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Government Enforcement Exposed - "The GEE"
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29 Apr 2016 Accounting Fraud Getting Increased Attention from the SEC and Class Action Counsel

Accounting and financial disclosure issues are increasingly becoming the focus of litigation – both with the Securities and Exchange Commission (SEC) and the plaintiffs’ class action bar – according to recent pronouncements from the SEC and a leading research firm that tracks securities class actions.   Last week, the SEC announced two financial fraud cases against companies and their former executives, accusing them of various accounting failures that gave investors inaccurate views of company finances. These cases appear to be among the fruits of the SEC’s Financial Reporting and Audit Task Force, created in 2013 to strengthen the SEC’s efforts to identify securities law violations relating to the preparation of financial statements, issuer reporting and disclosure and audit failures. The Task Force’s efforts have taken…

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16 Apr 2015 SENTENCING COMMISSION AMENDS FRAUD GUIDELINES

On April 9, 2015, the U.S. Sentencing Commission (Commission) adopted changes to the sentencing guidelines addressing fraud. In doing so, the Commission confronted previously held concerns regarding harm to victims, individual culpability for “bit” players in a fraud scheme and an individual offender’s intent.   These proposed adjustments to the guidelines include more significant penalties for white collar crimes that “resulted in substantial financial hardship to one or more victims,” and where “the defendant intentionally engaged in or caused the conduct constituting sophisticated means,” according to Commission materials. The proposed change, if adopted by Congress, would increase the severity of the offense by four levels at five or more victims (currently 50 or more victims), with an increase of six levels where 25 or more…

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15 Apr 2014 Disgorgement in the Second Circuit: Equitable Relief or Punishment?

  In legal circles, disgorgement is known as an equitable remedy used to force a defendant to return money or property earned from illegal conduct.  Traditionally, disgorgement has not been used as punishment, but a recent Second Circuit decision has suggested that disgorgement may now be a punitive remedy in disguise.   In September 2005, Joseph Contorinis, an investment banker at Jefferies & Company, was given confidential information from a friend and fellow investment banker regarding a major financial acquisition.  Contorinis used the non-public information to make very profitable trades for a Jeffries’ fund that Contorinis managed and controlled.  By virtue of the information Contorinis had received and his subsequent trades, the fund earned a profit of $7,304,738, and avoided a loss of $5,345,700.  Most…

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