Recent Posts
Follow Us
twittergoogle_pluslinkedinrssyoutube
The Legal Stuff
Government Enforcement Exposed - "The GEE"
0 0

09 Nov 2017 SEC Scrutiny Brings Sanity to Hot ICO Market

  Initial coin offerings (ICO) originally became popular because they appeared to hold the promise of easy access to capital, in exchange for a virtual token with some desirable function. For example, Playkey—an online gaming company—is presently raising money by selling tokens that will allow holders to access high powered computer systems for gaming. ICOs have raised more than $3 billion in 2017.   The tokens from these offerings can appreciate in value either because they are limited in number or because they are tied to the growth of the issuer’s enterprise. The Securities and Exchange Commission (SEC) has deemed the later kind of token to be a security. Accordingly, any entity seeking to offer tokens reflecting the value of the enterprise needs to follow…

READ MORE
0 0

25 Sep 2017 Who’s Watching the Watchdog? SEC Deals With Its Own Data Breach

  On Sept. 20, SEC Chairman John Clayton announced that Wall Street’s watchdog, the Securities and Exchange Commission (SEC), was the victim of a cyber hack in 2016. In what ironically amounts to the SEC’s first significant disclosure of its own cybersecurity risks, Clayton stated: “In certain cases, threat actors have managed to access or misuse our systems.” According to Clayton, “[i]n August 2017, the Commission learned that an incident previously detected in 2016 may have provided the basis for illicit gain through trading.”   Hackers apparently exploited a weakness in the SEC’s Electronic Data Gathering, Analysis and Retrieving (EDGAR) system. EDGAR houses financial records for all of the companies listed on stock exchanges in the United States – including domestic and foreign securities issuers and…

READ MORE
0 0

06 Sep 2017 Don’t Let DOJ Defections Fool You: Corporate Conduct Still in the Crosshairs

  Authors: Michael Battle, Roscoe Howard and Patrick Miles   The early months of the Trump administration have brought about the resignations of the two most prominent lawyers behind the U.S. Department of Justice’s recent campaign against corporate wrongdoing. The departures of Deputy Attorney General and Acting Attorney General Sally Yates, and DOJ Compliance Counsel Hui Chen, coupled with the administration’s business-friendly rhetoric, might tempt corporate compliance officers to conclude that the DOJ is shifting its emphasis away from corporate prosecutions.   They shouldn’t. In fact, neither those high-profile defections nor the change in administration is likely to alter the mindsets of the working lawyers in the DOJ’s 94 U.S. Attorney offices. Those prosecutors will not only continue pursuing the same types of cases they…

READ MORE
0 0

02 Aug 2017 Corporate Law Alert – SEC Issues Guidance on Initial Coin Offerings and Cryptocurrencies

  On July 25, the U.S. Securities and Exchange Commission (SEC) issued its most comprehensive public guidance to date on digital assets such as cryptocurrencies and tokens. Key points from the guidance are:   Initial Coin Offerings (ICOs) are required to be registered with the SEC if the digital assets are securities offered or sold in the U.S. Digital assets can be evaluated for securities status using traditional securities law criteria Automated functions through smart contracts or other code remain subject to securities laws Companies dealing in digital assets should consider seeking counsel as to whether the digital assets are securities Companies dealing in digital currencies may need to register as broker-dealers, securities exchanges, or alternative trading systems Companies investing in digital assets and advising on investment…

READ MORE
0 0

31 Jul 2017 SEC Chairman Announces 8 Core Principles

  In his first public speech since becoming the U.S. Securities and Exchange Commission (SEC) chairman, Jay Clayton shared his eight core principles that he indicates will guide his oversight of the agency, with an emphasis on the “Main Street” investor. This speech is significant because it provides insight into how the agency may balance benefits to investors against costs to the markets under the commission’s enforcement and regulatory powers.   However, he also emphasized part of his plan to help individual investors is by increasing the public investments available to them. To that end, Clayton reminded companies considering IPOs that the JOBS Act benefit of submitting draft registration statements confidentially and gradually phasing in reporting obligations, previously available only to emerging growth companies, now…

READ MORE
0 0

12 Jun 2017 U.S. Supreme Court Delivers Blow Limiting SEC Disgorgement Power

  In a unanimous opinion authored by Justice Sonia Sotomayor and issued on June 5, the U.S. Supreme Court reversed a decision of the U.S. Court of Appeals for the Tenth Circuit, holding that SEC disgorgement constitutes a penalty under 28 U.S.C. § 2462, thereby making such actions subject to the five-year limitations period for “an action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture.” In the case, Kokesh v. Securities and Exchange Commission , the court found the “SEC disgorgement… bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not compensate.”   The ruling resolves a circuit split and will have a far-reaching impact…

READ MORE
0 0

01 May 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 7

  *This is the eighth in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions the Yates Memo raised. The seventh of these questions addresses receiving cooperation credit in a civil matter.   Question: Does the “all facts” cooperation requirement apply in civil matters as well?   Answer: Yes. If a company wishes to receive cooperation credit in a civil matter, it must disclose the relevant facts regarding the individuals involved in the misconduct.   In two speeches following the issuance of the Yates Memo, Bill Baer, who was an associate attorney general at the time, provided additional guidance on what the DOJ expects in terms of cooperation in civil matters.   First, on June 9, 2016, Baer identified…

READ MORE
0 0

27 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 6

  *This is the seventh in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions raised by the Yates Memo. The sixth of these questions addresses whether companies should enter into joint defense agreements.   Question: Can a cooperating company enter into a joint defense agreement with individuals’ counsel?   As mentioned in a previous post about the Yates Memo, the Department of Justice (DOJ) has certainly cast a pall on joint defense agreements (JDA) in potential criminal investigations. The DOJ’s guidance seems to indicate that any corporation interested in obtaining cooperation credit in the form of a reduced penalty or a deferred prosecution agreement must carefully consider whether entering into a JDA could stymie the corporation’s ability to…

READ MORE
0 0

25 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 5

  *This is the sixth in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions raised by the Yates Memo. The fifth of these questions addresses what happens if a company cannot determine who did what within the organization.   Question: What happens if a company cannot determine who did what within the organization or is prohibited from providing that information to the government?   The simple answer to this question is that the company seeking cooperation credit has the burden of providing a compelling explanation to the DOJ if the corporation is not able to identify all wrongdoers and provide all relevant facts.   By way of background, before the Yates Memo was issued, the government typically would…

READ MORE
0 0

07 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 4 (Part 2)

  What does the DOJ’s response to FAQ No. 4 tell us about cooperation?   This is the second of two posts relating to FAQ No. 4. In a previous post, we addressed the DOJ’s response to FAQ No. 4 regarding voluntary disclosure by a company. This post will address what the DOJ’s response says about a company cooperating, which includes, as we noted in Part 1, only a brief but important reference to cooperation:   “In recognition of the significant value early reporting holds for the government, the Principles [of Federal Prosecution Of Business Organizations] were revised to separate voluntary disclosure from cooperation in order to treat prompt voluntary disclosure as an independent factor to be considered.”   While it may be a rare,…

READ MORE