More on SEC Penalties Policy Shift

agenda

The SEC’s new director of enforcement delivered his first speech this week, where he outlined a more aggressive use of monetary penalties to deter corporate misconduct and how the SEC will evaluate cooperation and other factors while deciding how large of a penalty to impose. The speech came from Gurbir Grewal, who took over as…

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Goldman Compliance Officer Busted on Insider Trading

insider

A senior compliance analyst at Goldman Sachs has been charged with insider trading by the SEC, which says the man racked up more than $470,000 ill-gotten profits by trading in brokerage accounts held under his parents’ names.  The man, Jose Luis Casero Sanchez, worked in the control room of Goldman’s offices in Warsaw, Poland, from…

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WPP Pays $19M on FCPA: An Analysis

WPP

Advertising giant WPP has agreed to pay $19 million to settle charges with the Securities and Exchange Commission that it had poor internal accounting controls in the 2010s, which led to bribery through third parties in India and several other emerging markets. The SEC announced the settlement on Friday. It consisted of $11 million in…

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Food for Thought From Kraft Heinz

Kraft

We have a fascinating enforcement action from the Securities and Exchange Commission to study, this time against Kraft Heinz Co., which is paying $62 million to settle charges that it committed accounting fraud with a bogus cost-savings scheme. The case is a glimpse into how strategic imperatives can pressure internal controls — and at least…

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Firm Fined on Loss Contingency Failures

contingency

The Securities and Exchange Commission has fined a Pennsylvania healthcare services firm $6 million for poor internal controls that allowed the company to keep looming lawsuit costs out of the financial statements, which in turn helped the company to meet Wall Street earnings expectations. The firm in question is Healthcare Services Group ($HCSG), which provides…

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SEC Schools Pearson on Cyber Disclosure Failures

Pearson

We have yet another reminder from the Securities and Exchange Commission today about the importance of full and accurate disclosure of cybersecurity breaches, this time in the form of a $1 million fine against education publisher Pearson for making misleading statements about a breach the company suffered in 2018. Pearson is a British company that…

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The Second Act of SPACs Enforcement

Last week the Securities and Exchange Commission took its first enforcement action against a special purpose acquisition company (SPAC), in a case involving poor due diligence and misleading disclosures to investors. We should expect more such cases in the future, but there’s also another realm of compliance risk for SPACs that needs more attention.  The…

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Our First SPAC Enforcement Action

SPACs

Well that’s one way to crash and burn: the SEC has charged a SPAC and the space technology company it was trying to acquire with misleading investors about the deal’s proposed risks — including national security questions raised about the space company’s founder — ahead of a proposed merger next month.  The tale is rather…

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Lessons From Robinhood

robinhood

FINRA served up an eye-popping enforcement action this week, hitting online trading app Robinhood with a $70 million fine — the largest ever in FINRA history — for a host of poor business practices and misleading statements made to Robinhood customers over the years.  The settlement order is 123 pages long, so clearly it will…

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Example of Cybersecurity Disclosure Failures

First American

The Securities and Exchange Commission has fined a New York title insurance company $488,000 for failing to disclose cybersecurity problems to investors in a timely manner, in yet another example of how cybersecurity risks can spawn a secondary wave of compliance risks too. The company in question is First American Financial Corp., parent company of…

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