Securities

Current News

Securities

TOP STORY—SEC fines BNY Mellon adviser $1.5 million for misleading on ESG analysis

Announced ahead of an SEC meeting on ESG disclosures for investment advisers and investment companies, the enforcement action highlights the need for advisers to accurately describe their consideration of ESG factors in investment selection. The SEC ...

TOP STORY—SEC fines BNY Mellon adviser $1.5 million for misleading on ESG analysis
REGULATION TRACKER—Upcoming SEC and CFTC comment deadlines and effective dates
May 23, 2022
WK Editorial Staff

A table of proposed rule comment dates and final rule effective and compliance dates for SEC and CFTC rulemaking. Recent SEC activity includes the following: Climate disclosure comments. The SEC extended the comment period for proposed rule amendment...

FIDUCIARY DUTIES—D.D.C.: Fiduciary duty claim stands, negligence/DC Securities claims do not
May 23, 2022
Jay Fishman, J.D.

Bank of America can, at trial, introduce evidence showing a mere contractual relationship with the plaintiff but cannot rely on the contract at the motion to dismiss stage. The District of Columbia District Court denied defendant Bank of America’s (B...

FRAUD AND MANIPLUATION—1st Cir.: Dismissal of Santander Securities municipal bonds case affirmed
May 23, 2022
David Yucht, J.D.

Generally, an omission is actionable only where there is an affirmative duty to disclose. Santander Securities was under no duty to disclose information which was readily accessible to municipal bond investors. The First Circuit Court of Appeals uphe...

Securities

TOP STORY—Wells Fargo Advisors to pay $7 million for AML monitoring failures

A change to the firm's AML monitoring system led to missed alerts and late SAR filings. Wells Fargo Advisors will pay $7 million to settle charges arising from its failure to timely file nearly three dozen Suspicious Activity Reports. According to th...

TOP STORY—Wells Fargo Advisors to pay $7 million for AML monitoring failures
ENFORCEMENT—N.D. Ill.: CFTC wins statutory restraining order in digital asset, commodity futures fraud case
May 20, 2022
Suzanne Cosgrove

Regulator charges Oregon and Illinois residents and a Florida company misappropriated millions of dollars in digital asset investments and operated an illegal commodity pool. Defendants Sam Ikkurty, Ravishankar Avadhanam and Jafia, LLC, a Florida com...

ENFORCEMENT—W.D.N.C.: North Carolina man and his company charged in $7 million Ponzi scheme
May 20, 2022
Kristin J. Angelino, J.D.

The SEC filed an emergency action against a self-described business consultant and his alter-ego company alleging a multi-year, multi-million-dollar Ponzi scheme by defendants. The SEC complaint alleges that, since 2019, a Charlotte, North Carolina-b...

FRAUD AND MANIPULATION—S.D. Cal.: Class action complaint alleges securities fraud by mobile-based ‘Web 3’ financial services company
May 20, 2022
Joanne Cursinella, J. D.

Plaintiffs seek damages for alleged material misstatements and omissions and clarification that the unregistered BLOCK Exchange Traded Index products purchased by the class are “securities” under federal law. A complaint filed in a California distric...

WORTH NOTING—Other litigation, regulatory activity and industry news
May 20, 2022
WK Editorial Staff

A weekly roundup of other items of interest to the securities, commodities, and corporate governance communities. BLOCKCHAIN— In its first criminal prosecution involving the alleged use of cryptocurrency to evade U.S. economic sanctions, the U.S. Jus...

Securities

TOP STORY—5th Cir.: SEC ALJ proceedings ruled unconstitutional

In a decision that could reshape enforcement throughout the executive branch, the Fifth Circuit held that in-house SEC proceedings for securities fraud were unconstitutional for at least two independent reasons. In a 2-1 opinion, a panel of the Fifth...

TOP STORY—5th Cir.: SEC ALJ proceedings ruled unconstitutional
FRAUD AND MANIPULATION—7th Cir.: Stericycle class action fee award vacated and remanded for review and recalculation
May 19, 2022
R. Jason Howard, J.D.

The district court’s analysis of the fee award was incomplete as it failed to consider several factors. The Seventh Circuit has vacated and remanded a class-action settlement against Stericycle following a challenge to the 25 percent attorney fee awa...

INVESTMENT ADVISERS—Adviser must pay $1.8M to settle breach of fiduciary duty charges
May 19, 2022
John Filar Atwood

Affiliated broker received third-party compensation from advisory client investments without fully disclosing its conflicts of interest. The SEC has ordered First Republic Investment Management, Inc. to pay more than $1.8 million in disgorgement, int...

MERGERS AND ACQUISITIONS—N.D. Calif.: Amended complaint fails to fix pleading shortcomings in Monsanto acquisition litigation
May 19, 2022
Jeffrey H. Brochin, J.D.

The complaint failed to plead misrepresentations concerning Monsanto's science-based trial defenses with particularity, but the case can proceed on other theories. A federal district court in California has denied the motion to dismiss filed by Bayer...

SECURITIES OFFERINGS—N.D. Tex.: Court rules Texas oil well partnership sale was an unregistered security
May 19, 2022
Suzanne Cosgrove

The District Court said the sale of interest in an oil well partnership met the requirements of an investment contract and so violated state and federal securities laws. When granting the investor’s motion for a summary judgment, the Texas District C...

BLOG TRACKER—Noteworthy blog posts and other commentary
May 19, 2022
WK Editorial Staff

The week’s most insightful, intriguing, and entertaining blog posts from the securities, commodities, and corporate governance communities. Proskauer, SEC Issues New Guidance Regarding Russia Sanctions and Public Company Disclosures , by Frank Zarb, ...

Securities

TOP STORY—S.D.N.Y.: Allianz Global, 3 former managers charged with multi-billion-dollar securities fraud

Allianz Global agreed to pay more than $1 billion to settle SEC fraud charges. On May 17, 2022, the SEC has filed a complaint in the Southern District of New York charging Allianz Global Investors U.S. LLC (AGI US) and Gregoire P. Tournant, Trevor L....

TOP STORY—S.D.N.Y.: Allianz Global, 3 former managers charged with multi-billion-dollar securities fraud
BROKER-DEALERS—Dangling digital gummy bears: Gensler considers behavior nudges and investor temptations
May 18, 2022
John M. Jascob, J.D., LL.M.

Digital engagement practices in finance can be powerful but raise important questions about conflicts of interest and bias, said the SEC chair at NASAA's Public Policy Symposium. The use of predictive data analytics and other digital engagement pract...

EXCHANGES AND MARKET REGULATION—Chair Gensler makes case for SEC’s first $2 billion plus appropriation
May 18, 2022
Mark S. Nelson, J.D.

In prepared remarks, SEC Chair Gary Gensler asserted that the agency’s staff had shrunk even though the markets it oversees have grown significantly; meanwhile, the agency’s formal FY23 request cited looming appeals cases a partial justification for ...

ENFORCEMENT—S.D. Fla.: CFTC charges Florida man and his companies in commodity futures fraud scheme
May 18, 2022
Jeffrey H. Brochin, J.D.

The scheme defrauded at least 50 pool participants of approximately $3.4 million through the use of non-existent accounts, false account statements, misappropriation of funds, and Ponzi-like payouts. The Commodity Futures Trading Commission filed a c...

Securities

TOP STORY—ESMA makes recommendations to improve retail investor protections

The stated goal of ESMA’s proposals is ensuring retail investors’ access to information they need to make well-informed investment decisions while being protected from aggressive marketing techniques and other detrimental practices. On April 29, 2022...

TOP STORY—ESMA makes recommendations to improve retail investor protections
INTERNATIONAL NEWS—IOSCO report says fair access to market data should be concern for world’s regulators
May 17, 2022
John Filar Atwood

Group also emphasizes the importance of pre-trade and post-trade data in promoting transparency of trading. In a final report that was 17 months in the making, the International Organization of Securities Commissions (IOSCO) has offered several recom...

NASAA NEWS AND SPEECHES—Model rule amendments adopted to combat unpaid arbitration awards and fines
May 17, 2022
R. Jason Howard, J.D.

The conduct set forth in the newly adopted model rules is not inclusive and engaging in other conduct such as non-disclosure, incomplete disclosure, or deceptive practices shall be deemed an unethical business practice. The North American Securities ...

CORPORATE GOVERNANCE—Cal. Super.: California board diversity statute ruled unconstitutional
May 17, 2022
Jeffrey H. Brochin, J.D.

California’s S.B. 826 mandating the number of females on corporate boards violated the Equal Protection Clause, and the legislature was without compelling state interest in remedying generalized discrimination through the use of gender-based classifi...

IPO TRACKER—Despite slowdown, SPACs claim nearly half of May’s IPOs so far
May 17, 2022
John Filar Atwood

A snapshot of the week’s IPO activity, including completed deals, new preliminary filings and IPO withdrawals. Much has been made of the dramatic slowdown in SPAC registrations and offerings this year, and rightly so as SPAC withdrawals currently out...