SEC and CFTC Update

A month-by-month recap of the U.S. Securities and Exchange Commission, and Commodity Futures Trading Commission enforcement activities and developments

Latest from SEC and CFTC Update

Action against Respondents, a rental car company and its holding company, for alleged financial misstatements.  According to the SEC, Respondents misstated pretax income, failed to disclose material facts to investors, issued earnings guidance that was inaccurate based on internal analyses, and failed to maintain adequate accounting controls.  Respondents have agreed to pay a civil penalty of $16 million. SEC Order
Action against Respondent, a communication product company, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, Respondent’s subsidiary provided discounts to distributors and resellers with the understanding that the discounts would be used to make cash payments to government officials who had influence over purchasing decisions.  The SEC further alleges that Respondent failed to maintain adequate accounting controls and lacked an effective anti-corruption compliance program with…
Action against Respondent, a partially state-owned Brazilian energy company, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, officers of Respondent’s subsidiary engaged in a scheme to rig construction bids, inflate contract prices, and pay bribes to government officials.  The SEC further alleges that Respondent’s accounting controls were inadequate.  Respondent has agreed to pay a civil penalty of $2.5 million. SEC Order SEC Administrative Summary
Action against Respondents, a nutritional patch manufacturer and two of its directors, for alleged filing of misleading statements.  According to the SEC, Respondents misrepresented the FDA’s jurisdiction over the company’s products and failed to disclose that the products required FDA approval.  Respondent directors have agreed to pay civil penalties of $25,000 each. SEC Order
Action against Respondent, a registered investment adviser, for alleged violations of the Investment Advisers Act with respect to the management of private equity and employee funds.  According to the SEC, Respondent failed to properly allocate certain expenses to certain of its funds and co-investors and failed to properly offset management fees in connection with fee-sharing agreements and implement policies, including ones consistent with representations to investors.  Respondent has agreed to pay a civil penalty of…
Action against Respondent, a home security firm, for failure to comply with disclosure requirements with respect to non-GAAP financial measures.  According to the SEC, Respondent used non-GAAP metrics in its financial statements and failed to give equal or greater prominence to comparable GAAP metrics.  Respondent has agreed to pay a civil penalty of $100,000. SEC Order
Action against Respondent, a financial services firms, in connection with an industry-wide sweep into practices related to the pre-release of American Depositary Receipts (ADRs).  According to the SEC, Respondent pre-released ADRs to pre-release brokers pursuant to an agreement which required the broker receiving the pre-released ADRs to represent, among other things, that it beneficially owned the ordinary shares (or an equivalent security) represented by the ADRs.  The SEC alleges that Respondent should have known or discovered that…
Action against Respondent, an investment adviser, for alleged violations of the antifraud and compliance provisions of the federal securities laws.  According to the SEC, Respondent invested client funds in mutual fund share classes that charged 12b-1 fees when less expensive share classes were available.  The SEC alleges that Respondent failed to disclose conflicts of interest, violated the duty of best execution, and failed to maintain adequate compliance policies.  Respondent has agreed to pay disgorgement of…
Action against Respondents, an auditing firm and two of its partners, for alleged audit standard violations.  According to the SEC, Respondents conducted a deficient audit despite known fraud risks and failed to maintain independence due to an ongoing business relationship with the audited company.  Respondent firm and partners have agreed to pay respective civil penalties of $1.5 million, $25,000, and $15,000.  Respondent partners have agreed not to appear or practice as accountants before the SEC.…
Action against Respondent, a robo-adviser, for alleged false statements to clients.  According to the SEC, Respondent failed to monitor client accounts for transactions that would cause wash sales, despite promising to do so, improperly published client testimonials, improperly paid for client referrals, and failed to implement adequate policies, procedures, and a compliance program.  Respondent has agreed to pay a civil penalty of $250,000. SEC Order SEC Press Release