Yesterday, in a 5-4 split decision, the United States Supreme Court ruled that for purposes of SEC Rule 10b-5, a mutual fund investment advisor cannot be held liable for material misstatements in its client’s prospectus because those statements are ultimately controlled by the client. Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525, slip
Subject to Inquiry
Latest from Subject to Inquiry - Page 35
After Initial Setback, Supreme Court Holds that Plaintiffs in Halliburton Fraud Action May Obtain Class Certification
On June 6, 2011, the U.S. Supreme Court held in Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. ____ (2011) that plaintiffs accusing Halliburton Co. of securities laws violations do not have to prove loss causation in order to obtain class certification.
The Halliburton plaintiffs sought class certification for shareholders who allege that…
DOJ, FCPA and Pharma: Participation Pays
As discussed in a July 2010 Subject to Inquiry post, DOJ put Big Pharma on notice that it intended to aggressively investigate potential violations of the Foreign Corrupt Practices Act (FCPA) within the pharmaceutical and medical device industry. Well, they meant what they said.
Johnson & Johnson, the New Jersey-based multi-national pharmaceutical, medical devices…
SEC Agrees To Its First Non-Prosecution Agreement
On December 20, the SEC announced that it had entered into a non-prosecution agreement with Carter’s Inc., allowing Carter’s to avoid prosecution in exchange for cooperation with a fraud investigation. This is the first non-prosecution agreement issued by the SEC since its announcement in January 2010 of new measures designed to strengthen SEC enforcement by…
The Continued Push for the National Export Initiative and Export Control Reform
Secretary of Commerce Gary Locke continued the administration’s push to boost U.S. exports 100% by 2015 in accordance with President Obama’s 3/11/10 executive order establishing the National Export Initiative (“NEI”). Last week, Secretary Locke addressed the 2010 International District Export Council (“DEC”) at a conference in Detroit, noting recent economic successes as a result of the NEI…
FCPA Opinion Procedure Release Helps Clarify Line for Permissible Payments to Lobbyists
Companies expanding in foreign countries often engage consultants to assist in marketing to and negotiating with foreign officials. In recent years, they have become increasingly careful to consider whether payments for such services may implicate concerns under the Foreign Corrupt Practices Act (FCPA). On September 1, 2010, the DOJ released its third FCPA Opinion Procedure…
UK Ministry of Justice Announces April 2011 Effective Date for New Bribery Act
On July 20, 2010, the UK Ministry of Justice announced that the recently enacted Bribery Act will take effect in April 2011. The announcement had been anticipated by UK companies and companies doing business in the UK, all of which must comply with the new Act. The Act received the Royal Assent on April 8,…
DOJ’s FCPA Team Pressing Forward with Pharma Probes
In a November 2009 speech before the Tenth Annual Pharmaceutical Regulatory and Compliance Congress in Washington D.C., Assistant Attorney General Lanny A. Breuer put big pharma on notice that DOJ intended to aggressively investigate potential violations of the FCPA within the pharmaceutical and medical device industry. The DOJ’s FCPA team appears to be backing that…
SEC Uses SOX “Clawback” to Force the Return of Compensation from Former CEO
A recent litigation release reveals the SEC’s continued determination to use Section 304 of the Sarbanes-Oxley Act of 2002 to compel CEOs and CFOs of companies required to restate their financial statements to repay bonuses and other forms of compensation. The SEC has sought to force the return of such executive compensation without alleging and…
Justice Defaulted: SEC Loses Its “First” Credit Default Swaps Insider Trading Action
In a detailed, 122-page opinion (pdf), U.S. District Court Judge John G. Koeltl systematically dismantled and dismissed the SEC’s first-ever credit default swap insider trading case. In SEC v. Jon-Paul Rorech and Renato Negrin (pdf), the SEC alleged that Deutsche Bank bond salesman, Jon-Paul Rorech, passed material, non-public information to a Millennium Partners hedge…