the SEC’s never-ending challenge to apply decades-old statutes to novel fraudulent schemes, this case represents an important precedent for the agency.
Guest Column: Use of “Conscious Avoidance” Doctrine in Frederic Bourke Conviction Expands Corporate Executives’ FCPA Exposure
Guest columnists F. Joseph Warin, Michael S. Diamant and Matthew P. Hampton explain that understanding the significance of the Frederic Bourke conviction and the danger it illustrates for the unwary, starts with a simple observation: Bourke’s case was not a typical FCPA prosecution. Bourke was never accused of bribing or directing others to bribe government officials. Rather, the government charged Bourke with conspiring to violate the FCPA because he invested in an entity that he knew, or at least had every reason to know, was engaged in a scheme to bribe Azeri officials. In his closing, the prosecutor stated, Bourke “had enough understanding to know that something . . . was occurring” yet “ke[pt] his head in the sand.”
Guest Column: Assessing the Madoff Sentence
Guest columnist Michael L. Martinez, a partner in the Washington office of Crowell & Moring LLP, analyzes two questions arising out of the 150-year sentence handed down to Bernard Madoff: (1) is the length of the sentence appropriate; and (2) how does it compare with other sentences for similar crimes?
Guest Column: Justice Sandra Day O’Connor’s Involvement in the Flowserve Decision May Bode Well for Securities Plaintiffs
Re-posted for those who did not catch it over the holiday weekend:
Guest columnist Justin N. Saif of law firm Berman DeValerio writes that a recent Fifth Circuit opinion that revived a securities class action and included language strongly supportive of securities plaintiffs is attracting plenty of attention, not least because retired Supreme Court Justice Sandra Day O’Connor sat on the panel.
Guest Column: Sonia Sotomayor’s Securities Law Opinions – What President Obama’s Supreme Court Nominee Might Mean for Private Securities Litigation
Guest columnists Mary Eaton and Roger Netzer of Willkie Farr & Gallagher LLP write that Judge Sotomayor’s track record both as a United States District Court Judge and as a member of the Court of Appeals for the Second Circuit belies the suggestion that she has an “anti-business” tendency with respect to private securities law issues. Their analysis shows that, with few exceptions, Judge Sotomayor has tended to side with corporate defendants on private securities litigation matters during her 17 years on the bench.
Guest Column: Arbitrary and Capricious Standards Governing Access to the SEC Staff’s Investigative File
Guest columnist Michael MacPhail of Holland & Hart writes that the issuance of a Wells notice presents defense counsel with an opportunity to learn about the proposed case against their client. Granting access to the entire investigative file (including the testimony transcripts of other witnesses) is a key part of the Wells process, since it permits defense counsel to more intelligently advise clients of the risks of possible enforcement action, facilitates the preparation of more focused and helpful Wells submissions, and encourages better and quicker resolutions of proposed enforcement actions. Yet the standards governing whether to grant such access, and their application by the staff, are arbitrary and capricious.
Guest Column — The Retek Decision: A Case Study on Loss Causation at Summary Judgment
Guest columnist Richard Gallagher writes about a recent order by the U.S. District Court for the District of Minnesota granting summary judgment to the defense on loss causation grounds in In re Retek Inc. Securities Litigation. On the basis of the court’s loss causation analysis, the court dismissed all of the remaining claims in the case, which arose under Section 10(b) and 20(a) of the 1934 Act. The Court’s ruling is significant because it provides a thorough review of loss causation principles as they apply at the summary judgment stage, as opposed to the pleading stage.
Guest Column: The Rise and Rise of the NYAG
In this guest column, Douglas S. Kantor and Philip S. Khinda, partners with the law firm of Steptoe & Johnson LLP, discuss how the Office of the New York Attorney General has stepped to the fore and become a player on the national stage. They write that the NYAG’s success has been a product of its ability to move quickly and creatively in enforcing the law and applying its vision of proper corporate conduct.
Guest Column: Should Outside Directors Request the Purchase of Independent Director Liability Policies?
Should outside directors on corporate boards of directors request that the companies’ boards companies purchase Individual Director Liability (IDL) insurance for them? In a guest column, Scott N. Godes of Dickstein Shapiro writes that generally speaking, IDL insurance is just for outside or independent directors of a company and, depending on the form in which it is written, may offer independent directors additional insurance protection if the corporate policyholder’s insurers were to attempt to deny or rescind coverage under the policyholder’s directors and officers insurance policy.