On November 2, 2020, the SEC’s Division of Enforcement issued its Annual Report for fiscal year 2020. The Report provides a useful look at Enforcement’s accomplishments, priorities, and challenges over the past year. Notably, the number of SEC enforcement actions fell by approximately 17 percent from fiscal 2019 – a likely result, at least in part, of the impact of the COVID-19 pandemic on Enforcement’s operations. The total amount of penalties and disgorgement the SEC obtained,… More
On October 1, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released an advisory regarding potential sanctions risks related to facilitating ransomware payments, as covered in this post from Foley Hoag’s Security, Privacy, and the Law blog.
OFAC is the federal agency responsible for implementing and enforcing U.S. sanctions against individuals, entities, and foreign governments involved in terrorism,… More
Just before the close of its fiscal year, the Securities and Exchange Commission (SEC) brought three noteworthy financial reporting cases against issuers that resulted from the agency’s increasingly sophisticated use of risk-based data analytics to detect disclosure violations. On September 28, 2020, the SEC filed settled actions against two issuers, as well as two officers of one of them, for falsifying their reported earnings per share (EPS). These actions,… More
On September 23, 2020, the Securities and Exchange Commission (SEC), in a 3-2 vote, approved several significant amendments to, and interpretive guidance on, the rules governing its whistleblower program. Most controversially, the SEC adopted the position that it has discretion to reduce the largest whistleblower awards based upon their size. The amendments, first proposed in 2018, have generated substantial opposition from the plaintiffs’ bar and within the Commission,… More
The U.S. Attorney’s Office in Massachusetts is ramping up its effort to combat fraud related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) through an agreement to work with the Office of the Special Inspector General for Pandemic Recovery (“SIGPR”), an office established by the CARES Act to audit and investigate loans and investments made under the CARES Act.
In 2012, New England Compounding Center (“NECC”) shipped contaminated anti-pain medication to hospitals and clinics around the country, with devastating consequences. Patients around the country developed fungal meningitis and spinal and paraspinal infections. At least 63 died, and nearly 700 more suffered debilitating injuries. In opinions issued on July 9, 2020, the First Circuit addressed—and, for the most part, rejected—efforts by NECC’s owner and chief pharmacist to vacate their convictions and set aside the lengthy prison sentences they were ordered to serve for their roles in shipping the contaminated drugs.… More
The U.S. Supreme Court’s decision last month in Liu v. SEC raises the question of whether disgorgement payments in SEC enforcement actions should now be deductible for federal income tax purposes. The Court held that a disgorgement award that does not exceed a wrongdoer’s net profits and is ordered for the benefit of victims is equitable relief, and therefore available to the SEC under the Securities Exchange Act. … More
The Supreme Court in Seila Law LLC v. Consumer Financial Protection Bureau held that the structure of the Consumer Financial Protection Bureau (“CFPB”) violated the separation of powers, but stopped short of finding the entire agency unconstitutional and instead held the CFPB could live on with a director who was removable at will by the President.
The Court reasoned that the CFPB’s “unique structure” was unconstitutional because the agency was “vested with significant executive power” but was led by a single director who was,… More
Last week, the Supreme Court decided in Liu v. SEC that the SEC may continue to seek disgorgement in judicial proceedings as a form of equitable relief under the Securities Exchange Act. A ruling to the contrary would have deprived the SEC of its most significant tool, in dollar terms, for obtaining monetary relief. Although the decision preserves the SEC’s disgorgement power, it restricts how courts may disgorge ill-gotten gains in three ways: in general,… More
Earlier this month, the Criminal Division of the United States Department of Justice (DOJ) updated its Evaluation of Corporate Compliance Programs guidance. In considering enforcement actions against companies, prosecutors use the guidance to assist in evaluating (1) the form of any resolution or prosecution, (2) the amount of a monetary penalty, if any, and (3) whether to impose compliance obligations, such as a monitor or reporting requirements. The guidance thus provides valuable insight into the factors prosecutors consider when making these decisions.… More