SEC to Continue to Punish Wrongdoers and Deter Misconduct
March 01, 2023
The Division of Enforcement will likely continue to use "every tool in its toolkit" and expect that public companies and other market participants will think rigorously about their business and appropriately tailor compliance practices and internal controls and policies to match.
Circuit Split Reflects Disagreement About the Relationship Between Scheme Liability and SEC Rule 10b-5(b)
March 01, 2023
Historically, federal courts generally agreed that scheme liability under SEC Rule 10b-5(a) and (c) requires something more than a misstatement or omission — with misstatements and omissions typically being litigated under Rule 10b-5(b) instead. However, the SCOTUS in Lorenzo v. SEC held that an individual who disseminates a misstatement, without other fraudulent conduct, is potentially liable under the scheme liability provisions of Rule 10b-5. Subsequently, a circuit split has emerged over the scope of Lorenzo's holding.
ESG 'Greenwashing' Litigation On the Rise
March 01, 2023
Increased attention paid to companies' public promotion of their environmental and sustainability programs is likely to continue in 2023, with further developments in regulation and litigation pertaining to "greenwashing" — a marketing practice which involves unsubstantiated or exaggerated claims about the environmentally friendly or socially-responsible attributes of an organization's products or services.
Second Circuit Narrows Reach of Wire Fraud and Insider Trading Prohibitions
February 01, 2023
The Second Circuit's long-anticipated decision in United States v. Blaszczak limits the government's ability to bring fraud or insider trading prosecutions where the information used to achieve an advantage is regulatory information held by the government. It also brings the Second Circuit in greater alignment with the Supreme Court's wire fraud jurisprudence.
Regulators Reaching Deep In Their Toolbox to Prosecute Users of Encrypted Messages
February 01, 2023
If you use Whatsapp or similar platforms for work-related communications, then you've probably heard that regulators are putting an end to that practice. Ephemeral and encrypted messaging, they have noted, evades monitoring and prevents retention. A seldom used doctrine allows prosecutors to charge executives with misdemeanor offenses just for being in the position of power when others commit the misconduct. Rather than take a wait-and-see approach, companies and their leaders would do well to prepare for prosecutors to reach deep into their toolbox.
SEC Tightens Rules on Scheduling Trades In Advance
February 01, 2023
General counsel may find themselves pulled into difficult conversations with top executives as the Securities and Exchange Commission tightens its rules on company insiders looking to dump their stock.
Cryptocurrency: Rich In Investment Opportunity; Ripe for Fraud Schemes
January 01, 2023
The recent implosion of FTX Trading leaves investors and their advisers wondering whether any crypto investment is safe. There have been dozens of cryptocurrency-related fraud schemes in recent years including Ponzi schemes and investment schemes using crypto and the blockchain to facilitate the fraud scheme.
