For those eager to learn what direction the SEC will take during the Trump administration, some clues surfaced during the recent nomination hearing of Jay Clayton, President Trump’s pick to head the SEC. Clayton commented on several important issues confronting the SEC.
enforcement
SEC Chair’s Suggested Expansion of Executive Liability Unlikely to Occur
By Lou Mejia & Perkins Coie on
Posted in Compliance, Fund Organization and Governance
Apparently lost in the news of the impending departure of SEC Chair Mary Jo White is her recent suggestion to expand liability of corporate executives. In a speech on November 18, 2016, Chair White suggested a potential change in federal securities law that would hold executives accountable even if they are not involved in the misconduct and did not know about it. Given recent signals from the new administration in Washington, we believe this potential expansion of liability is unlikely to occur.
SEC Staff and Chair Talk Examination Priorities (For the Time Being At Least)
By Gwen Williamson on
Speaking at a compliance workshop sponsored by the Investment Adviser Association held in Atlanta on November 10, 2016, Bill Royer, Associate Director of the SEC examination program in the Atlanta Regional Office of the SEC laid out the priorities that he expected the SEC’s Office of Compliance Inspections and Examination (OCIE) to focus on in the coming year.
The State of the SEC’s Admissions Policy: Three Years Later
By Lou Mejia on
Posted in Compliance
In June 2013, SEC Chair Mary Jo White announced a new SEC policy requiring admissions as part of settlements in certain types of cases. The criteria for admission cases, as stated by Chair White and an SEC staff memo, included the following factors:
- A large number of investors have been harmed or the conduct was otherwise egregious
- The conduct posed a significant risk to the market
- Admissions would aid investors in deciding whether to deal with a particular party in the future
- Disclosing the facts would send an important message to the market
- Intentional misconduct
- Obstruction of an investigation
In practice, the SEC has rarely required defendants to make admissions in settlements.
More Sanctions from Private Equity Fees: W.L. Ross
By Perkins Coie on
Shortly after my post on the SEC’s recent settlement with Apollo Global Management went up, the SEC released a settlement with another private equity fund manager: W.L. Ross & Co. LLC (“WLR”). Like the Apollo case, the SEC sanctioned WLR for failing to fully disclose how it was collecting its fees. But WLR paid a lower penalty than Apollo, perhaps due to its greater perceived cooperation with the SEC.
Apollo Global Management Settles with the SEC
By Perkins Coie on
Four affiliates of Apollo Global Management settled with the SEC by paying $52.7 million (disgorgement of $37.5 million, prejudgment interest of $2.7 million, and a civil money penalty of $12.5 million) and were issued a cease-and-desist order. There were several bases of alleged misconduct.
SEC Judge Recognizes the Limits of Custodian Liability
By Lou Mejia on
Posted in Compliance
In a recent enforcement proceeding, In the Matter of Equity Trust Company, the SEC sought to impose a standard of care to an IRA custodian that the administrative law judge (“ALJ”) found to be “essentially made up of whole cloth.” The ALJ dismissed the case due to this weakness, among other reasons. The SEC’s loss illustrates the limits of liability for the acts of others.