Securities Enforcement and Regulation

Securities Enforcement and Regulation

Fried Frank’s Securities Enforcement and Regulation Practice, one of the nation's leading SEC enforcement practices for over two decades, is driven by cutting-edge developments in the financial and commercial markets.  These evolving trends dictate the kinds of disputes in which Fried Frank’s Securities Enforcement and Regulation attorneys represent clients.

We serve public companies and their directors, officers and employees, as well as broker-dealers, investment advisers, hedge funds, accounting and legal professionals and other participants in the securities markets.  We represent companies and individuals in connection with government investigations involving securities and corporate law disputes.  We also counsel public companies and regulated entities on complex securities laws and other regulatory issues and help clients assess and develop compliance programs to guard against future violations of law and corporate policy.

We work closely with our clients, as a team, to gain an insider’s understanding of their business, regulatory and practical needs.  We strive to provide practical advice that will be useful in guiding our clients through what can sometimes be very challenging and uncertain circumstances.

Conducted out of our New York, Washington, DC and London offices, our Securities Enforcement and Regulation Practice interfaces frequently with our White-Collar Criminal Defense, Anti-Corruption Compliance and Enforcement, and Internal Investigations Practices.  We also collaborate across practice areas within the Firm to offer comprehensive representation on client matters, including corporate counseling and governance, commercial litigation, and securities and shareholder litigation.

In January 2010, the Director of the Division of Enforcement at the United States Securities and Exchange Commission announced the creation of five specialized units within the Division.  These units were designed to focus on areas with “complicated organizational structures or regulatory schemes, on newly-emerging and complex markets, transactions and products, and on targeted areas.”  We have extensive experience in those five areas, as well as in the general areas of SEC enforcement expertise that are handled more broadly in the Division.  Examples of recent matters in these specialized and general areas include:
1.  Structured and New Products Unit.  This unit within the SEC’s Division of Enforcement focuses on “all structured products, including collateralized debt obligations, both cash and synthetic, Credit Default Swaps, securitized instruments and other structured products.  It will also focus on newly-developing products.”  Our experience in these substantive areas includes:

  • A major US Bank in connection with an inquiry by the Department of Justice concerning residential mortgage-backed securities.
  • An analyst for a financial services company in an SEC investigation concerning the credit ratings for a mortgage-backed CDO transaction for which the company served as the trustee.
  • A banker and sales manager in connection with SEC investigation of CDOs.
  • A broker-dealer in connection with SEC investigation of cash flow modeling issues in a securitization transaction.
  • A former manager of collateralized debt obligations in connection with several SEC investigations focused on business conduct in this market from 2006-2008.
  • A global banking and financial services company in internal and SEC investigation into credit derivatives.

2.  Asset Management Unit.  This unit within the SEC’s Division of Enforcement focuses on “investment companies, investment advisers, mutual funds, hedge funds and private equity funds.”  Our experience in these substantive areas includes:

  • An investment adviser in connection with an SEC examination concerning valuation of securitized assets and debt.
  • In-house lawyer regarding SEC investigation regarding mutual fund servicing business.
  • A hedge fund in federal and state regulatory investigations and multidistrict litigation concerning mutual fund market timing and late trading.
  • A broker-dealer in NYSE investigation regarding odd-lot trading.
  • A hedge fund adviser and its CEO in SEC, DOJ, Treasury and SIGTARP investigations related to the failure of Colonial National Bank.

3.  Foreign Corrupt Practices Act Unit.  This unit within the SEC’s Division of Enforcement focuses on “enforcing the law and regulations that prohibit corporate bribery of foreign officials.”  Our experience in these substantive areas includes:

  • Conducting FCPA and anti-corruption investigations and due diligence, for a number of private equity and financial service companies, which required Fried Frank attorneys to conduct interviews and review documents in countries located in Europe, South America, the Middle East and Asia.
  • An international defense contractor in an internal investigation and follow up to “red flags” of possible anti-corruption.
  • A number of financial services companies and an international company in the oil and gas industry in a wide variety of multinational FCPA and OFAC internal investigations and diligence reviews.
  • A major US corporation in conducting an investigation into international FCPA/anti-bribery whistleblower allegations.
  • A senior officer of a Fortune 500 Company in SEC and DOJ investigations regarding alleged FCPA violations.

4.  Market Abuse Unit.  This unit within the SEC’s Division of Enforcement focuses on “large-scale and organized insider trading and market manipulation schemes, and will utilize some unique technology to aid in the investigations.”  Our experience in these substantive areas includes:

  • A corporate officer in connection with an insider trading and tipping investigation.
  • A broker-dealer in connection with SEC investigation and US Attorney’s Office prosecutions of former employees regarding trading floor communications.
  • A company officer in connection with SEC insider trading investigation.
  • A major investment bank in an SEC investigation focused on potential insider trading in the corporate debt market.
  • A major hedge fund adviser in connection with its settlement with the SEC regarding allegations of insider trading in Microsoft securities.

5.  Municipal Securities and Public Pension Unit.  This unit within the SEC’s Division of Enforcement focuses on “misconduct in the US$2.8 trillion municipal securities market and at public pension funds.”  Our experience in this substantive area includes:

  • A pension fund in connection with an SEC investigation concerning activities of investment managers.
  • State of New Jersey in the settlement of SEC charges that the state had fraudulently marketed US$26 billion in municipal bonds to investors.
  • A hedge fund adviser in connection with inquiry from New Jersey Attorney General’s office regarding “pay-to-play” practices in connection with investments by NJ Treasury Department.
  • A hedge fund adviser in investigation by the New York Attorney General’s Office regarding “pay-to-play” in connection with investments by New York’s pension fund.

6.  General Enforcement.  The vast majority of the SEC’s enforcement investigations focus on areas outside of the specialized units, such as financial reporting and fraud-related matters.  In addition, the SEC has recently established a Cross Border Working Group that focuses on foreign issuers and US companies with substantial foreign operations.  Our extensive experience in these other areas, and in connection with FINRA, PCAOB and other self-regulatory organizations, includes:

  • A major international insurance company in dealing with a whistleblower alleging accounting and antitrust violations in an employment contract dispute. Fried Frank conducted an internal investigation, reported the results to the company’s audit committee, and represented the company in reaching a contract settlement with the former employee.
  • A non-US accounting firm in connection with a multi-year PCAOB investigation of audits performed by the firm and an associated firm of a foreign private issuer with operations in several countries.
  • A major US bank in four related government investigations concerning its disclosures and accounting treatment for residential mortgage portfolios.  After extensive investigations, each of the four offices closed or ended its investigation with no action against the company or any individuals.
  • A public company in an internal investigation and subsequent self-report to the SEC in connection with the discovery of improper conduct by a senior executive.
  • An international company in an internal investigation concerning trade activities with sanctioned countries and related federal securities law issues.
  • A privately held company in an SEC investigation concerning secondary market trading in the company’s securities and related exemptions from SEC registration requirements.
  • A senior corporate officer in an SEC investigation concerning the adequacy of the institution’s loan loss reserves and related disclosures and internal control issues.
  • Senior partners of both US and foreign accounting firms in SEC investigations concerning issues such as risk management policies, auditor independence and consultations on changes in an audit client’s accounting policies.
  • A broker-dealer in connection with an SEC investigation concerning valuation services performed on commercial real estate portfolios.
  • Portfolio managers in an SEC investigation concerning securities trading issues.
  • A broker-dealer in FINRA investigation concerning Unit Investment Trust discounts.
  • An insurance company in a multi-year investigation concerning the company’s accounting for earnings and expenses concerning loss mitigation insurance.
  • Current and former independent directors in an SEC investigation regarding stock options.
  • A self-regulatory organization in connection with undertakings ordered in SEC settlement.
  • A health care services company in SEC investigation alleging that reserves and accruals were improperly adjusted to meet public earnings forecasts.
  • A broker-dealer in an enforcement action alleging inadequate due diligence to determine investor suitability and false advertising.

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