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Official announcements highlighting recent actions taken by the SEC and other newsworthy information.
- Pharmaceutical Company Paying Penalty for Misleading Investors About Sales Metric
published on Fri, 22 Sep 2017 12:55:00 -0400
The Securities and Exchange Commission today filed fraud charges against a Massachusetts-based biopharmaceutical company that exaggerated how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue. Aegerion Pharmaceuticals, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013. The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions ultimately purchased the drug. The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases. “By no one’s math is 50 percent a vast majority,” said Paul Levenson, Director of the SEC’s Boston Regional Office. “When companies publicly discuss their financial data, they must be truthful. Whether they supply hard numbers or give broader descriptions, they cannot mislead investors.” According to the SEC’s complaint, Juxtapid is used to treat a rare and potentially life-threatening genetic condition that causes extremely high cholesterol. In 2013 and 2014, it was priced at approximately $250,000 to $300,000 annually per patient. Following Juxtapid’s introduction in 2013, investors and investment analysts had little financial data to estimate Aegerion’s future revenues from sales of the drug. Aegerion allegedly provided details on the number of Juxtapid prescriptions during several subsequent earnings calls, but this data alone was insufficient for analysts and investors trying to forecast the company’s future revenues because only prescriptions that were actually filled “converted” into sales. According to the SEC’s complaint, it wasn’t until October 2014 that Aegerion disclosed to investors that the conversion rate was actually in the range of 50 to 60 percent. But Aegerion allegedly failed to reveal to investors even then that the conversion rate had hovered around 50 percent since 2013. The SEC’s complaint, filed in federal court in Boston, charges Aegerion with violating Sections 17(a)(2) and (3) of the Securities Act of 1933. Aegerion agreed to the settlement without admitting or denying the allegations. The settlement is subject to court approval. The SEC’s investigation, which is continuing, is being conducted by Emily R. Holness, Dawn A. Edick, Ruth Anne Heselbarth, Rachel Hershfang, Marc Jones, and Amy Gwiazda of the Boston office. The SEC appreciates the assistance of the Federal Bureau of Investigation.
- SEC Announces Agenda for October 12 Investor Advisory Committee Meeting
published on Fri, 22 Sep 2017 12:00:00 -0400
The Securities and Exchange Commission today announced the agenda for the October 12 meeting of its Investor Advisory Committee. The meeting will begin at 10 a.m. in the Multipurpose Room at SEC headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public. The meeting will be webcast live and archived on the committee’s webpage for later viewing. The committee will hold three panel discussions covering blockchain technology and implications for securities markets, law school clinic advocacy efforts on behalf of retail investors, and electronic delivery of information to retail investors, which may include a Recommendation of the Investor as Purchaser Subcommittee. The committee welcomes new members Allison A. Bennington, a Partner and General Counsel at ValueAct Capital, and Mina Nguyen, a Managing Director at AQR Capital Management. Members of the committee represent a wide variety of investor interests, including those of individual and institutional investors, senior citizens, and state securities commissions. For a full list of committee members, see the committee’s webpage. The Investor Advisory Committee was established under Section 911 of the Dodd-Frank Act to advise the Commission on regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace. The Dodd-Frank Act authorizes the committee to submit findings and recommendations to the Commission.
- SEC Suspends Trading in Company Purporting Involvement in Hurricane Harvey Relief Efforts
published on Fri, 22 Sep 2017 10:30:05 -0400
The Securities and Exchange Commission today suspended trading in a company amid questions surrounding its statements about sending response teams and equipment to help with Hurricane Harvey disaster recovery efforts in Houston and surrounding areas. The SEC’s trading suspension order says that a recent press release issued by Texas-based Grupo Resilient International claimed that the company added a “FEMA approved contractor” to the board of its subsidiary and was deploying workers and preparing to deploy a network of mobile broadband trailers to assist in relief efforts. The SEC’s order also says there are questions regarding the adequacy and accuracy of statements made by the company on other matters in prior press releases. Grupo was previously known as Paradise Ridge Hydrocarbons and trades under the ticker symbol GRUI. Earlier this month, the SEC issued an alert that warned investors to be vigilant for investment scams related to Hurricanes Harvey and Irma, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities. “This is further reminder of the need for vigilance when investing in penny stock companies, especially when they are being touted in connection with humanitarian aid during a natural disaster such as Hurricane Harvey. Investors are reminded to keep on the lookout for schemes that seek to attract people who are eager to invest with companies that genuinely provide assistance to those in need,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
- SEC Adopts Interpretive Guidance on Pay Ratio Rule
published on Thu, 21 Sep 2017 16:17:00 -0400
The Securities and Exchange Commission has approved interpretive guidance to assist companies in their efforts to comply with the pay ratio disclosure requirement mandated by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the Commission’s rule implementing the pay ratio requirement, companies are required to begin making pay ratio disclosures in early 2018. “It’s our priority to make sure that we implement disclosure rules mandated by Congress in a way that is true to the mandate and, to the extent practicable, allows companies to use operational data and otherwise readily available information to produce the disclosures,” said Chairman Jay Clayton. “Today’s guidance on pay ratio reflects the feedback the SEC has received and encourages companies to use the flexibility incorporated in our prior rulemaking to reduce costs of compliance.” In particular, the guidance: States the Commission’s views on the use of reasonable estimates, assumptions and methodologies, and statistical sampling permitted by the rule Clarifies that a company may use appropriate existing internal records, such as tax or payroll records, in determinations about the inclusion of non-U.S. employees and in identifying the median employee Provides guidance as to when a company may use widely recognized tests to determine whether its workers are employees for purposes of the rule The Commission’s staff is also providing guidance separately about the pay ratio rule. Bill Hinman, Director of the Division of Corporation Finance noted, “This additional staff guidance, which includes examples illustrating how reasonable estimates and statistical methodologies may be used, is intended to assist companies with their compliance efforts and reduce the costs associated with preparing disclosures. We encourage companies to contact the division staff if additional interpretive questions arise as the compliance date approaches.”
- Telecommunications Company Paying $965 Million For FCPA Violations
published on Thu, 21 Sep 2017 13:45:00 -0400
Sweden-based telecommunications provider Telia Company AB has agreed to pay $965 million in a global settlement with the Securities and Exchange Commission, U.S. Department of Justice, and Dutch and Swedish law enforcement to resolve charges related to violations of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan. According to the SEC’s order, Telia entered the Uzbek telecommunications market by offering and paying at least $330 million in bribes to a shell company under the guise of payments for lobbying and consulting services that never actually occurred. The shell company was controlled by an Uzbek government official who was a family member of the President of Uzbekistan and in a position to exert significant influence over other Uzbek officials, causing them to take official actions to benefit Telia’s business in Uzbekistan. “Corporate bribery is not just unfair and illegal, it has terribly corrosive effects on business, government, and society,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “As this global settlement demonstrates, the SEC continues to work closely with our counterparts at home and abroad to expose and pursue such corruption.” Telia consented to the SEC’s order requiring the company to pay $457 million in disgorgement, and the company also agreed to pay a criminal fine of more than $508 million imposed by the Department of Justice. Portions of each amount could be offset by payments made in overseas settlements or proceedings brought by the Dutch Openbaar Ministerie or the Swedish Åklagarmyndigheten. Telia’s overall payment to the four agencies must be at least $965 million. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud and Money Laundering and Asset Recovery Sections as well as the Internal Revenue Service, Department of Homeland Security, Dutch Openbaar Ministerie, National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway, Swedish Prosecution Authority, Office of the Attorney General in Switzerland, and Corruption Prevention and Combating Bureau in Latvia. The SEC also appreciates the assistance from regulators and law enforcement in France, Spain, and Hong Kong as well as the Financial Conduct Authority, British Virgin Islands Financial Services Commission, Cayman Islands Monetary Authority, Bermuda Monetary Authority, Cyprus Securities and Exchange Commission, and Central Bank of Ireland.
- SEC Chairman Clayton Issues Statement on Cybersecurity
published on Wed, 20 Sep 2017 19:36:23 -0400
SEC Chairman Jay Clayton today issued a statement highlighting the importance of cybersecurity to the agency and market participants, and detailing the agency’s approach to cybersecurity as an organization and as a regulatory body. The statement is part of an ongoing assessment of the SEC’s cybersecurity risk profile that Chairman Clayton initiated upon taking office in May. Components of this initiative have included the creation of a senior-level cybersecurity working group to coordinate information sharing, risk monitoring, and incident response efforts throughout the agency. The statement provides an overview of the Commission’s collection and use of data and discusses key cyber risks faced by the agency, including a 2016 intrusion of the Commission’s EDGAR test filing system. In August 2017, the Commission learned that an incident previously detected in 2016 may have provided the basis for illicit gain through trading. Specifically, a software vulnerability in the test filing component of the Commission’s EDGAR system, which was patched promptly after discovery, was exploited and resulted in access to nonpublic information. It is believed the intrusion did not result in unauthorized access to personally identifiable information, jeopardize the operations of the Commission, or result in systemic risk. An internal investigation was commenced immediately at the direction of the Chairman. “Cybersecurity is critical to the operations of our markets and the risks are significant and, in many cases, systemic,” said Chairman Clayton. “We must be vigilant. We also must recognize—in both the public and private sectors, including the SEC—that there will be intrusions, and that a key component of cyber risk management is resilience and recovery.” The statement also outlines the management of internal cybersecurity risks, including the incorporation of cybersecurity considerations in disclosure-based and supervisory efforts, coordination with other government entities, and the enforcement of the federal securities laws against cyber threat actors and market participants that do not meet their disclosure obligations. Chairman Clayton writes, “By promoting effective cybersecurity practices in connection with both the Commission’s internal operations and its external regulatory oversight efforts, it is our objective to contribute substantively to a financial market system that recognizes and addresses cybersecurity risks and, in circumstances in which these risks materialize, exhibits strong mitigation and resiliency.”
- Thomas J. Butler Named an Associate Regional Director for Examinations in New York Regional Office
published on Wed, 20 Sep 2017 13:00:00 -0400
The Securities and Exchange Commission today announced that Thomas J. Butler has been named an Associate Regional Director for the Investment Adviser and Investment Company examination program in the agency's New York Regional Office. Mr. Butler is leaving his current position as Director of the SEC's Office of Credit Ratings (OCR), a position he has held since June 2012. "I am delighted to welcome Tom to the team," said Pete Driscoll, Acting Director of the Office of Compliance Inspections and Examinations. "The New York region is responsible for more than 2,800 registered investment advisers with more than $18 trillion in assets under management and over 200 investment company complexes. Tom's significant industry experience and leadership prior to and at the SEC will be invaluable to the experienced and dedicated staff in the New York examination program." Prior to his 2012 appointment as the inaugural Director of OCR, Mr. Butler was a Managing Director at Morgan Stanley Smith Barney and Citigroup, held senior financial advisory and structuring roles at UBS and Babcock & Brown, and worked at two major law firms. Mr. Butler received his undergraduate degree from Rutgers College and his law degree from Rutgers School of Law at Newark. Jessica Kane, Director of the SEC's Office of Municipal Securities (OMS), has been appointed to serve as Acting Director of OCR on an interim basis following Mr. Butler's departure. In turn, Rebecca Olsen, Deputy Director of OMS, will serve as Acting Director of that office while Ms. Kane is assigned to OCR.
- CEO Charged With Using Secret Accounts for Insider Trading in Company Stock
published on Wed, 20 Sep 2017 12:15:00 -0400
The Securities and Exchange Commission today charged the former CEO of a Silicon Valley-based fiber optics company with insider trading in company stock by using secret brokerage accounts held in the names of his wife and brother. The SEC alleges that Peter C. Chang, who also was the founder and chairman of the board at Alliance Fiber Optic Products, generated more than $2 million in illicit profits and losses avoided by trading on nonpublic information and tipping his brother ahead of two negative earnings announcements and the company’s merger. According to the SEC’s complaint, Chang was the company’s largest shareholder and required under the federal securities laws to disclose his ownership of company securities as an officer and director. Chang allegedly traded company shares secretly in the family member accounts, often times from his work computer after attending board meetings where confidential information was discussed. He also allegedly tipped his brother in Taiwan with nonpublic information to trade ahead of the earnings announcements in 2015 and an announcement in 2016 that the company would be acquired via tender offer by Corning. Chang allegedly tried to hide his control over one of the accounts by posing as his brother in communications with one of the brokerage firms, and he allegedly obscured his relationship with his wife in response to a market surveillance inquiry by the Financial Industry Regulatory Authority. “As alleged in our complaint, Chang betrayed his company and its shareholders for his personal gain by trading in clandestine accounts right after learning extremely confidential information in board meetings,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office. The SEC’s complaint charges Chang with violating Sections 10(b), 14(e), and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 14e-3, and 16a-3. The complaint seeks disgorgement with prejudgment interest plus a penalty, permanent injunction, and officer-and-director bar. In a separate action by the U.S. Attorney’s Office for the Northern District of California, criminal charges were unsealed against Chang. The SEC’s investigation, which is continuing, has been conducted by Serafima Krikunova and supervised by Jennifer J. Lee of the San Francisco office with assistance from John Rymas of the Enforcement Division’s Market Abuse Unit. The SEC’s litigation will be led by Susan F. LaMarca. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of California, Federal Bureau of Investigation, Financial Industry Regulatory Authority, and Options Regulatory Surveillance Authority.
- Catherine McGuire to Retire After More Than 40 Years at the SEC
published on Tue, 19 Sep 2017 15:30:00 -0400
The Securities and Exchange Commission today announced that Catherine McGuire, Counsel in the Division of Trading and Markets, is retiring after 44 years at the SEC. Ms. McGuire has received more than a dozen awards for her service, including the Distinguished Service Award, the SEC’s highest award, in 1992, and the Presidential Meritorious Executive Award, in 2000. She began her SEC career in 1973 in what was then the Division of Market Regulation and was promoted to positions of increasing responsibility, including serving as Counsel to Commissioner Bevis Longstreth from 1982 to 1983. She was named Chief Counsel and Associate Director of the division in 1993 and has advised the division as Counsel since 2008. “Catherine McGuire has been an outstanding advocate for investors and a guardian of safe and efficient markets throughout her career at the Commission,” said Division of Trading and Markets Acting Director Heather Seidel. “She has been dedicated to the Commission’s mission to protect investors, maintain fair and orderly markets, and facilitate capital formation, and her continuing legacy is a talented and committed division staff, many of whom she mentored, supported, and advised.” Ms. McGuire said: “I am grateful to have spent my legal career at the Commission. I am extremely proud of the work by the Division of Trading and Markets and the dedication of its staff. Their commitment to the agency’s mission is inspiring and represents the best of government service. It has been a privilege to work with them on behalf of investors.” Ms. McGuire’s numerous and significant contributions include work to implement the Securities Reform Act of 1975, the Securities Exchange Act Amendments of 1983, the Secondary Mortgage Market Enhancement Act, the Market Reform Act, the Government Securities Act, the National Securities Markets Improvements Act, the Gramm-Leach-Bliley Act, the Commodity Futures Modernization Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. She also worked on rules involving trade confirmations, regulation of municipal securities and government securities dealers, municipal securities disclosure, retail sales practices, securities arbitration, anti-money laundering, options, and derivatives. Ms. McGuire is a graduate of the University of Michigan and the University of Kansas School of Law, which honored her with the Distinguished Alumna Award in 2004.
- Ken C. Joseph, Head of Investment Adviser/Investment Company Examination Program in SEC's New York Regional Office, to Leave SEC After 21 Years of Service
published on Fri, 15 Sep 2017 14:30:00 -0400
The Securities and Exchange Commission today announced that Ken C. Joseph, Head of Investment Adviser/Investment Company Examination Program in the New York Regional Office, is planning to leave the agency. Since 2012, Mr. Joseph has led a team of over 130 accountants, examiners, attorneys, and support staff responsible for the examination of investment companies and investment advisers in New York and New Jersey. During that time, the IA/IC Examination Program in the New York Regional Office has steadily increased the number of exams of investment advisers and investment companies and has made many changes that have led to a more efficient and effective examination program. Before joining the National Exam Program, Mr. Joseph started at the SEC as a Law Clerk. He went on to serve as an Assistant Director in the SEC's Enforcement Division, New York. When the division was reorganized in 2010, he joined the newly formed Asset Management Unit. During his tenure with the Enforcement Division, Mr. Joseph investigated a wide array of alleged violations of the federal securities laws, including those involving financial fraud, auction rate and subprime securities, credit default swaps, reinsurance transactions, hedge funds, private equity funds, Ponzi schemes, special purpose entities, auditors, investment advisers, investment companies, self-regulatory organizations, transfer agents, and broker-dealers. "Throughout his over two decade career at the SEC, Ken has served the Commission with dedication, leadership and integrity," said Pete Driscoll, Acting Director of the SEC's Office of Compliance Inspections and Examinations. "We and the investing public have greatly benefitted by his outstanding stewardship of the IA/IC Examination Program in New York and his commitment to the SEC's mission." "Ken is the quintessential public servant, who has worked tirelessly for investors these last 21 years. He is, without a doubt, one of the most gifted and talented managers I have ever encountered – a true visionary with a mighty work ethic who has spent night and day thinking about how to do his job better," said Andrew M. Calamari, Director for the SEC's New York Regional Office. "After a stellar enforcement career, Ken took on leadership of our investment management program and in five short years transformed the program in many positive ways including innovative ideas and changes that contributed to the National Exam Program. It has been my privilege to serve with Ken, and I will miss him greatly." Mr. Joseph said, "It has been a privilege and an honor to be entrusted with ever increasing responsibility for fulfilling the Commission's mission. I have been fortunate to work cooperatively and collegially with professionals, all of whom have been bound by our deep commitment to public service. I also wish to acknowledge the support my teams have received over the years from law enforcement partners at the state, local and federal levels." Under Mr. Joseph's supervision, the examination team has referred a number of impactful matters to the Division of Enforcement, which resulted in the payment of significant disgorgement and penalties. These impactful actions included: In the Matter of Royal Alliance Associates, Inc. et al., which resulted in the payment of $9.5 million in monetary relief stemming from alleged anti-fraud violations based on alleged failure to monitor client accounts and to disclose conflicts in selecting mutual fund share classes for clients. Morgan Stanley Smith Barney LLC, which resulted in $13 million in monetary relief for alleged overcharges to clients of more than $16 million and alleged violations of the custody rule and compliance rule. Kohlberg Kravis Roberts & Co. for alleged violations of the anti-fraud rules and for alleged misallocation of broker-dealer expenses, which resulted in monetary relief of $30 million for alleged misallocation of broken deal expenses. Barclays Capital Inc., for alleged anti-fraud violations based on alleged overbilling of advisory fees and excess mutual fund sales charges, which resulted in $97 million monetary relief. Mr. Joseph earned his B.S., M.B.A., and post-graduate degrees from St. John’s University, New York, and his J.D. from the University of North Carolina at Chapel Hill School of Law.
- SunTrust Charged With Improperly Recommending Higher-Fee Mutual Funds
published on Thu, 14 Sep 2017 11:20:00 -0400
The Securities and Exchange Commission today charged the investment services subsidiary of SunTrust Banks with collecting more than $1.1 million in avoidable fees from clients by improperly recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available. SunTrust Investment Services has agreed to pay a penalty of more than $1.1 million to settle the charges. SunTrust separately began refunding the overcharged fees plus interest to affected clients after the SEC started its investigation. SEC examiners cited the practice during a compliance review of the firm in mid-2015. More than 4,500 accounts were affected. According to the SEC’s order, the Atlanta-based firm breached its fiduciary duty to act in clients’ best interests by recommending and purchasing costlier mutual fund share classes that charge a type of marketing and distribution fee known as 12b-1 fees. Investors were not informed that they were eligible for less costly share class options that did not charge 12b-1 fees. The avoidable fees flowed back to SunTrust in the form of higher commissions from the funds. “SunTrust made self-serving investment recommendations to the detriment of everyday investors who rely on mutual funds to secure their financial futures,” said Aaron W. Lipson, Associate Regional Director for Enforcement in the SEC’s Atlanta office. “The story has a happy ending for customers with the extra fees back in their accounts, and an obvious lesson for investment advisory representatives that you must always recommend the best deal for your clients, not yourselves.” The SEC’s order finds that SunTrust violated Sections 206(2), 206(4) and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-7. Without admitting or denying the findings, SunTrust agreed to pay the penalty totaling $1,148,071.77 as well as disgorgement plus interest on any leftover amount of the avoidable 12b-1 fees that are being refunded to clients. The firm also agreed to be censured. The SEC’s investigation was conducted by Brian M. Basinger and supervised by Mr. Lipson and Stephen E. Donahue in the Atlanta office with support from the Division of Economic Risk and Analysis. The SEC examination that led to the investigation was conducted by Vincent H. Catrini and Samra Fleschner of the Atlanta office.
- SEC Monitoring Impact of Hurricane Irma on Capital Markets, Continues to Monitor Impact of Hurricane Harvey
published on Wed, 13 Sep 2017 16:40:00 -0400
The Securities and Exchange Commission is closely monitoring of the impact of Hurricane Irma on investors and capital markets, and continues to monitor the impacts of Hurricane Harvey. "As we are doing in areas affected by Hurricane Harvey, the SEC will be closely monitoring the effects of Hurricane Irma. We will be making sure investors have access to their securities accounts, evaluating the need to extend deadlines for filings and other regulatory requirements, and keeping a watchful eye for storm-related scams," said SEC Chairman Jay Clayton. “Our thoughts and prayers continue to be with everyone affected by these terrible storms.” The SEC Divisions and Offices that oversee companies, accountants, investment advisers, mutual funds, brokerage firms, transfer agents, and other regulated entities and investment professionals will continue to closely track developments. They will evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storms. Until the Commission’s Miami Regional Office reopens, investors and market participants in Florida, Mississippi, Louisiana, U.S. Virgin Islands, and Puerto Rico can contact the Commission’s Atlanta Regional Office. Entities and investment professionals affected by Hurricanes Harvey and Irma are encouraged to contact Commission staff with questions and concerns: Office of Compliance Inspections and Examinations staff in the Commission's Atlanta Regional Office can be reached by phone at 404-842-7600 or email at firstname.lastname@example.org Office of Compliance Inspections and Examinations staff in the Commission's Miami Regional Office can be reached by phone at 305-982-6300 or email at email@example.com Office of Compliance Inspections and Examinations staff in the Commission's Fort Worth Regional Office can be reached by phone at 817-978-3821 or email at firstname.lastname@example.org Division of Corporation Finance staff can be reached by phone at 202-551-3500 or via online submission at www.sec.gov/forms/corp_fin_interpretive Division of Investment Management staff can be reached by phone at 202-551-6825 or email at email@example.com Division of Trading and Markets staff can be reached by phone at 202-551-5777 or email at firstname.lastname@example.org Office of Municipal Securities staff can be reached by phone at 202-551-5680 or email at email@example.com Individuals experiencing problems accessing their securities accounts or with similar questions or concerns relating to the hurricanes are encouraged to contact the Commission's Office of Investor Education and Advocacy by phone at 1-800-SEC-0330 or email at firstname.lastname@example.org. The Division of Enforcement will be vigilant for Hurricane Harvey and Irma-related securities scams and will vigorously prosecute those who attempt to defraud victims of the storms. The SEC is asking investors to report any suspicious solicitations at www.sec.gov/complaint/tipscomplaint.shtml. An SEC Investor Alert can be found at: https://investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-be-vigilant-investment-scams.
- Commission Statement on T+2 Implementation
published on Mon, 11 Sep 2017 17:30:00 -0400
Last week, on September 5, 2017, the securities industry successfully implemented a shortened settlement cycle for most securities transactions, pursuant to amendments to Rule 15c6-1 that the Commission adopted earlier this year. The move to a two business day standard settlement cycle – or T+2 – was the product of extensive preparation and coordination among regulators and industry. This change represents a significant milestone for the securities markets – the standard settlement cycle was last shortened in 1995 when it moved from five business days to three business days. The first transactions covered by the amended rule settled on September 7, 2017. The benefits of a shortened settlement cycle extend throughout the financial sector. The shortened settlement cycle, which was largely enabled by advances in technology, should reduce certain risks in the clearance and settlement process, including credit, market, and liquidity risks for central counterparties, their members, and other market participants. It also should enhance efficiency by promoting innovation and changes in market infrastructures and operations. “Last week’s transition to a T+2 standard settlement cycle represents a significant accomplishment,” said SEC Chairman Jay Clayton. “Going forward, investors and other market participants will be able to receive the proceeds of their securities transactions one day sooner, thereby enhancing the overall efficiency of the U.S. securities markets. I would like to thank my colleagues, including Commissioners Piwowar and Stein and the staff of the Commission, for their leadership in achieving this important result.” “Last week, the U.S. securities markets terminated the outdated T+3 settlement cycle and successfully implemented T+2,” said Commissioner Michael Piwowar. “I applaud the Commission staff and market participants for achieving a smooth transition to a new environment that provides greater efficiency and less risk to the American people.” “The shortened settlement cycle benefits investors and contributes to the resiliency of our securities markets,” said Commissioner Kara Stein. “I look forward to future collaborative efforts as we work together to further enhance our market structure.” If you have additional questions about this transition to the T+2 standard settlement cycle, the Commission will continue to maintain the previously-established e-mail address – T2settlement@sec.gov – for the submission of inquiries to SEC staff.
- SEC, MSRB, FINRA to Hold Compliance Outreach Program for Municipal Advisors
published on Mon, 11 Sep 2017 12:30:00 -0400
The Securities and Exchange Commission, Municipal Securities Rulemaking Board (MSRB), and Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for the Compliance Outreach Program for Municipal Advisors. There is no cost to attend the program, which provides an open forum for municipal advisory industry professionals to discuss compliance practices with regulators and promote a more effective compliance structure for regulatory obligations of municipal advisors. The event will be held at the SEC’s Atlanta Regional Office on November 8, from 9:00 a.m. to 4:00 p.m. ET, and webcast live on the SEC’s website. Additional information, including the agenda, is available on the SEC, MSRB, and FINRA websites. The SEC’s Office of Compliance Inspections and Examinations (OCIE) and Office of Municipal Securities are partnering with the MSRB and FINRA to sponsor the program. Topics of discussion include the duties and standards of conduct for non-solicitor municipal advisors under MSRB Rule G-42 and the Securities and Exchange Act of 1934, and municipal advisor compliance with supervision, registration, and books and records rules. The program also will include a roundtable discussion among the regulators and a question and answer session with participants. “This program is designed to promote compliance with municipal advisor regulations and affords the industry the opportunity to hear from all three regulators on the regulatory obligations of municipal advisors,” said Rebecca Olsen, Deputy Director of the SEC’s Office of Municipal Securities. Suzanne McGovern, Assistant Director of the SEC's broker-dealer and municipal advisor examination programs, added, “This municipal advisor outreach will take a deeper dive into regulatory requirements and their practical implementation, helping municipal advisor professionals ensure proper regulatory compliance.” MSRB Executive Director Lynnette Kelly said, “This program is consistent with the MSRB’s goal of assisting municipal advisors in understanding and complying with their regulatory obligations, and municipal advisors will benefit from getting first-hand feedback from our staff.” Mike Rufino, FINRA’s Head of Member Regulation-Sales Practice, said, “Any firm that wants to enhance its understanding of the regulatory expectations in the important areas of fiduciary duty and supervision will benefit from participating in the outreach program.” Registration is being administered by the MSRB and is open to all municipal advisor industry professionals, with a maximum of two in-person attendees per firm. In-person attendance is limited to a first-come, first-served basis. For those who cannot attend in person, the program will be webcast live on the SEC’s website. Register to attend the program here. Information on accessing the webcast and the links to program materials will be posted on the SEC, MSRB, and the FINRA websites on the day of the program.
- Bridget Fitzpatrick Named Chief Litigation Counsel
published on Thu, 07 Sep 2017 16:20:00 -0400
The Securities and Exchange Commission today announced the leadership of the agency’s trial unit. Bridget Fitzpatrick has been named Chief Litigation Counsel of the SEC and David Gottesman will continue to serve as the agency’s Deputy Chief Litigation Counsel. Since December 2016, Ms. Fitzpatrick and Mr. Gottesman have served as Co-Acting Chief Litigation Counsel. In that role, they were jointly responsible for supervising the trial unit at the agency’s Washington D.C. headquarters as well as coordinating with litigators in the SEC’s 11 regional offices around the country. In her new role, Ms. Fitzpatrick will oversee the agency’s national litigation program and, as Deputy, Mr. Gottesman’s responsibilities will include oversight of all trial lawyers in the SEC’s Washington, D.C., headquarters. Ms. Fitzpatrick previously served as a supervisor and a trial lawyer in the SEC’s Enforcement Division, where she supervised the litigation of several successful cases and tried highly complex matters such as the Commission’s charges against the Chairman and Vice Chairman of the Board of Directors of Michaels Stores, Samuel and Charles Wyly, and former Goldman Sachs banker Fabrice Tourre. In recognition of her contributions to the SEC’s litigation program, she has twice received the Chairman’s Award for Excellence, and also received the Arthur F. Flemming Award for excellence in public service for her role as lead trial counsel in the Commission’s action against the Wyly brothers. As Deputy Chief Litigation Counsel, Mr. Gottesman has managed and advised the agency’s nationwide trial unit on litigation strategies and trial preparation. He previously served as a supervisor and a trial lawyer in the SEC’s Enforcement Division, where he litigated cases involving accounting and disclosure fraud, market manipulation, offering frauds, and insider trading. “The combination of Bridget’s impressive track record and strong judgment on litigation and trial strategy will serve the Division’s national litigation program well,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “And I am pleased that David is going to substantially broaden his role by overseeing more than 40 trial lawyers and continuing to bring his significant securities expertise and judgment to our litigation program.” Steven Peikin, Co-Director of the SEC’s Enforcement Division, added, “Bridget is well respected within both the Division and the agency, and her leadership of the program will be well complemented by David’s expertise and strong management experience.” Ms. Fitzpatrick said, “I am honored to have been chosen to lead the SEC’s trial program and look forward to working with David and the SEC’s talented trial lawyers nationwide to continue our fight to protect investors from wrongdoers.” Mr. Gottesman said, “I look forward to working with Bridget to continue to build upon the successes of our strong litigation program, and look forward to leading the agency’s Washington, D.C.-based trial lawyers to success in the agency’s litigation against wrongdoers.” Before joining the SEC staff, Ms. Fitzpatrick served as a federal prosecutor for more than five years. She served as an Assistant U.S. Attorney in the U.S. Attorney’s Office for the District of Columbia, where she tried 30 cases to verdict, including 15 jury trials, and obtained felony convictions against a sitting City Council member in Washington, D.C., for the embezzlement of more than $350,000 in public funds earmarked for youth and against an accounting manager who stole money from a woman’s shelter and an international charity. Prior to her work in the U.S. Attorney’s Office, Ms. Fitzpatrick worked in private practice. Ms. Fitzpatrick received her bachelor’s degree with distinction in all subjects from Cornell University and her law degree with honors from Georgetown University, where she was a member of the American Criminal Law Review. Before joining the SEC staff, Mr. Gottesman was a trial attorney in the Commercial Litigation Branch of the Civil Division of the U.S. Department of Justice. Prior to his work at the Department of Justice, he worked in private practice. Mr. Gottesman received his bachelor’s and law degrees from the University of Minnesota.
- Former Amazon Employee and College Friend Charged With Insider Trading
published on Thu, 07 Sep 2017 14:50:00 -0400
The Securities and Exchange Commission today announced insider trading charges against a former Amazon financial analyst who allegedly leaked confidential information to his former fraternity brother in advance of a company earnings announcement so they could turn an illegal profit. The college friend and his trading partner also are charged in the SEC’s complaint. The SEC alleges that Brett Kennedy accessed nonpublic 2015 first quarter earnings information without authorization while working at Amazon and shared it with Maziar Rezakhani, who illegally traded on the financial results before their public release to make more than $116,000 in illicit profits. According to the SEC’s complaint, Rezakhani paid Kennedy $10,000 in cash for the tip and also shared the trading profits with Sam Sadeghi, who was advising him on his brokerage account trades and joined Rezakhani at a meeting with Kennedy to discuss the nonpublic information. The SEC’s complaint alleges that Rezakhani and Sadeghi aimed to establish a successful track record with the trading in Rezakhani’s brokerage account and together open a hedge fund in New York that would accept investments from others. According to the SEC’s complaint, Rezakhani boasted on at least two trading-related internet communication platforms in the days leading up to Amazon’s earnings announcement that he was predicting first quarter revenue of $22.7 billion and earnings per share of -$0.12, writing that the “numbers are so obvious” that a “5 year old can guess what they will do.” Jina L. Choi, Director of the SEC’s San Francisco Regional Office, said, “As alleged in our complaint, Rezakhani boasted on social media that he could accurately predict Amazon’s financial performance. But he failed to predict that we would catch him and his accomplices in their illegal scheme.” Sadeghi and Kennedy agreed to settlements that are subject to court approval. Without admitting or denying the allegations, Sadeghi agreed to pay disgorgement of $11,599.74 plus $1,035.39 in interest and an $11,599.74 penalty for a total of $24,214.87. Kennedy agreed to pay disgorgement of $10,000 plus interest of $875.36. In a parallel action, the U.S. Attorney’s Office for the Western District of Washington today announced criminal charges against Kennedy. The SEC’s investigation was conducted by Sallie Kim and supervised by Steven Buchholz of the San Francisco office. The litigation against Rezakhani will be led by Ms. Kim and Mr. Buchholz. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington and the Federal Bureau of Investigation.
- State Street Paying Penalties to Settle Fraud Charges and Disclosure Failures
published on Thu, 07 Sep 2017 11:05:00 -0400
The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities. An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm. State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets. When one customer detected some hidden markups and confronted State Street employees, they falsely called it a “fat finger error” and “inadvertent commissions” in order to conceal the scheme. “Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges. In a separate SEC order, the agency finds that State Street failed to inform subscribers to its government securities trading platform called GovEx that despite marketing the system as “fair and transparent” it provided one subscriber with a “Last Look” trading functionality that allowed a short period of time for the subscriber to reject a match to a submitted quote. The subscriber used Last Look to reject 57 matches that each had a $1 million face value. State Street did not inform the counterparties that their orders had been rejected with Last Look. While developing Last Look, State Street even told one subscriber that the platform did not have Last Look functionality at all. “Firms that run trading platforms cannot mislead subscribers about their order handling operations,” said Kathryn A. Pyszka, Associate Director of the SEC’s Chicago Regional Office that investigated the GovEx-related disclosure failures. State Street Bank and Trust Company agreed to pay a $3 million penalty without admitting or denying the findings that its GovEx-related disclosure failures violated Section 17(a)(2) of the Securities Act of 1933. The SEC’s investigation was conducted by Jonathan I. Katz of the Chicago office and Marcus D. Fruchter of the Market Abuse Unit, and the case was supervised by Ms. Pyszka, Joseph G. Sansone, and Robert A. Cohen. State Street Global Markets LLC, State Street Global Advisors Funds Distributors LLC, and State Street Bank and Trust Company agreed to pay a $32.3 million penalty to settle the fraud charges for the hidden transition services markups, which violated Sections 17(a)(1) and (3) of the Securities Act of 1933 as well as Section 15(c)(1) and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c). State Street Corporation and certain foreign subsidiaries previously agreed to pay separate penalties to U.S. criminal authorities and the United Kingdom’s Financial Conduct Authority. The SEC’s investigation was conducted by Eric Heining, Rory Alex, Rua Kelly, and Paul Block of the Boston office with assistance from examiner Mark Gera. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Massachusetts, Fraud Section of the U.S. Department of Justice, Federal Bureau of Investigation, United Kingdom’s Financial Conduct Authority, and City of London Police.
- SEC Announces Agenda for September 13 Meeting of the Advisory Committee on Small and Emerging Companies
published on Wed, 06 Sep 2017 15:00:00 -0400
The Securities and Exchange Commission today announced the agenda for the next meeting of its Advisory Committee on Small and Emerging Companies. The committee will discuss the Sarbanes-Oxley Act auditor attestation requirement and explore whether updates are needed to Securities Act Rule 701, which many companies use to provide stock and option awards. The committee also will vote on a final report that would be issued before the committee’s charter expires on September 24. The September 13 meeting will begin at 9:30 a.m. in the multipurpose room at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public. It will be webcast live on the SEC’s website and archived on the website for later viewing. The committee provides a formal mechanism for the SEC to receive advice and recommendations on privately held small businesses and publicly traded companies with a market capitalization less than $250 million. Members of the public who wish to provide their views on the matters to be considered by the committee may submit comments electronically or on paper. Please submit comments using one method only. Information that is submitted will become part of the public record of the meeting. Electronic submissions: Use the SEC's Internet submission form or send an e-mail to email@example.com. Paper submissions: Send paper submissions to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090. All submissions should refer to File Number 265-27, and the file number should be included on the subject line if e-mail is used. Agenda 9:30 a.m. Co-Chairs Call Meeting to Order Introductory Remarks 10:00 a.m. Auditor Attestation Report under Section 404(b) of the Sarbanes-Oxley Act Presentations William J. Newell, Chief Executive Officer, Sutro Biopharma Inc. Leonard L. Combs, PwC, U.S. Chief Auditor Committee Discussion 11:30 a.m. Final Report of the Advisory Committee to the Commission Discussion and Vote on Adoption 12:30 p.m. Lunch Break 2:00 p.m. Awards Pursuant to Written Compensatory Benefits Plans - Should Securities Act Rule 701 Be Updated? Presentation Christine McCarthy, Partner, Compensation & Benefits, Technology Companies Group, Orrick Steve Miller, Chief Financial Officer, Warby Parker Committee Discussion 3:30 p.m. Adjournment
- Radio Host Charged With Concert Ticket Investment Scam
published on Wed, 06 Sep 2017 11:35:00 -0400
The Securities and Exchange Commission today charged a sports radio personality and another New York City man with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets. In a complaint filed in federal district court in Manhattan, the SEC alleges that Craig Carton and Joseph Meli falsely claimed they had access to large blocks of face value tickets to popular concert performances. According to the SEC’s complaint, investors were falsely promised high returns from the price markups in ticket resales. But instead of purchasing tickets for resale, Carton and Meli allegedly misappropriated at least $3.6 million to repay earlier investors and cover such other expenses as Carton’s gambling debts. Carton allegedly stole an additional $2 million by tricking a concert venue into forwarding an investor’s money into a bank account belonging to one of Carton’s companies. According to the SEC’s complaint, one investor was provided documents falsely representing that large blocks of Adele tickets were being purchased at face value directly from Adele’s management company when in fact no such agreement was in place. Meli was separately charged earlier this year with operating a Ponzi scheme involving purported resales of tickets to the Broadway musical Hamilton and other events. “As alleged in our complaint, investors were lured with promises of big profits from resales of A-list concert tickets, but little did they know their money was being used to cover Carton’s gambling debts among other things,” said Paul Levenson, Director of the SEC’s Boston Regional Office. The SEC’s complaint seeks disgorgement of ill-gotten gains plus interest and penalties against Carton and Meli along with six businesses they control: Advance Entertainment LLC, AdvanceM Ltd., Misoluki Inc., Misoluki LLC, Ticket Jones LLC, and Tier One Tickets LLC. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Carton. The SEC’s case is being handled by Dahlia Rin, John McCann, Martin Healey, and Celia Moore of the Boston office. The SEC appreciates the assistance of the FBI and the U.S. Attorney’s Office for the Southern District of New York.
- Adviser Charged With Stealing Investor Funds
published on Wed, 06 Sep 2017 11:15:00 -0400
The Securities and Exchange Commission today charged a New Jersey-based tax preparer and investment adviser with stealing more than $1 million from clients to support his gambling habit and other personal expenditures. The SEC alleges that Scott Newsholme of Farmingdale, New Jersey, fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice to give him their money to invest in various securities. Instead of investing clients’ money, Newsholme allegedly cashed their investment checks at a check-cashing store and pocketed the funds while assuring clients that their assets were safe and flourishing. According to the SEC’s complaint, Newsholme used investor money for personal expenses, gambling in Atlantic City, and Ponzi-like payments to clients who sought a return of their funds. “As alleged in our complaint, Newsholme repaid his clients’ trust with betrayal,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Newsholme. The SEC’s complaint, filed in Trenton, New Jersey, charges Newsholme with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks the disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions. The SEC’s investigation was conducted by Alix Biel, Neil Hendelman, and Thomas P. Smith Jr., and the litigation will be led by Ms. Biel and Howard Fischer. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the New Jersey Bureau of Securities.
- Chairman Clayton Names Executive Staff
published on Thu, 31 Aug 2017 17:11:00 -0400
The Securities and Exchange Commission today announced that John Cook, Jeffrey Dinwoodie, Raquel Fox, Kristina Littman, Alan Cohen, Christopher Carofine, and Shelby Begany Telle have been named to the executive staff of Chairman Jay Clayton. These executive staff members will advise Chairman Clayton alongside Chief of Staff Lucas Moskowitz, Deputy Chief of Staff Sean Memon, Chief Counsel Jaime Klima, Managing Executive Peter Uhlmann, and Senior Advisor to the Chair for Cybersecurity Policy Christopher Hetner. Chairman Clayton's executive staff is responsible for advising the Chairman on all matters before the Commission, working closely with agency staff, and helping the Chairman perform all day-to-day operations needed to fulfill the SEC's mission. "I am pleased that we have assembled a dedicated, talented, and diverse group with such a wide range of experiences in the public and private sectors," said Chairman Jay Clayton. "With their help, and the work of the dedicated staff of the Commission, I look forward to continuing the SEC's strong tradition of interacting with all constituencies we serve effectively and efficiently as we strive to fulfill the SEC's mission." John CookSenior Advisor to the Chairman John Cook is the lead advisor to the Chairman on matters involving the Division of Investment Management, Division of Economic and Risk Analysis (DERA), and Office of the Chief Accountant (OCA), and assists on enforcement matters. Mr. Cook joined the SEC in 2010, previously serving as a Senior Special Counsel in DERA and in OCA, and as a counsel to Commissioner Daniel M. Gallagher. Before joining the SEC, Mr. Cook practiced law at Gibson, Dunn & Crutcher LLP, representing clients in regulatory matters. Mr. Cook earned his J.D., cum laude, from Harvard Law School and an undergraduate degree, magna cum laude, from the Georgetown University School of Foreign Service. Jeffrey DinwoodieSenior Advisor to the Chairman Jeffrey T. Dinwoodie is the lead advisor to the Chairman on matters involving the Division of Trading and Markets, Office of Compliance Inspections and Examinations, Office of Municipal Securities, and Office of Credit Ratings, and assists on enforcement matters. Mr. Dinwoodie previously practiced law at Davis Polk & Wardwell LLP, where he advised banks, broker-dealers, clearinghouses, markets, rating agencies, and other financial institutions on a wide range of regulatory, enforcement, and transactional matters. He has been a frequent writer and speaker on securities and derivatives law topics. Prior to joining Davis Polk, Mr. Dinwoodie served as an SEC attorney from 2008 to 2011 in the Division of Trading and Markets. Mr. Dinwoodie earned his J.D., magna cum laude, from American University and an undergraduate degree from George Mason University. Raquel FoxSenior Advisor to the Chairman Raquel Fox is the lead advisor to the Chairman on matters involving the Division of Corporation Finance and Office of International Affairs, and assists on enforcement matters. Ms. Fox joined the SEC in 2011, previously serving as a Senior Special Counsel to the Director of the Division of Corporation Finance and an attorney fellow in the offices of Capital Markets Trends and Rulemaking. Before joining the SEC, Ms. Fox practiced law at Wilmer Cutler Pickering Hale and Dorr LLP, specializing in capital markets transactions, corporate governance, and disclosure. She began her career as a certified public accountant, specializing in taxation. Ms. Fox earned her J.D. from Harvard Law School and a master's degree in Taxation and an undergraduate degree, summa cum laude, from Baylor University. Kristina LittmanSenior Advisor to the Chairman Kristina Littman is the lead advisor to the Chairman on matters involving the Division of Enforcement, and assists on other regulatory and policy matters. Ms. Littman joined the SEC in 2010, previously serving as a trial attorney and investigative attorney in the Division of Enforcement and as Counsel to the Director of Enforcement. Prior to joining the SEC, Ms. Littman practiced law at Drinker Biddle & Reath LLP, specializing in white collar and securities litigation. Ms. Littman earned her J.D. and M.B.A. from Rutgers University School of Law – Camden and an undergraduate degree from Florida State University. Alan CohenSenior Policy Advisor to the Chairman Alan Cohen will serve as advisor to the Chairman on emerging risks and regulatory developments, including the impact of Brexit, new European Union regulations (e.g. MiFID II), and issues related to domestic and international clearing and settlement of securities and derivatives transactions. Most recently, Mr. Cohen was an advisor to the executive office at Goldman Sachs after joining the firm in 2004 as the Global Head of Compliance and a member of the management committee, where he supervised a global team that was responsible for compliance across all business and financial products, and in every major international market. Additionally, he was the court-appointed receiver of an SEC- and CFTC-regulated firm that engaged in a global securities and commodities fraud scheme and served on FINRA's Compliance Advisory Committee and International Advisory Working Group. From 1991 to 2003, Mr. Cohen created and co-headed the white collar and regulatory defense practice at O'Melveny & Myers LLP. Mr. Cohen earned his J.D. from Rutgers School of Law – Newark, a Ph.D. in Political Science from Rutgers University, and an undergraduate degree from Temple University. Christopher CarofineDirector of Communications Christopher Carofine serves as Director of Communications to Chairman Clayton, advising on all matters related to communications and media relations. Prior to joining the SEC, Mr. Carofine served as the Communications Director for Rep. Scott Garrett, former Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises. He was previously a Senior Account Executive at a business communications and public relations firm in New York. Mr. Carofine earned his undergraduate degree from Rutgers University. Shelby Begany TelleConfidential Assistant Shelby Begany Telle serves as Confidential Assistant to Chairman Clayton. Prior to joining the SEC staff, Ms. Telle spent four years working on Capitol Hill—most recently for the Senate Rules Committee and previously for the Senate Committee on Banking, Housing and Urban Affairs and the Senate Appropriations Committee—all for U.S. Senator Richard Shelby. Ms. Telle earned her undergraduate degree from Vanderbilt University, where she was a Chancellor's Scholar, and is an evening student at Catholic University's Columbus School of Law. Other Members of the Executive Staff Lucas MoskowitzChief of Staff BioSean MemonDeputy Chief of Staff Bio Jaime KlimaChief Counsel Bio Peter UhlmannManaging Executive Bio Christopher HetnerSenior Advisor to the Chair for Cybersecurity PolicyBio
- SEC Names Jeffrey Harris as Director of the Division of Economic and Risk Analysis
published on Thu, 31 Aug 2017 17:10:00 -0400
The Securities and Exchange Commission today announced that Dr. Jeffrey H. Harris has been named Director of the agency's Division of Economic and Risk Analysis (DERA). He replaces former director Mark Flannery who left the agency to return to teaching. DERA was created in September 2009 to integrate financial economics and rigorous data analytics into the core mission and operations of the SEC. As Director, Dr. Harris will lead DERA’s team of experienced economists as they are involved across the entire range of SEC activities, including policy, rulemaking, enforcement, and examination. “Dr. Harris’s extensive research on securities and commodities issues and experience in government, academia, and the private sector make him a great fit to lead DERA’s team of dedicated economists,” said Chairman Jay Clayton. “I am confident that DERA will continue to provide the SEC’s staff and the Commission with the valuable economic analysis, research, and support they need.” Dr. Harris added, "The team at DERA is one of the most well-respected and talented groups of economists in public service and it is an honor to join their ranks. I look forward to working with my new team, agency staff, and the Commissioners as we work to fulfill the SEC’s mission.” Chairman Clayton also thanked Acting Director Scott Bauguess. “Scott has been a terrific leader of DERA since the departure of Professor Flannery and I look forward to continuing to work with him on various important projects.” Dr. Harris is currently a professor and the Gary D. Cohn Goldman Sachs Chair in Finance at Kogod School of Business at American University in Washington, D.C. Dr. Harris has an extensive background in market microstructure and regulatory issues. He recently served as Chief Economist at the Commodity Futures Trading Commission, with prior experience as Visiting Academic at the Nasdaq Stock Market and at the SEC. He has previously held faculty appointments as the Dean’s Chair in Finance at the Whitman School of Management at Syracuse University, as the Collins Chair of Finance in the Cox School of Business at Southern Methodist University (visiting), and at the University of Delaware, the University of Notre Dame, and The Ohio State University. DERA relies on a variety of academic disciplines, quantitative and non-quantitative approaches, and knowledge of market institutions and practices to help the Commission approach complex matters and conduct economic analysis in a fresh light. DERA also assists in the Commission's efforts to identify, analyze, and respond to risks and trends, including those associated with new financial products and strategies. Through the range and nature of its activities, DERA serves the critical function of promoting collaborative efforts throughout the agency and breaking through silos that might otherwise limit the impact of the agency's institutional expertise. Dr. Harris’s research has appeared in the Energy Journal, European Financial Management, Financial Management, The Financial Review, the Journal of Finance, the Journal of Investment Management, the Journal of Financial and Quantitative Analysis, the Journal of Financial Economics, the Journal of Futures Markets, the Review of Futures Markets and the Review of Financial Studies. Dr. Harris holds an undergraduate degree and M.B.A. from the University of Iowa and a Ph.D. in Finance from The Ohio State University.
- SEC Names Dalia Blass as Director of the Division of Investment Management
published on Thu, 31 Aug 2017 17:05:00 -0400
The Securities and Exchange Commission today announced that Dalia Blass has been named Director of the agency's Division of Investment Management. The SEC's Division of Investment Management works to protect investors and to promote capital formation and innovation in investment products and services through oversight and regulation of the nation’s multi-trillion dollar investment management industry. The Division is responsible for the Commission's regulation of investment companies, variable insurance products, and federally registered investment advisers. "Dalia's years of service here at the SEC and extensive experience in the private sector will make her a valuable asset to the agency and the Division of Investment Management," said Chairman Jay Clayton. "The investment management industry is constantly evolving, yet its integrity is vital to our markets and Main Street investors. I know Dalia and the dedicated team in the Investment Management Division recognize this and will continue to work every day to fulfill the SEC’s mission." Ms. Blass returns to the SEC after previously serving in a number of leadership roles in the Division of Investment Management, most recently as Assistant Chief Counsel. During her SEC tenure of more than a decade, Ms. Blass received the SEC's Manuel F. Cohen Award, which recognizes outstanding legal ability and performance. "It is an enormous honor to return to the SEC to work with Chairman Clayton, Commissioners Stein and Piwowar, and the talented and hard-working staff in the Division of Investment Management and across the agency," said Ms. Blass. "The asset management industry is more important than ever to American investors and to our capital markets. I am humbled by the opportunity to lead the Division and to promote opportunities for capital formation and innovation that benefits investors." Ms. Blass joins the agency from Ropes & Gray LLP, where she advised on a broad range of investment fund, private equity, and regulatory matters. She previously practiced law at O'Melveny & Myers LLP, and began her career in the London office of Shearman & Sterling LLP. Ms. Blass earned a J.D. from Columbia University School of Law, where she was Harlan Fiske Stone Scholar and Executive Editor of the Journal of Transnational Law. She received her B.A in international studies from the American University and studied political science at the American University in Cairo.
- SEC and NYU to Host Forum on Exchange-Traded Products
published on Thu, 31 Aug 2017 15:00:00 -0400
The Securities and Exchange Commission and New York University will host a forum in September to examine the fast growing market for exchange-traded products and its implications for investors. The event, hosted by SEC’s Division of Economic and Risk Analysis and NYU’s Salomon Center for the Study of Financial Institutions, will bring together regulators, industry members, and academics for a half-day dialogue on September 8. It will kick off with welcoming remarks by Commissioner Michael Piwowar at 9:15 a.m. and conclude following remarks by Commissioner Kara Stein at 1:00 p.m. Since the first exchange-traded product (ETP) was introduced in 1993, the ETP market has expanded to nearly 2,000 different securities holding more than $2.7 trillion of assets. While the first ETPs tracked stock-market indices, the market now includes ETPs that track other market indices as well as actively managed ETPs that invest in stocks, bonds, commodities, currencies, futures, options, and other derivative products. “Exchange-traded products, once novel instruments, now account for nearly one-third of trading volume on U.S. exchanges. It is important that we examine the impact of these products on our markets and Main Street investors,” said SEC Chairman Jay Clayton. “We are pleased to collaborate with NYU on this event and I thank my fellow Commissioners for their participation.” The event will be held at SEC headquarters at 100 F Street NE, Washington, D.C., and webcast at DERA Events. The event is free and open to the public who are asked to register in advance.
- Former Pharma Company Accountant, Three Others Charged With Insider Trading
published on Thu, 31 Aug 2017 13:05:00 -0400
The Securities and Exchange Commission today charged an accountant and three others with insider trading on market-moving news about the New Jersey-based pharmaceutical company where the accountant formerly worked. The SEC's complaint, filed in federal court in New Jersey, alleges that Evan R. Kita, a CPA and former accountant at Celator Pharmaceuticals Inc., tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals Plc almost three months later. Celator's stock rose more than 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator. According to the SEC's complaint, Daniel Perez and Richard Yu purchased Celator stock based on Kita's tips before the two announcements and agreed to share their trading profits with him. The SEC alleges that Richard Yu passed Kita's tips to his father, Chiang Yu, who also traded in advance of both announcements. To avoid detection, Kita allegedly communicated with Perez and Richard Yu through an encrypted smartphone application. ''The investing public relies on accountants and other gatekeepers to safeguard confidential information, not use it for personal profit,'' said Kelly L. Gibson, Associate Director of the SEC's Philadelphia Regional Office. ''When gatekeepers violate that public trust as Kita allegedly did, the SEC is committed to holding them accountable.'' In a parallel action, the U.S. Attorney's Office for the District of New Jersey today filed criminal charges against Kita, Perez, Richard Yu, and Chiang Yu. The SEC's complaint charges Kita, Perez, Richard Yu, and Chiang Yu with violating antifraud provisions of the federal securities laws and related SEC antifraud rules. The SEC's continuing investigation is being conducted by David W. Snyder and John S. Rymas and supervised by Ms. Gibson and Joseph G. Sansone, Co-Chief of the Market Abuse Unit. The litigation will be led by Jennifer Chun Barry. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.