Investigations, Enforcement, & Compliance Alerts

Recent enforcement actions targeting a CEO, CFO, and an audit committee chair underscores the SEC's focus on gatekeeper accountability.

The Securities and Exchange Commission recently announced charges and million-dollar penalties against four companies for allegedly making materially misleading disclosures regarding cybersecurity risk and intrusions relating SolarWinds hack.

It is no longer a secret that the U.S. Department of Justice (DOJ) has recently, and in some ways radically, increased its enforcement of the Foreign Agents Registration Act (FARA or the Act) and related foreign influence and lobbying laws that require adequate disclosure and transparency about domestic activities performed on behalf of foreign governments, companies, nonprofits, and other foreign actors. The uptick in recent prosecutions centered around improper foreign influence has been highlighted by the latest indictment of New York Mayor Eric Adams for allegedly receiving bribes and soliciting illegal campaign contributions from foreign sources tied to Turkey. He’s the third politician in just the last year who has been charged with crimes involving foreign influence operations—in the case of New Jersey Senator Bob Menendez, it was Egypt, and for Texas Congressman Henry Cuellar, it was Azerbaijan and a Mexican bank.

On September 25, 2024, the Securities and Exchange Commission (the SEC) announced settled charges against 25 entities and individuals for late beneficial-ownership and insider-transaction reports. The SEC had levied penalties on these filers because of failures to timely report information about their holdings and transactions in public-company stock. Without admitting or denying the charges, 2 public companies, 13 other entities, and 10 individuals agreed to cease committing and causing violations and pay civil penalties. The civil penalties ranged from $10,000 to $200,000 for individuals, and $40,000 to $750,000 for the entities involved, including $200,000 each for two public companies that were charged with contributing to filing failures by certain corporate insiders and failing to report their insiders’ filing delinquencies.

The U.S. Department of Justice recently succeeded in its prosecution of former Ontrak CEO Terren Peizer for insider trading, which involved the misuse of his 10b5-1 trading plan. This post provides an overview of the case’s background and outcome, and highlights key lessons that directors and officers of public companies should consider.