On January 11, 2021, the U.S. Supreme Court vacated the 2019 decision of the U.S. Court of Appeals for the Second Circuit in United States v. Blaszczak,[1] which substantially broadened the scope of criminal insider trading liability, and remanded the case to the Second Circuit for further consideration in light of the Supreme Court’s decision last year in Kelly v. United States.[2]

The Second Circuit held in Blaszczak that the government’s often challenging burden under the Securities Exchange Act to prove that the insider received a “personal benefit” in exchange for tipping inside information,… More

Last month, General Electric agreed to pay a $200 million penalty to settle an SEC enforcement action arising from alleged disclosure violations concerning the company’s power and health insurance businesses.  According to the SEC’s order, between 2015 and 2017, GE did not disclose that the profits it reported for those segments were largely attributable to changes the company made to its accounting practices in order to mask significant challenges that those business lines were facing. … More

On January 1, 2021, Congress significantly expanded the SEC’s authority to seek disgorgement as a remedy for violations of the federal securities laws, responding to recent decisions by the U.S. Supreme Court that had limited the SEC’s disgorgement power.  Congress unexpectedly provided this enhanced authority by amending the Securities Exchange Act of 1934 (“Exchange Act”) in an obscure portion of the over 1,400-page National Defense Authorization Act,… More

On December 4, 2020, the SEC brought its first case charging a public company, The Cheesecake Factory, with making misleading disclosures about the effects of COVID-19 on its business operations and financial condition.  The agency has made explicit since January that it is closely focused on this issue, and its settled action against The Cheesecake Factory, which agreed to pay a $125,000 penalty, signals that it will target issuers for failing to provide fulsome disclosure about the negative impacts of the pandemic.… More

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.

The two offices entered into a Memorandum of Understanding (“MOU”) to cooperate on the investigation and prosecution of pandemic relief fraud,… More

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