SEC Sanctions Florida-Based Auditor for Circumventing Rules
The Securities and Exchange Commission today sanctioned a Florida-based auditor for violating federal laws and regulations requiring lead audit partners to periodically rotate off their audit engagements with a publicly traded company in order to preserve the integrity of the financial reporting process.
The lead partner primarily responsible for the audit of a public company is prohibited from performing lead audit partner services for the same issuer for more than five consecutive fiscal years. The SEC finds that Eliot Berman attempted to circumvent this auditor rotation requirement. For the audit of a company that he conducted for the previous five years, Berman installed as lead audit partner an employee at his firm who was not a certified public accountant nor otherwise qualified to lead such an audit. Berman improperly continued to perform many of the lead audit partner functions for that audit.
Berman and his firm Berman & Company, located in Boca...
SEC Charges New Jersey Man in Insider Trading Case Involving Pharmaceutical Companies
The Securities and Exchange Commission today announced insider trading charges against a New Jersey man who generated nearly $700,000 in illicit profits trading in the securities of two pharmaceutical companies that were about to be acquired. The SEC charged his source of nonpublic information earlier this month.
The SEC alleges that David Post of Livingston, N.J., was tipped with confidential details about the impending deals by his former business school classmate who was tasked with evaluating potential acquisitions in his financial analyst job at a major pharmaceutical company. Post and his friend, Zachary Zwerko, used prepaid “burner” cell phones to exchange coded text messages in advance of Post’s trading. They also used a dummy e-mail account they could both access to draft an e-mail message in code and leave it in the draft folder for the other to read and then delete. In exchange for the illegal tips, Post paid...
Rengan Rajaratnam Agrees to Settle Insider Trading Charges
The Securities and Exchange Commission today announced that former hedge fund manager Rajarengan “Rengan” Rajaratnam has agreed to pay more than $840,000 and accept securities industry bars in order to settle the agency’s insider trading case against him.
The SEC filed civil charges in March 2013 against Rengan Rajaratnam for his role in the widespread insider trading scheme conducted by his brother Raj Rajaratnam and hedge fund advisory firm Galleon Management. The insider trading occurred in securities of more than 15 companies for illicit gains totaling nearly $100 million. The SEC has now obtained court judgments or settlements in Galleon-related enforcement actions against 35 defendants, resulting in approximately $165 million in monetary sanctions.
“We are pleased to have reached a favorable proposed resolution of our insider trading charges against Rengan Rajaratnam,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “The settlement ensures he’s out of the industry and...
Six Federal Agencies Jointly Approve Final Risk Retention Rule
Board of Governors of the Federal Reserve System
Department of Housing and Urban Development
Federal Deposit Insurance Corporation
Federal Housing Finance Agency
Office of Comptroller of the Currency
Securities and Exchange Commission
Six federal agencies approved a final rule requiring sponsors of securitization transactions to retain risk in those transactions. The final rule implements the risk retention requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The final rule is being issued jointly by the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission. As provided under the Dodd-Frank Act, the Secretary of the Treasury, as Chairperson of the Financial Stability Oversight Council, played a coordinating role in the joint agency rulemaking.
Office of Municipal Securities Director John Cross to Leave SEC
The Securities and Exchange Commission today announced that John J. Cross III, Director of the Office of Municipal Securities, will leave the agency in November.
Since September 2012, Mr. Cross has served as the first Director of the Office of Municipal Securities, which was established under the Dodd-Frank Act to oversee the municipal securities market. The Office of Municipal Securities administers the Commission’s rules for the municipal securities market and oversees rulemaking by the Municipal Securities Rulemaking Board, a self-regulatory organization. The Office of Municipal Securities also advises the Commission and other SEC offices on policy matters, enforcement, current market issues, and other issues affecting the municipal securities area, including municipal disclosure and municipal market structure initiatives.
During his tenure, Mr. Cross was instrumental in efforts to build and develop the Office of Municipal Securities into a standalone office staffed by a team of municipal securities experts. Mr. Cross played a leading...