"Is The SEC Finished With NPAs And DPAs?"

Plus why is the World Weekly News in this newsletter?

Author

Bruce Carton
October 14, 2024

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Stephen Frank, former AUSA and Chief, Securities, Financial & Cyber Fraud Unit of the U.S. Attorney’s Office in Massachusetts, has joined Quinn Emanuel as a partner in the firm’s Boston and New York offices.

Clips ✂️

Is The SEC Finished With NPAs And DPAs?

In early 2010, the SEC (see here) announced a series of measures “to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency’s investigations and enforcement actions.”

The SEC’s then Director of Enforcement called the measures “a potential game-changer for the Division of Enforcement.”

Among the measures the SEC adopted was use of deferred prosecution agreements and non-prosecution agreements – resolution vehicles the SEC described as “tools [that] have been regularly and successfully used by the Justice Department in its criminal investigations and prosecutions” (which of course was and still remains a debatable point).

However, as highlighted below, since this “game-changing” moment at the SEC nearly 15 years ago, the agency has only used a DPA twice to resolve an issuer FCPA enforcement action and an NPA three times. Moreover, the SEC’s last use of an NPA or DPA to resolve an issuer FCPA enforcement was in mid-2016.

by FCPA Professor

Investment Advisory Firm Hit with AI-Washing SEC Enforcement Action

One final observation about likely AI-related actions is that, so far at least, most of the AI-related activity has focused on companies’ exaggerated claims regarding the AI capabilities. One related area of concern that should not be overlooked is the possibility of claims against companies for failing to disclose their AI-related risks, such as, for example, with respect to privacy or intellectual property issues, or even with respect to operational and financial issues. I believe that as the AI related claims unfold, the kinds of claims alleged likely will evolve, and likely will include disclosure allegations related to AI risks, as well as with respect to AI capabilities.

by The D&O Diary

Would a Time Machine Make You a Great Investor?

The latest is the “Crystal Ball Trading Game.” Players are given $1 million in play money and are shown 15 Journal front pages following big economic news randomly selected over the past 15 years. With up to 50 times leverage, multiplying that pot of money sounds like shooting fish in a barrel. Yet it wasn’t, and many players instead shot themselves in the foot. Through Thursday, more than 8,000 mostly financially savvy players had taken a crack at the game. Their median ending wealth after 15 rounds was just $687,986 according to data provided by Elm. Many lost everything.

by WSJ

👉 Gather ’round, youngsters, and let me tell you the story of Andrew Carlssin. According to no less an authority than the World Weekly News, Carlssin was arrested by federal investigators after he turned an initial investment of only $800 into over $350 million in a period of two weeks. His explanation was that he was a time-traveler from the year 2256. Per the WWN:

“Sources at the Security and Exchange Commission confirm that 44-year-old Andrew Carlssin offered the bizarre explanation for his uncanny success in the stock market after being led off in handcuffs on January 28.

"We don't believe this guy's story -- he's either a lunatic or a pathological liar," says an SEC insider.

"The only way he could pull it off is with illegal inside information. He's going to sit in a jail cell on Rikers Island until he agrees to give up his sources."

The following month, on March 31, 2003, after “many” inquiries from investors and the public, the SEC issued a statement regarding the Andrew Carlssin case in Question 19 of the “Q&A guidance” section on its website:

1. Question 19: Is the Andrew Carlssin case for real?
Answer: Many investors and other members of the public have asked us about news reports concerning Andrew Carlssin, an alleged “time-traveler” who supposedly made a fortune in the stock market by trading in the year 2003 based on information gleaned from his travels to the future. The reports appear to be a hoax. The SEC has not, in fact, brought an enforcement action against any such person.

👉 Make your own decisions on the veracity of the WWN (some other headlines are below) but I swear to you that this Question 19 was on the SEC website back in the day even though it has since disappeared—I have a screenshot of it somewhere! 👈

In a follow-up article on April 29, 2003, the WWN reported that Carlssin had suddenly “vanished without a trace.” According to the WWN,

The mystery man, who claimed to be a visitor from the year 2256, jumped bail before a scheduled court hearing on April 3 and hasn't been seen since, officials say, despite an intense manhunt by federal lawmen. "It's like he disappeared off the face of the Earth," declares a law-enforcement source. "No one can find him. Some people are speculating that he might really have hopped in his time machine and escaped 'back to the future.'"

SEC Issues $12 Million Award to Joint Whistleblowers

The Securities and Exchange Commission today announced a $12 million award to be split among three joint whistleblowers who provided critical information and assistance in an SEC enforcement action.

The joint whistleblowers provided the SEC significant information and extensive cooperation, which helped expand the scope of the investigation and the charges brought in the enforcement action and also saved the agency substantial time and resources. The joint whistleblowers met numerous times with SEC’s enforcement staff and certain of the joint whistleblowers suffered hardships due to their whistleblowing.

by The Washington Post

👉 The SEC Order is here.

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