On October 5, 2016, the Supreme Court in Salman v. United States will hear oral argument on its first insider trading case in nearly 20 years. At issue is whether a tipper must receive a pecuniary benefit for a tipper and tippee to be held criminally liable under 10b-5, or whether disclosure by itself can trigger liability. This case will resolve a circuit split that ranges from the broad view that a tipper and tippee are liable if the disclosed inside information is a "gift" to the narrow view that the tipper must receive a tangible pecuniary benefit in exchange for the inside information.
Having lost her initial suit (and appeal) to enjoin an SEC administrative enforcement action against her, the so-called "diva of distressed," Lynn Tilton recently filed another lawsuit trying to halt her upcoming October 24 hearing before an SEC administrative law judge.
In her last suit, Tilton argued the SEC's administrative forum - particularly the selection of the ALJs who hear the proceedings - was unconstitutional under the Appointments Clause. Her new suit raises different arguments, claiming that SEC has a pattern and practice of depriving respondents of their Fifth ...
The Securities Division of Tennessee's Department of Commerce and Industry has increased its enforcement activity during 2016. The recent actions include:
Final Administrative Orders:
Clifton Alexander and HugeROI.com - May 30, 2016
Anthony Dean Myers, Sr. - May 24, 2016
Cease & Desist Orders:
Broad Street Ventures - August 12, 2016
Cumulus Financial - October 29, 2015
Consent Orders:
Wortham Laboratories - August 12, 2016
Charles Sims, Jr. - August 3, 2016
Scott B. Chitwood - July 21, 2016
The Homes Email Business Corp. - May 23, 2016
Initial Orders:
Black Gold Resources, Inc ...
The SEC announced August 25 that it approved FINRA's pay-to-play rules governing placement-agent or solicitor broker-dealers and was "prepared" to approve the extension of MSRB Rule G-37 to municipal advisors as well.
The two rule proposals would complete the pay-to-play suite of rules across municipal securities dealers, investment advisors, broker-dealers, and municipal advisors. The bedrock Rule - MSRB's Rule G-37 governing municipal finance professionals and dealers - has been in place since 1994. After Dodd-Frank's expansion of municipal-advisory regulation, the ...
On August 24, the SEC announced settled administrative actions against 71 state and local issuers arising from $3.7 trillion in municipal securities offerings. The Commission alleged the issuers made false statements claiming they had complied with their continuing disclosure obligations under prior debt issues from 2011-2014. Each settled action imposed a cease-and-desist order and compliance undertakings.
The settlements appear to be the last leg of the Commission's Municipal Continuing Disclosure Cooperation ("MCDC") initiative, under which the SEC offered ...
Within weeks, the Second and Third Circuits reached opposite conclusions over federal jurisdiction to confirm, modify or vacate arbitration awards. The Second Circuit now allows courts to look through the face of the petition to assess the federal-question jurisdictional merit of the underlying dispute; the Third Circuit doesn't (along with the DC and Seventh Circuits).
In 2009, the Supreme Court held the text of Section 4 of the Federal Arbitration Act required "look-through" assessment of the underlying dispute in motions to compel arbitration, based on the statute's text:
"A ...
The SEC announced its second enforcement action in a week against a company using severance or confidentiality agreements requiring employees to waive whistleblower bounties or their right to bring a qui tam action.
In this week's settled action, the SEC fined publicly-traded Health Net $340,000 for having used severance agreements (over 4 years) that expressly allowed government reporting and cooperation in investigations but required waiver of monetary awards and qui tam actions. The offending agreements included waivers of:
"the right to file an application for award for ...
The SEC has fined an Atlanta company $265,000 for using various severance agreements restricting whistleblower activities.
The Dodd-Frank Act added '34 Act § 21F encouraging whistleblower programs. The SEC adopted Rule 21F-17 providing:
(a) No person may take any action to impede an individual from communicating
directly with the Commission staff about a possible securities law violation,
including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.
The Company's severance agreements contained confidentiality and ...
The D.C. Circuit has affirmed that SEC ALJs are not constitutional Officers subject to the Appointments Clause, rejecting perhaps the strongest of the constitutional challenges to the Commission's administrative forum. The ruling is the first case to decide the issue on its merits instead of rejecting it on procedural grounds (as the 2nd, 7th, 11th and D.C. Circuits previously did).
The Court held the Commission's right of discretionary review, coupled with the requirement to issue an affirmative order declining it (where not exercised), means its ALJs do not issue final ...
In a July 22 Notice, FINRA took umbrage at a growing line of Court decisions suggesting that a later or more-specific forum selection clause in an agreement between the parties may override a prior customer arbitration agreement. FINRA defended it arbitral forum, pointing out that members are subject to discipline for restricting a customer's right (or even request) to arbitrate.
An expanding line of precedent holds that a later forum-selection provision (limiting disputes to a particular court) may supersede a prior arbitration provision between the same two parties. See, e.g ...