We have been writing about white-collar enforcement trends discussed at the Boston Bar Association’s recent White Collar Crime Conference (see here and here). Today we look at one area that was the subject of much discussion at the conference: securities enforcement.
Paul Levenson, Director of the Boston Regional Office of the U.S. Securities and Exchange Commission (SEC), said that the SEC is looking closely at microcap fraud, in addition to its other 2019 enforcement priorities. Levenson noted that the SEC is seeing less insider trading and accounting fraud, which he attributed to an increased reliance by business executives on outside auditors, but continues to scrutinize non-GAAP disclosures in corporate filings.
Stephen Frank, Chief of the Economic Crimes Unit at the U.S. Attorney’s Office in the District of Massachusetts (USAO), emphasized that the USAO is trying to be less reactive and be more on the offensive in its investigations and prosecutions. According to Frank, the USAO is increasingly relying on “organized-crime-type tactics”—including Title III wiretaps, undercover operations, and cooperating witnesses—to combat financial crimes. Frank indicated that the USAO is focusing more on insider trading and market manipulation (always in collaboration with the SEC) as well as bigger, more sophisticated fraud investigations, often in collaboration with the FCPA division in Washington, D.C. Frank and other USAO panelists noted that the USAO identifies investigation targets by employing different strategies, some rather basic (e.g., reading the newspaper) and others more advanced (e.g., monitoring real-time trading data).