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On Sept. 28, 2018, the Commodity Futures Trading Commission filed a civil enforcement action against EOX Holdings LLC, an introducing broker, and one of its registered associated persons, Andrew Gizienski. The CFTC’s complaint, which charges that EOX Holdings and Gizienski misused material, nonpublic information in connection with block trades of energy contracts on the ICE Futures U.S. exchange, represents the latest assertion of CFTC jurisdiction over the relatively new concept of illegal insider trading in…
The Enforcement Division of the U.S. Securities and Exchange Commission (“SEC”) continued its “Rule 105 initiative” this year, culminating in settlements with six firms that total more than $2.5 million in monetary sanctions, in addition to other sanctions. These cases highlight important components of the SEC’s approach to Rule 105 enforcement. Fund managers should review their policies with regard to Rule 105, stress test the actual procedures that support those policies, and redouble their surveillance…
Last week saw two significant developments for insider trading law stemming from the Second Circuit’s important decision in U.S. v. Newman, 773 F.3d 438 (2d Cir. 2014). First, the government was dealt a significant loss when, on Jan. 22, 2015, U.S. District Judge Andrew L. Carter, Jr. vacated four insider trading defendants’ guilty pleas in the wake of Newman and rejected the government’s argument that the Newman decision does not apply to cases prosecuted under the so-called “misappropriation” theory of…
Private investment funds today face layers of regulation from regulatory bodies in different jurisdictions. Many of these regulators work in coordination with each other and, as a result, private funds may find themselves facing simultaneous inquiries, investigations or enforcement actions involving multiple regulators. In a recent chapter, published in Private Equity International’s Private Fund Dispute Resolution, SRZ partner Harry S. Davis and associate Brian Burns offer a comprehensive outline of the U.K. and U.S. regulatory compliance…
In its highly anticipated decision in U.S. v. Newman, the U.S. Court of Appeals for the Second Circuit held on Dec. 10 that to sustain insider trading charges against a tippee who trades on material nonpublic information, the government must prove that the tippee knew that the tipper disclosed the information in breach of a duty of trust and confidence in order to receive a personal benefit. The court further explained that the benefit must be…
U.S. Securities and Exchange Commission Chairman Mary Jo White in mid-June announced an important change to the SEC’s policy of permitting parties to settle SEC securities claims without admitting wrongdoing. Chairman White’s announcement follows other remarks that further illuminate how co-directors George S. Canellos and Andrew J. Ceresney will oversee the SEC’s Enforcement Division under White’s leadership. These developments demonstrate the impact that White, Canellos, and Ceresney – who worked together during White’s tenure as…
The Enforcement Division of the Securities and Exchange Commission (“SEC”) recently increased the pace of investigations of potential violations of Rule 105 of Regulation M under the Securities Exchange Act of 1934. Rule 105 makes it unlawful for any person during the “Rule 105 restricted period” to “sell short” an equity security that is being offered for cash pursuant to a registration statement in a firm-commitment, underwritten offering and purchase the offered securities. Hedge fund…
U.S. Securities and Exchange Commission Chairman Mary Jo White last week announced an important change to the SEC’s policy of permitting parties to settle SEC securities claims without admitting wrongdoing. Chairman White’s announcement follows other remarks that further illuminate how Co-Directors George S. Canellos and Andrew J. Ceresney will oversee the SEC’s Enforcement Division under White’s leadership. These developments demonstrate the impact that White, Canellos and Ceresney — who worked together during White’s tenure as…