Attorneys at the Securities and Exchange Commission have filed litigation against two Florida men alleging that they defrauded teachers and retirees in a $22 million Ponzi scheme by posing as a private equity fund. Read more about it here.
Senate Permanent Subcommittee on Investigations Meets With Governement Securities Attorney re Document Destruction
Dow Jones is reporting that the Senate Permanent Subcommittee on Investigations has met with a securities lawyer at the SEC who claims that the agency had destroyed “roughly 9,000 files since 1993 containing documents on inquiries into potential securities-law violations.” Allegedly the documents were destroyed routinely as a matter of the agency’s policy and violated federal rules.
According to Reuters, attorneys at the Securities and Exchange Commission (“SEC”) have reportedly begun making requests for information concerning proprietary algorithmic trading data as part of its authority to examine financial firms for compliance with federal regulations according to officials and outside lawyers. Reuters reports that “the unusual requests for algo code and other computerized trading strategies really ramped up this year and have targeted stock-trading firms such as broker dealers and hedge funds.”
FORMER PORTFOLIO MANAGER AT HEDGE FUND INVESTMENT ADVISOR DIAMONDBACK CAPITAL MANAGEMENT SUED BY SEC
Enforcement attorneys at the Securities and Exchange Commission (“SEC”) filed a civil action against a former portfolio manager at the hedge fund investment adviser Diamondback Capital Management, LLC. The SEC complaint alleges that the former portfolio manager used inside information to trade ahead of the November 29, 2009 announced acquisition of Axcan Pharma Inc. The SEC also names Diamondback as a relief defendant
Interestingly, in September 2007, Diamondback was appointed as a lead plaintiff in the securities class action case Technical Olympic USA, Inc. (TOUSA) Securities Litigation, No. 06-cv-61844, in the Southern District of Florida. Shortly thereafter (and after vigorously pursuing its appointment), Diamondback moved to withdraw from this high profile position merely stating that “Diamondback no longer wishes to undertake take the responsibilities of Lead Plaintiff because it believes that doing so could be detrimental to Diamondback’s overall business.” The Court granted this motion in an Order dated May 22, 2008.
The Wall Street Journal is reporting that Oracle is being investigated by attorneys at the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) for possible violations of the Foreign Corrupt Practices Act (FCPA) arising out of software sales in Africa.
The WSJ Deal Journal blog had an interesting post today discussing whether Groupon was “skirting” the Securities and Exchange Commission (SEC) rules.
SEC rules impose a ”quiet period” in connection with an initial public offering. During the “quiet period” or sometimes “waiting period,” federal securities laws limit what information a company and related parties can release to the public. A theory behind the quiet or waiting period is to permit the market to reach a valuation of the shares without influence from insiders of affiliated parties hyping the company’s stock.
§ 240.21F-2 Whistleblower status and retaliation protection.
(a) Definition of a whistleblower. (1) You are a whistleblower if, alone or jointly with others, you provide the Commission with information pursuant to the procedures set forth in § 240.21F-9(a) of this chapter, and the information relates to a possible violation of the federal securities laws (including any rules or regulations thereunder) that has occurred, is ongoing, or is about to occur. A whistleblower must be an individual. A company or another entity is not eligible to be a whistleblower.
(2) To be eligible for an award, you must submit original information to the Commission in accordance with the procedures and conditions described in §§240.21F4, 240.21F-8, and 240.21F-9 of this chapter.