You probably did not know many things about the Securities and Exchange Commission and the attorneys who enforce its laws. Of course, many different types of violations may require investigation, for instance, securities attorney can investigate misrepresentation of budget projections and misappropriation of investor funds. Reporting violations of the law under the whistleblower program of the SEC. This a more will be discussed in this article.
Misleading budget projections
The SEC filed a complaint against the District of Columbia after filing an OS based on inaccurate projections. The District included stale budget projections in its POS and OS while failing to disclose contrary information. As a result, the investors were misled by the District’s projected fund balance. Ultimately, this action led to a $4 billion fine and many other consequences.
Misappropriation of investor funds
In SEC v. Yasuna Murakami, the SEC alleges that a Massachusetts-based hedge fund manager misappropriated more than $8 million in investor funds. This money was not used for trading but was diverted for personal expenses. In addition, the SEC claims that Murakami received more than $8 million in Ponzi-like payments from earlier investors. The SEC also seeks civil penalties, disgorgement, and an asset freeze.
In a recent lawsuit, the SEC and the attorneys for investors have sought criminal charges, disgorgement, and an injunction. IN NOVEMBER, the SEC filed the case, alleging that the defendants misappropriated more than $40 million in investor funds. The SEC’s complaint also seeks civil penalties and disgorgement and the criminal charges filed against three principals.
SEC’s whistleblower program
The SEC’s whistleblower program and attorneys can help you protect your career and gain significant rewards for reporting misconduct. These awards are up to 30% of the total recovered amount and can be ten million dollars. In addition, an individual must provide original information to the SEC that led to successful enforcement action to be eligible. In 2016, the SEC awarded over $57 million in cash awards to whistleblowers.
Individuals with original information can contact the SEC’s whistleblower program anonymously. However, they must be represented by an attorney and provide their contact information. Anonymous whistleblowers must provide their attorney’s contact information and submit the statement under penalty of perjury within 120 days of reporting the violation internally. Attorneys may help you collect your award if your identity should remain private. But if you can prove your identity, the attorneys will represent you in court.
Acting in good faith
Whether or not a lawyer must act in good faith when dealing with the Securities and Exchange Commission depends on the context. Recent enforcement actions by the Commission have centered on lawyers’ failure to provide clients with appropriate advice. While some lawyers have expressed surprise at these recent actions, the actions reflect a trend toward continuity. Those actions, such as Lorne & Callcott, reflect a longstanding Commission policy of not punishing lawyers for their advice but punishing lawyers who participated in prohibited conduct.
In many cases, acting in good faith requires cooperation with law enforcement, but it does not require that you altogether avoid any responsibilities to the government. For example, your duty to cooperate with law enforcement and attorneys may require you to refrain from involving in activities that will compromise the integrity of the investigation or court case. Therefore, a breach of the duty of good faith may require you to cooperate. However, if the government does find it difficult to cooperate, you may be subject to penalties.
Recidivism
The US Securities and Exchange Commission (SEC) has renewed emphasis on enhanced corporate responsibility and recidivism in its enforcement efforts. As a result, they have repeatedly imposed more stringent penalties on firms that violate laws and rules. In addition to recidivism, SEC officials have also heightened their attention on data privacy and cybersecurity. However, firms may still foul SEC rules even with world-class compliance programs.
Deputy Attorney General Monaco has posed a difficult question: how to deal with corporate recidivists? For example, is it possible to make a DPA if the company is subject to previous breaches? Indeed, it would seem so, but how should the DOJ enforce the terms of its agreements? In the meantime, how can the government ensure that companies subject to such contracts follow their obligations?
