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Government Enforcement Exposed - "The GEE"
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23 Jan 2015 THIRD CIRCUIT UPHOLDS SECURITIES FRAUD CONVICTION OF CANADIAN STOCK BROKER WHERE “IRREVOCABLE LIABILITY” FOR TRANSACTIONS OCCURRED IN THE UNITED STATES

On Jan. 20, 2015, the Third Circuit upheld former Canadian stockbroker George Georgiou’s securities fraud conviction under Section 10(b) of Securities Exchange Act, determining that the transactions were “domestic” under Section 10(b) of the Securities Exchange Act because “irrevocable liability” for the transactions occurred in the United States.   The opinion provides further clarification of the United States Supreme Court’s 2010 ruling in Morrison v. National Australia Bank Ltd. that Section 10(b) applies to deceptive conduct in (1) the purchase or sale of a security listed on an American stock exchange, or (2) the purchase or sale of any other security in the United States.   Georgiou had been convicted for manipulating the market of four United States stocks listed on the OTC Bulletin Board…

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22 Jan 2015 Chasing the Gatekeepers

In an earlier post on our Government Enforcement Exposed blog, we highlighted the Securities and Exchange Commission’s anticipated focus on cracking down on those they have referred to as “gatekeepers” – attorneys, auditors, accountants, compliance officers, and the like. As pointed out in our prior post, SEC Commissioners have stated in public speeches that they intended on using new rules and novel approaches to prosecute all responsible individuals involved in facilitating a securities violation.[i]   True to its word, the SEC recently announced that it was instituting administrative proceedings alleging fraud against an attorney and seven auditors for their peripheral role in an attempt by a Canadian-based attorney, John Briner, to effectuate a microcap pump-and-dump scheme. The recent charges stem from a stop order proceeding…

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08 Jan 2015 No Spoofing. No Kidding?

Both the Securities and Exchange Commission and the Commodity Futures Trading Commission have, for years, banned the use of manipulative trading devices. Indeed, if you asked most average market participants, they would have told you that trading practices like layering and spoofing—putting on buy and sell orders in different order types that allow a trader to move the market price without actually trading, in order to sell high and buy low—were manipulative devices. And, yet, it has taken until now for the two largest commodity exchanges (the CME Group and the ICE Futures U.S. Exchange) to come out and ban such blatantly manipulative trading.   In September 2014, the CME announced that it was specifically banning “disruptive market practices,” including spoofing and quote stuffing. Then,…

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02 Jan 2015 Year in Review: Government Enforcement/Financial Litigation Developments

This year we have seen a number of interesting and important developments in the world of government enforcement and financial/regulatory litigation. Here are our “Top 5:”   Wal-Mart permits the discovery of privileged internal investigation documents   As we discussed in August, the Wal-Mart decision out of the Delaware Supreme Court was significant because it made clear that the attorney-client and work product privileges are not impenetrable when it comes to internal investigations – at least not in Delaware. The Court, in formally adopting the Garner Doctrine, found that even when all parties agree that the privileges exist and apply, the privileges may be overcome and shareholders may be entitled to privileged documents if they can show “good cause.” While the decision was important and…

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