First FCPA Case Against Hedge Fund

On September 29, 2016, the Securities and Exchange Commission (the “SEC”) announced that Och-Ziff Capital Management Group (“Och-Ziff”) agreed to pay nearly $200 million to the SEC to settle civil charges of violating the Foreign Corrupt Practices Act (“FCPA”).  Also, Och-Ziff’s Chief Executive Officer, Daniel Och, agreed to pay nearly $2.2 million to settle related charges.

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In Wake of Panama Papers Scandal Obama Calls for Stricter Bank Regulations, Tax Rules

In a news conference today President Obama addressed rules and proposed regulations announced Thursday intended to help the U.S. fight tax evasion and other crimes connected to anonymous offshore companies and accounts.  The announcements come after a month of intense review by the administration following the first release of the so-called Panama Papers, millions of documents stolen or leaked from Panamanian law firm Mossack, Fonseca.  The papers have revealed a who’s who of international politicians, business leaders, sports figures and celebrities involved with financial transactions accomplished through anonymous shell corporations.

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The Benefit of the Doubt: SEC Scores an Insider Trading Win Despite Newman’s Personal Benefit Requirement

On February 29, 2016, in Securities and Exchange Commission v. Payton et al, a jury found two stockbrokers liable for trading on confidential tips about an acquisition being made by IBM despite the ruling made by the Second Circuit Court of Appeals in United States v. Newman[1] in December 2014. Continue Reading

SEC Releases 2016 Examination Priorities

On January 11, 2016 the Office of Compliance Inspections and Examinations (the “OCIE”) for the Securities and Exchange Commission (the “SEC”) announced its key areas of focus with respect to examinations in 2016. Like last year, the OCIE’s priorities are organized into three categories; (i) risks facing retail investors, (ii) assessing issues related to market-wide risks and (iii) new and evolving technology that will allow the OCIE to evaluate larger amounts of data to identify registrants who are participating in illegal activity. Continue Reading

SEC Issues a Risk Alert on the Current State of Outside Compliance Consultants

On November 9, 2015, the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert, noting that some of the outside CCOs that were examined were not sufficiently competent, knowledgeable of the business of the company or the federal securities laws or empowered with full responsibility, resources and authority to develop and enforce appropriate policies and procedures for the company. Observations of the SEC’s staff include: Continue Reading

SEC Charges Investment Adviser for Failure to Disclose Acceleration of Monitoring Fees and Discounts on Legal Fees

On October 7, 2015, the Securities and Exchange Commission (the “SEC”) announced that three private equity fund advisers with The Blackstone Group (“Blackstone”) have agreed to pay approximately $39 million to settle charges that the advisers failed to fully inform investors about the benefits those advisers obtained from (i) accelerated monitoring fees and (ii) discounts on legal fees, and thereby breached their fiduciary duty. Continue Reading

SEC Co-Chief of Division of Enforcement’s Asset Management Unit Identifies 2015 Exam Priorities for Hedge and Private Equity Funds

On November 18, 2014, Julie M. Riewe, Co-Chief of the Division of Enforcement’s Asset Management Unit of the Securities and Exchange Commission (the “SEC”), spoke at a Practicing Law Institute seminar and identified 2015 SEC examination priorities for investment managers of private funds.  Ms. Riewe identified three themes on which the SEC will focus in its examinations of hedge and private equity funds: (i) conflicts of interest, (ii) valuation and (iii) compliance and controls.  She discussed how these thematic issues related to both hedge funds and private equity funds.

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SEC Releases 2015 Examination Priorities

On January 13, 2015, the Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (the “SEC”) released its 2015 examination priorities.  The SEC identified three thematic issues:  (i) matters relating to retail investors and investors saving for retirement, (ii) issues related to market-wide risks and (iii) analysis of data to identify and examine registrants that may be engaged in illegal activity.

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Second Circuit Affirms Tippee Liability

On December 10, 2014, the Second Circuit Court of Appeals rendered a decision[1] regarding an insider trading case that affirmed the elements to prove tippee liability.  The Second Circuit was reviewing a district court’s conviction of Todd Newman, a portfolio manager at Diamondback Capital Management, LLC, and Anthony Chiasson, a portfolio manager at Level Global Investors, L.P., of insider trading based on tippee liability.  The Second Circuit found that the jury instruction given by the district court was erroneous because the jury instruction failed to state that the government must prove beyond a reasonable that the tipeee knew that an insider disclosed confidential information and that such insider did so in exchange for a personal benefit.

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