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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A Suspicious Activity, Cybersecurity Mess

cybersecurity

A broker-dealer firm in Colorado has agreed to pay $1.5 million to settle charges with the SEC that the firm failed to file suspicious activity reports about cybersecurity thieves trying to take over customers’ accounts. It’s a sobering example of how weak cybersecurity controls can spill over into regulatory compliance trouble.  The firm in question…

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New SEC Enforcement Chief Quits

enforcement

The new director of the SEC Division of Enforcement, Alex Oh, resigned today after less than a week on the job, apparently due because of some dispute related to a class-action lawsuit against Exxon Mobil, one of her clients in private practice.  Oh was announced as the new enforcement director on April 22. She came…

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SEC Warns on Penny Stocks, Compliance Programs

penny stocks

Broker-dealer firms have another warning from the SEC to do better with AML compliance and suspicious activity reporting, and particularly to do better with customers’ trading in penny stocks and acting on known red flags with that type of transaction. The message came from the SEC’s Division of Examinations, which published its latest risk alert…

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SEC Enforcement Speech: Umm, Wow

enforcement

Compliance officers, clear your schedule and retreat to your reading nook! We have an important speech to consider on the future of enforcement at the Securities and Exchange Commission.  Commissioner Caroline Crenshaw, a Democratic appointee who joined the SEC only seven months ago, spoke Tuesday at the spring meeting of the Council of Institutional Investors…

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Climate Action Heats Up at SEC!

climate

More news this week about the Securities and Exchange Commission’s approach to climate change: the Enforcement Division has created a new task force to examine corporate disclosures about climate and ESG issues; and the two Republican commissioners on the SEC published a warning shot against the agency’s new climate change enthusiasm. Let’s start with the…

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SEC Lists Examination Priorities for 2021

examination

The Securities & Exchange Commission has released its list of 2021 examination priorities for broker-dealers and investment advisers, with a heap of attention paid to business continuity, climate change disruptions, and how the pandemic has amplified risks to cybersecurity and supervision. The SEC’s Division of Examinations (previously known as the Office of Compliance Inspections &…

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More on Goodwill, Internal Controls

goodwill

Today I want to circle back to that lawsuit the SEC filed last week against Sequential Brands for failing to impair its goodwill assets in a timely manner. It’s a glimpse of poor internal control that raises an intriguing question: How many other companies might be in a similarly precarious position?  After all, goodwill has…

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SEC Charges Retailer on Impairment Issue

goodwill

You don’t see this too often: the Securities and Exchange Commission has charged a fashion retailer with failing to impair goodwill in a timely manner, citing weak internal controls over how management determined goodwill and an attempt to mislead the company’s auditors. The company in question is Squential Brands, which sells clothing brands such as…

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SEC Warning on Insider Stock Sales

compensation

Two top officials at the Securities and Exchange Commission warned this week that companies should pay more heed to the policies they use to govern senior executives’ stock sales, to prevent even the appearance of impropriety when an executive is selling shares.  The comments came from Bill Hinman, director of the Division of Corporation Finance,…

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