SEC Issues First Charges for False Disclosures Concerning the COVID-19 Pandemic

While the COVID-19 pandemic has caused enormous challenges to public companies’ day-to-day operations, it has also introduced new complexities to their public disclosure obligations. As the Securities and Exchange Commission’s recent charges against a large restaurant chain make clear, regulators are monitoring public companies to ensure that they timely disclose material changes to operations and financial condition.

To read the full text of this Duane Morris Alert, please visit the firm website.

SEC Regulation Best Interest and Form CRS Compliance Deadline Unchanged Despite COVID-19 Pandemic

Regulation Best Interest (Reg BI)—which sets forth a new standard of conduct for broker-dealers and their associated persons when making investment recommendations—was adopted by the SEC on June 5, 2019, and is scheduled to take effect on June 30, 2020. There was some question as to whether the SEC would push back the effective date due to the COVID-19 pandemic, but on April 2, SEC Chairman Jay Clayton issued a public statement that the SEC will hold to the June 30 deadline despite the ongoing emergency.

To read the full text of this Duane Morris Alert, please visit the firm website.

Federal Prosecutors Begin Charging COVID-19 Fraud in California and New Jersey

By Jovalin Dedaj

Yesterday, federal prosecutors in the District of New Jersey charged a Georgia man for his alleged role in a conspiracy to defraud federally funded and private health care benefit programs by submitting fraudulent testing claims for COVID-19 and genetic cancer screenings.   It follows a criminal complaint announced last week by the U.S. Attorney’s Office for the Central District of California against a Southern California man on a federal fraud charge alleging he solicited investments in a company he claimed would be used to market pills that would prevent coronavirus infections and an injectable cure for those already suffering from COVID-19.  These cases are among the first criminal actions in the ongoing public health crisis and come on the heels of the first civil enforcement action by the Department of Justice against a COVID-19 related fraud.

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SEC and FINRA Warn Against COVID-19 Insider Trading and Market Fraud

By Jovalin Dedaj

On March 23, 2020, the Securities and Exchange Commission issued a stern warning against trading on nonpublic information related to the COVID-19 pandemic.  In a joint statement from the SEC’s co-directors of enforcement, the SEC emphasized that “a greater number of people may have access to material nonpublic information than in less challenging times.”  The message makes clear that corporate controls and procedures remain paramount in these challenging times.  But, with this announcement, the SEC is also putting the investing public on notice that it recognizes “these dynamic circumstances” present a greater risk of violating the federal securities laws.

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SEC Announces Reporting Relief and Issues Guidance Regarding Disclosures in Light of COVID-19

On March 25, 2020, the Securities and Exchange Commission announced that it is extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and that it is also extending regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19. In addition, the SEC’s Division of Corporation Finance issued its current views regarding disclosure considerations and other securities law matters related to COVID-19.

To read the full text of this Duane Morris Alert, please visit the firm website.

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