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Posts Tagged ‘SEC’

New risks involved in Title III changes to JOBS Act

November 12, 2015 Leave a comment

wall_street_fineThe 2012 Jumpstart Our Business Startups (JOBS) Act was passed in order to provide startups access to cost-effective investor capital by easing various securities regulations. This was the first step in enabling ordinary investors to participate in equity-based crowdfunding. The second step, Title III, was approved on October 30th by the SEC, but will not take effect until 180 days after they are published in the Federal Registrar.

Current SEC rules permit only accredited investors to participate in crowdfunding. An accredited investor is someone who earns greater than $200,000 per year, or whose net worth is over $1 million without taking into account their place of residence. Read more…

Cooperation from companies is crucial in reducing burden of criminal investigation

flag_scale_gavelAccording to a spokeswoman from the criminal division of the U.S. Department of Justice, a company’s willingness to investigate its own possible wrongdoing and to identify those responsible, counts tremendously in the agency’s prosecutorial decisions. Assistant Attorney General Leslie Caldwell told the Program on Corporate Compliance and Enforcement at New York University’s Law School that cooperation can, “significantly affect the length of the investigation and the costs incurred by the company. To receive cooperation credit, we expect companies to conduct appropriately tailored investigations designed to root out misconduct, identify wrongdoers and provide all available facts.” Read more…

GAAP vs. IFRS laws: Is convergence on the horizon?

global_revenueFollowing a May 28th conference between two of the world’s largest accounting regulatory agencies, members from both groups issued new joint standard they hoped would help smooth out discrepancies between the U.S.’s Generally Accepted Accounting Principles (GAAP) and the International Finance Reporting Standards (IFRS). While the leaders aimed to create a middle ground that combined the GAAP’s specific protocols (there are currently over 100 specific rules for various transactions and industries) with the IFRS’s broader scope of regulations, SEC officials remain skeptical about the success of a global set of accounting standards. Reports say the new global rules would aim to make it harder for companies to lie about their revenues to investors, and would take effect in 2017. Read more…

SEC to FINRA: Toughen up standards, penalty fines are too low

July 14, 2014 1 comment

wall_street_fineFINRA, the Financial Industry Regulation Authority, came under fire recently to toughen its sanctions and enforcement actions against financial firms and Wall Street executives. The Wall Street journal recently reported that during a 5 year period through 2013, FINRA trailed the SEC in the number of fines issued against financial firms and individuals. The report found that compared to the SEC, which imposed fines of $1million or more 259 times through 2013, FINRA issued only 55, an average of less than once per month. The analysis also showed that the SEC’s largest penalties reached upwards of $300 million, while FINRA’s fines amounted to just $12 million. Following the report, SEC commissioners urged FINRA employees to update and strengthen the standards used to determine financial punishments against Wall Street wrongdoers. Penalties must have a significant impact and send a strong enough message, the commissioners said, to hold perpetrators responsible and discourage unlawful actions. Read more…

Ruling boosts anti-retaliation protections for whistleblowers

court_gavel_whistleWhistleblowers are no longer required to notify the Securities and Exchange Commission to receive protection from retaliation. A recent decision from a U.S. District Court in Nebraska helped broaden the whistleblower term to include any individual who reports wrongdoing and/or illegality to internal sources, authorities or another government agency. While provisions under the Dodd-Frank Act’s whistleblower bounty program dictate that tipsters must report to the SEC, U.S. District Judge John Gerrard ruled that the anti-retaliation provision of the law does not mandate that whistleblowers must contact the SEC specifically. Therefore, tipsters are protected from retaliation whether they contact the SEC or another organization. However, the ruling did stipulate that rewards under the bounty program are reserved for whistleblowers are who report to the SEC.  Read more…

SEC whistleblower bounty program uncovers $14m award

October 30, 2013 1 comment

whistleblowerEarlier this month, the SEC awarded $14 million to an anonymous whistleblower who sent a tip about securities fraud that helped the Commission take enforcement action and recover investment funds. The case was the largest amount awarded since the launch of the U.S. Securities and Exchange Commission’s (SEC) whistleblower bounty program, which was created to help eliminate illegal and fraudulent financial conduct and to promote greater corporate compliance with federal securities laws.

Section 922 of the Dodd-Frank Act (DFA) established new whistleblower incentives and protections, including awards to individuals “who provide the SEC with original information about securities fraud that leads to the successful SEC enforcement action resulting in monetary sanctions over $1 million.” This is the third award the Read more…

Social media use as a means to communicate with investors is on the rise at banks and financial firms: beware the risks

twitter_wallstWith the release of the Securities and Exchange Commission’s new rules governing disclosure of social media use, an increasing number of companies are using sites like Facebook and Twitter to communicate with customers. Financial firms and banks are among those that are allowing employees to use social media sites on the job to post market updates and communicate with investors through tweets and status updates. Bank of America, Morgan Stanley, Citigroup Inc, and Goldman Sachs are among those on Wall Street incorporating social media use into their corporate communication strategies, granting stock analysts and traders use of Facebook, Twitter and LinkedIn in order to follow market trends and release financial information.

Despite the A.P.’s Twitter hoax last month, (which caused a brief drop in the Dow Jones Industrial Average after a false report about a bomb at the White House), social media use continues to expand Read more…