SEC Continues to Educate Investors About SPAC Enforcement Risks

By Mary P. Hansen, Michael J. Rinaldi, and Jovy Dedaj

Special purpose acquisition companies, or SPACs, have quickly become a part of the Wall Street vernacular, but until recently, they were rare.  In fact, the New York Stock Exchange went 10 years without listing a SPAC until 2017. The last year, however, saw a dramatic rise in their use, both in number and in profile. In 2020 alone, 248 public offerings occurred by way of a SPAC, representing 77 percent of all initial public offerings (IPOs) during that year. They raised more than $82 billion in capital in 2020—more than the last 10 years combined—and were responsible for taking many high-profile companies public.  Although the market seems to have embraced SPACs, regulatory authorities, including the U.S. Securities and Exchange Commission (SEC), have expressed concern that these investment vehicles may present certain risks for investors.

Read the Duane Morris Alert for more.

2018 Data Show No Slowdown in Corporate Prosecutions at DOJ

With the change of presidential administrations in January 2017, it was expected that the priorities of the U. S. Department of Justice (DOJ) would shift away from white-collar crime enforcement and towards immigration, violent crime, and narcotics enforcement.  But recent data actually show a significant uptick in both prosecutions and convictions of individuals by the DOJ Criminal Division’s Fraud Section in 2018 over the previous two years.  Moreover, the amount of money the DOJ recovered from companies through Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs) skyrocketed in 2018 .

Continue reading “2018 Data Show No Slowdown in Corporate Prosecutions at DOJ”

Home-Field Advantage? Scrutinizing the Independence of the SEC’s ALJs

By Eric R. Breslin, Mauro M. Wolfe, and Jovy Dedaj

In the last few weeks, the SEC and its administrative law judges (“ALJs”) have tested the truthfulness of the old adage, “There’s no such thing as bad publicity.”

On May 3, 2017, the United States Court of Appeals for the Tenth Circuit denied the SEC’s request to rehear a decision, in which the Court determined that the SEC’s administrative law judges were unconstitutional appointments. That decision was just another setback for the SEC in a high-stakes constitutional debate which could potentially put the issue of how the SEC appoints its ALJs before the Supreme Court. Later this month, much to the dismay of the SEC, the United States Court of Appeals for the D.C. Circuit will rehear arguments in its decision, which initially held in favor of the SEC. Continue reading “Home-Field Advantage? Scrutinizing the Independence of the SEC’s ALJs”

Changes Are Coming to the SEC Enforcement Division – What Does It All Mean?

This week reports surfaced that a major shift in the SEC enforcement division had taken place – behind the scenes.  The timing is quite interesting as the agency’s annual seminar and SEC Alumni dinner will occur at the end of the month.  No doubt this will be a topic, among many, of the annual SEC cocktail regulars in DC.

The reports indicate that the Acting Chairman Michael Piwowar has centralized the power of the enforcement division to “issue subpoenas or formally launch probes,” as Reuters put it.  The question that has been asked is – What does all of this really mean, really?  Continue reading “Changes Are Coming to the SEC Enforcement Division – What Does It All Mean?”

Historic U.S., China Agreement on Auditor Access Announced: Is This a Crack in the Wall Separating The Cross-Border Enforcement Cooperation Impasse?

On May 15, 2013, the U.S. Securities and Exchange Commission charged CEO Dejun Zou and board chair Amy Qiu, husband-and-wife executives at China-based RINO International Corporation, alleging that they engaged in a scheme to overstate the company’s revenues and divert $3.5 million in proceeds from a securities offering for their personal use. This would be a routine case – except it involves a China-based company, a jurisdiction that the SEC has found difficult to regulate. For some time now, the SEC has been hamstrung in gaining access to information from China. Today’s historic announcement by the Public Company Accounting Oversight Board (“PCAOB”) may be the first major step in alleviating such difficulties.

Continue reading “Historic U.S., China Agreement on Auditor Access Announced: Is This a Crack in the Wall Separating The Cross-Border Enforcement Cooperation Impasse?”