The New Whistleblower Protection Rule

The SEC’s new whistleblower program officially became effective on August 12, and the SEC has launched a new webpage for people to report a violation of the federal securities laws and apply for a financial award.

Following enactment of Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Office of the Whistleblower was established by the SEC to administer its whistleblower program. The SEC has appointed Sean McKessy as its head. Under the program, the SEC may provide monetary awards to eligible individuals who come forward with high-quality original information that leads to an SEC enforcement action in which over $1,000,000 in sanctions is ordered. The webpage notes that the range for awards is between 10% and 30% of the money collected. See More…

Former Major League Player and Others Charged with Insider Trading

The SEC has charged former professional baseball player Doug DeCinces and three others with insider trading ahead of a company buyout. DeCinces, a third baseman, played for fifteen seasons (1973 – 1987) in the major leagues for three different teams, including nine years with the Orioles and six years with the California Angels. The SEC charged that DeCinces and his associates made more than $1.7 million in illegal profits when Abbott Park, Ill.-based Abbott Laboratories Inc. announced its plan to purchase Advanced Medical Optics Inc. through a tender offer.

DeCinces agreed to pay $2.5 million to settle the SEC’s charges, and the three others also agreed to settlements.

The SEC’s complaint alleges that DeCinces received confidential information about the acquisition from a source at Santa Ana, Calif.-based Advanced Medical Optics. He then began purchasing shares of Advanced Medical Optics in several brokerage accounts, buying more throughout the course of the impending transaction as he received updated information from his source. During the period, DeCinces also illegally tipped three associates who traded on the confidential information – physical therapist Joseph J. Donohue, real estate lawyer Fred Scott Jackson, and businessman Roger A. Wittenbach. See more…

SEC Report on Examination of Certain Structured Securities Products Sold to Investors

The Securities and Exchange Commission staff has issued a report summarizing the results of a sweep examination of the retail structured securities products business of 11 broker-dealers, covering a cross-section of the industry. The report identifies common weaknesses seen in sales of structured securities products and describes measures by broker-dealers to better protect retail investors from fraud and abusive sales practices.

The report can be viewed here.

FINRA’s New Q&A Guidance on Reporting Customer Complaint Information

Under FINRA Rule 4530 that became effective on July 1, 2011 governing reporting requirements for customer complaints, FINRA issued Regulatory Notice 11-10 reminding member firms of the requirement that they electronically report specified events and quarterly customer complaint information.

Member firm are also required to file with FINRA copies of certain criminal actions, civil complaints and arbitration claims. The Notice also provided guidance on automated reporting under the new rule. To assist member firms with implementation, in new Notice 11-32, FINRA has provided questions and answers regarding the application of the new rule. FINRA has said it will use the information for regulatory purposes to identify and initiate investigations of member firms, offices and associated persons that it believes might pose a risk. View Notice.

Dodd-Frank: More New Rules for Investment Advisers and Hedge Funds

The Securities and Exchange Commission now has new rules implementing core provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding investment advisers, including those that advise hedge funds.

The Securities and Exchange Commission has adopted rules that now require advisers to hedge funds and other private funds to register with the SEC, establish new exemptions from SEC registration and reporting requirements for certain advisers, and reallocate regulatory responsibility for advisers between the SEC and states. View More…

Insider Trading by Accountants, Attorneys and Other Professionals

Why do people, who should presumably know better than most i.e. accountants and attorneys, continue to engage in insider trading by misappropriating material non-public information from the companies they serve? In doing so, either through ignorance or pure greed (or both) they end up leaving a “paper trail” long enough for the SEC to follow right to their door and the doors of their family members and friends.

The SEC’s most recent case against a former Deloitte partner continues a long line of such cases. View More…