Thomas O. Gorman

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The Commission initiated enforcement actions centered on insider trading, a sham transaction and a lack of auditor independence this week. The insider trading case charged a former high-ranking Apple attorney tasked with administrating the firm’s insider trading policy while the sham transaction focused on claims by executives that their firm could turn garbage into useful product, a pitch crafted to solicit merger partners. A proceeding against an audit firm and its partners centered on a…
A corporate attorney charged with monitoring the insider trading policy for a large publicly traded company clearly knows the practice is illegal. Indeed, at one point while administering the insider trading policy the attorney disseminated an email at his firm as part of the policy enforcement mechanism which stated in part: “Remember trading is not permitted, whether or not in an open trading window, if you possess or have access to material information that has…
While the government shutdown dragged on, the Courts and the Department of Justice continued to investigate and prosecute FCPA and related actions. One resulted in a guilty plea by a business man in Hawaii. U.S. v. Lyon, No. 1:19-cr-00008 (D. Hawaii Plea Jan. 22, 2019). Another involved a citizen of Micronesia tied to the bribery scheme with Mr. Lyon. That complaint, filed on January 24, 2019 was unsealed on February 11, 2019. U.S. v. Halbert,…
The Supreme Court in Cyan, Inc. v. Beaver County Employees, 138 S.Ct. 1061(2018) concluded that a securities class action brought in state court based solely on claims arising under the Securities Act of 1933 could not be dismissed based on the Securities Litigation Uniform Standards Act of 1998 or SLUSA. In an opinion written by Justice Kagan for a unanimous Court, arguments posed by the SEC and others based on the legislative history of the…
The Commission and the staff may have returned to the office in time to pack-up. By all reports there is no deal on funding the government past the end of the week, February 15, 2015. If that continues the stalemate could begin anew at the close of business on Friday. Since the government returned the Commission has continued to move forward in court, partially settling a large microcap fraud action – the type of case…
The Commission secured partial summary judgment in an action involving a recidivist securities law violator who failed to disclose that fact while soliciting investors that were not permitted to redeem their shares while the defendants redeemed their interests. The court held that defendant’s prior violation and bar should have been disclosed and that selective redemptions tied to misrepresentations violated the antifraud provisions. The agency also filed another offering fraud case. Two new reports on securities…
The number of securities cases filed in federal court continues to rise each year. The SEC continues to file large numbers of cases, although there are periods when the numbers drop. Private plaintiffs continue to file large numbers of securities class actions, although the pace seems to be slowing. Interestingly, the areas of focus for the SEC and securities class actions differ significantly. The agency focuses on accounting and disclosure issues; private plaintiffs focus on…
While the partial government shutdown continued the courts were able to remain open, although their websites were not updated. Agencies such as the SEC reduced their staff to a comparative handful. Nevertheless, during the period the Commission was able to prevail in part on a partial motion for summary judgment against a securities law recidivist. Specifically, the Commission secured summary judgement on claims that a hedge fund owner and his fund violated the antifraud provisions…
While the partial government shutdown continued the courts were able to remain open, although their websites were not updated. Agencies such as the SEC reduced their staff to a comparative handful. Nevertheless, during the period the Commission was able to prevail in part on a partial motion for summary judgment against a securities law recidivist. Specifically, the Commission secured summary judgement on claims that a hedge fund owner and his fund violated the antifraud provisions…