Compliance and Regulatory Services (“CARS”) Hot Topics for August 2015

August 06, 2015

For this monthly distribution, we are highlighting a bipartisan bill sponsored by Jack Reed (D-RI) and Chuck Grassley (R-IA) that would raise the SEC’s limits on securities fines and better enable them to tie penalties to scope of harm and crack down on repeat offenders.

The Stronger Enforcement of Civil Penalties Act (SEC Penalties Act) of 2015 increases civil penalties on an individual from a maximum of $160,000 per offense to $1,000,000 and institutions from $775,000 to $10,000,000. In other instances, penalties are calculated to equal the gross amount of ill-gotten gain. In the proposed legislation, the penalty cap would be a tripled for recidivists that have been held criminally and civilly liable for securities fraud within the past five years. These penalties can be assessed either by the SEC in-house (through administrative proceedings) or in federal court.
This bill is designed to give the SEC the firepower to make a difference in protecting investors by cracking down on fraudulent Wall Street activities. The legislative mandate to assess meaningful penalties just might change the dynamics of business for the better, especially when individuals face a potential monetary burden of $1,000,000. These levels of penalties may serve as an incentive to both individuals and firms to take compliance seriously and adopt comprehensive risk-based compliance programs that are reasonably designed to prevent, detect, and correct violations of applicable securities laws.  
Our Take: We have heard some industry comments that this is just another method of government revenue-raising. However, through our compliance practice, CARS has recognized the SEC’s changing approach over the past 6-8 months by the way the SEC is dealing with clients during routine examinations and when violations of law occur. The SEC has leveled the playing field through its take-no-prisoners approach when dealing with violations, regardless of whether the subject firm or targeted entity is a small, medium or large firm. The best defense is to make sure you have an air-tight compliance program.

SEC News 

July 31, 2015 SEC Charges Man With Microcap Fraud Involving Shares of Cynk Technology Corp.
July 30, 2015 SEC Charges Operators of Fraud Based in Upstate New York  
July 29, 2015 Daniel M. Hawke, Chief of Market Abuse Unit, to Leave SEC After 16 Years of Service  
July 28, 2015 SEC Charges Mead Johnson Nutrition With FCPA Violations  
July 23, 2015 Former Oppenheimer Employees Settle Charges Involving Unregistered Sales of Penny Stocks
July 21, 2015 SEC Charges Three Penny Stock Promoters Behind Pump-and-Dump Schemes
July 17, 2015 Michele Anderson Named Associate Director in the Division of Corporation Finance
July 17, 2015 SEC Pays More Than $3 Million to Whistleblower
July 16, 2015 SEC Charges Pennsylvania Attorney with Insider Trading in Advance of Merger Announcement
July 16, 2015 SEC Charges Purported Investment Adviser in San Diego With Stealing Client Funds and Conducting a Ponzi Scheme
July 15, 2015 SEC Chair White, Federal Agencies Join Forces for Military Consumer Protection Day 2015  
July 14, 2015 SEC Charges 34 Defendants in Microcap Market Manipulation Schemes
July 14, 2015 OZ Management LP Admits Providing Inaccurate Data, Impacting Brokers’ Records and “Blue Sheets”  
July 13, 2015 Release of Joint Staff Report on October 15, 2014
July 13, 2015 SEC Announces Settlement With Cooperator in Grand Central Post-It Notes Insider Trading Case  
July 8, 2015 SEC Advisory Committee on Small and Emerging Companies to Hold Conference Call Meeting  
July 6, 2015 SEC Charges Oil Company and CEO in Scheme Targeting Chinese-Americans and EB-5 Investors
July 2, 2015 SEC Reappoints Lewis H. Ferguson to Second Term on PCAOB  
July 2, 2015 SEC Halts Pyramid/Ponzi Scheme Targeting Spanish and Portuguese Communities
July 1, 2015 SEC Solicits Public Comment on Audit Committee Disclosures
July 1, 2015 SEC Charges Deloitte & Touche With Violating Auditor Independence Rules
July 1, 2015 SEC Proposes Rules Requiring Companies to Adopt Clawback Policies on Executive Compensation  
July 1, 2015 SEC Charges Former Stockbroker With Conducting Ponzi Scheme
July 1, 2015 SEC Charges Hedge Fund Advisory Firm With Conducting Fraudulent Fund Valuation Scheme



July 16, 2015 The Need for Proactivity: Remarks at the 2015 National Association of Women Lawyers Annual Meeting and Awards Luncheon
July 15, 2015 Opening Remarks at the Compliance Outreach Program for Broker-Dealers  



July 30 , 2015  Firms Elect Three Industry Governors to FINRA Board of Governors, Two New Governors Appointed
July 27, 2015 FINRA Fines Goldman Sachs Execution & Clearing, L.P. $1.8 Million for OATS and Trade Reporting Failures
July 16, 2015 FINRA Solicits Comment on New Academic TRACE Data Set
July 10, 2015 FINRA Issues Investor Alert, Bond Liquidity—Factors to Consider and Questions to Ask
July 6, 2015 FINRA Orders Wells Fargo, Raymond James, and LPL Financial to Pay More Than $30 Million in Restitution to Retirement Accounts and Charities Overcharged for Mutual Funds


(Complete Listing:

FINRA Rule Filings List
(Complete Listing:

Have Questions or Comments?

If you have any questions, we'd like to hear from you.