Senior Exits at the SEC

Frustration, Hot Atty Market Drive Some Senior Exits At SEC

A number of top lawyers from the U.S. Securities and Exchange Commission have trickled to the exits over the past year, driven by what ex-SEC officials and legal recruiters say is not only a hot lateral market but also, in some cases, frustration over new leadership’s aggressive enforcement tactics.

At least 22 mid- to senior-level SEC officials have left the agency since May 2021, with a vast majority finding new homes at law firms, according to a Law360 Pulse review of both SEC and law firm personnel announcements and LinkedIn profiles. The departures include several veteran members of the enforcement division, the leaders of the San Francisco and Salt Lake City branches, and multiple senior members of the examinations division, including the acting director.

CFTC Chief Heaps Praise on Bill That Boosts Agency’s Crypto Reach

Lummis (R-Wyo.) and Gillibrand (D-N.Y.), also speaking at the Washington event, were quick to point out that the Securities and Exchange Commission – which has been perceived by the cryptocurrency industry as being more adversarial than the CFTC – is also given a major role and a new system of disclosures.

“The SEC has an enormous responsibility,” Gillibrand said, referencing the vast number of smaller tokens likely to be defined as securities. “We aren’t minimizing the role of the SEC.”

While the CFTC may oversee the most market share, because it would have authority over the trading of the largest cryptocurrencies such as bitcoin (BTC) and ether (ETH), the SEC would have the “sheer numbers,” Lummis said, including the crypto efforts she said would “be the larger perpetrators of fraud.”

Highlight Reel of SEC’s Efforts to Shape Cybersecurity Policy

2022 is not even halfway over, and the Securities and Exchange Commission (SEC) has already made it a banner year for the SEC’s efforts to shape cybersecurity policy.  This alert highlights this year’s cyber developments to date and the SEC’s likely future regulatory efforts in this space.

COVID-Related SEC Enforcement Actions Not a Thing of the Past

The sun is shining, children are out of school, families are headed off on summer vacations, and the SEC is … bringing enforcement actions against companies for 2020 fraud related to COVID-19 products. One such action was recently filed against SCWorx Corp. and its former CEO and chairman, Marc Schessel.1 In bringing charges almost two years after the fraudulent statements at issue were made, the SEC has confirmed our expectation that it is prepared to take a long-term approach to COVID-related fraud cases. SCWorx also creates the potential for increased flexibility in how defendants are able to satisfy disgorgement obligations in the future.

SEC Charges CohnReznick LLP and Three Partners with Improper Professional Conduct

The Securities and Exchange Commission today charged audit firm CohnReznick LLP with improper professional conduct on engagements for two clients in 2017. The two clients, Sequential Brands Group, Inc. and Longfin Corp., previously were charged by the SEC for filing fraudulent financial statements prior to their bankruptcies and Nasdaq delisting. The Commission also charged firm partners Stephen M. Wyss, Stephen H. Jackson, and Robert G. Hilbert with improper professional conduct for violating numerous professional standards in their third quarter 2017 interim review and 2017 annual audit of Sequential’s financial statements. All respondents have agreed to settle charges and pay penalties. CohnReznick’s $1.9 million penalty will be returned to investors.

Brown Advances Fed and SEC Nominees

Today, U.S. Sen. Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, held an executive session to vote on the nominations of: The Honorable Michael S. Barr for Vice Chairman for Supervision of the Federal Reserve, and Mr. Jaime E. Lizárraga and Mr. Mark T. Uyeda to be members of the Securities and Exchange Commission.

The Honorable Michael S. Barr was advanced by a vote of 17-7. Mr. Jaime Lizarraga and Mr. Mark Uyeda were advanced on a voice vote.