Tag Archives: Andrew J. Ceresney

SEC Brings Enforcement Action Against Investment Adviser for Section 13 Beneficial Ownership Reporting Failures

by Andrew J. Ceresney, Matthew E. Kaplan, Nicholas P. Pellicani, Robert B. Kaplan, Julie M. Riewe, and Jonathan R. Tuttle 

On September 17, 2020, the U.S. Securities and Exchange Commission (the “SEC”) announced the institution of a settled cease and desist proceeding against WCAS Management Corporation (“WCAS”), an SEC-registered investment adviser to five private funds operating under the name Welsh, Carson, Anderson & Stowe (the “WC Funds”), for failures to satisfy reporting obligations under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, the SEC’s Cease and Desist Order (the “SEC’s Order”), which WCAS consented to without admitting or denying the SEC’s findings, found that WCAS caused the WC Funds to violate Section 13(d)(2) and Rule 13d-2 of the Exchange Act by failing to timely update its Schedule 13D to reflect (i) the investment intent to liquidate its reported position in a public company and (ii) the subsequent sales disposing of such position. The SEC’s Order required WCAS to pay a civil penalty of $100,000 and to cease and desist from future violations of the applicable provisions of the Exchange Act. This latest action serves as another reminder of the SEC’s continued focus on beneficial ownership disclosures by institutional investors and the need to implement and adhere to robust controls and procedures to ensure compliance. Continue reading →

DOJ Updates Guidance on Evaluating Corporate Compliance Programs

by Matthew L. Biben, Kara Brockmeyer, Helen V. Cantwell, Andrew J. Ceresney, Andrew M. Levine, David A. O’Neil, David Sarratt, Jonathan R. Tuttle, Mary Jo White, Bruce E. Yannett, Lisa Zornberg, Ryan M. Kusmin, and Jil Simon

On April 30, 2019, Assistant Attorney General Brian Benczkowski announced an updated version of the Evaluation of Corporate Compliance Programs (the “Updated Guidance”).[1] This Updated Guidance supersedes a document of the same name that the Fraud Section of DOJ’s Criminal Division published online in February 2017 without any formal announcement (the “2017 Guidance”). Although not breaking much new ground, we believe the Updated Guidance can serve as a valuable resource for those grappling with how best to design, implement, and monitor an effective corporate compliance program.

In contrast to the 2017 Guidance—which listed dozens of questions to consider in evaluating a compliance program without providing much context—the Updated Guidance employs a more holistic approach. It focuses on three fundamental questions drawn from the Justice Manual:

  • Is the corporation’s compliance program well designed?
  • Is the program implemented effectively?
  • Does the program work in practice?[2]

Continue reading →

Tenth Circuit Affirms SEC’s Extraterritorial Reach

by Mary Jo White, Kara Brockmeyer, Andrew J. Ceresney, Matthew E. Kaplan, Robert B. Kaplan, Julie M. Riewe, Jonathan R. Tuttle, and Ada Fernandez Johnson

Last week, in a much-anticipated decision, the U.S. Court of Appeals for the Tenth Circuit held in SEC v. Scoville et al. that Congress “clearly intended” Section 929P(b) of the Dodd-Frank Act to grant the U.S. Securities and Exchange Commission (“SEC”)  authority to enforce the anti-fraud provisions of the federal securities laws abroad where there is sufficient conduct or effect in the United States.[1] In affirming the lower court’s decision, the Tenth Circuit undertook a thorough analysis of the legislative history of Section 929P(b) and concluded that Congress “affirmatively and unmistakably” intended to grant extraterritorial authority to the SEC where either “significant steps” are taken in the U.S. to further a violation of the anti-fraud provisions, or conduct outside the U.S. has a “foreseeable substantial effect” within the U.S.

The Scoville decision thus provides judicial affirmation of the SEC’s ability to bring enforcement actions under what is essentially the same “conduct-and-effects” test that the Supreme Court rejected for private securities litigation in Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010). The Tenth Circuit’s decision, though not entirely unexpected, is significant in that it represents the first Circuit Court decision to directly address the SEC’s authority to enforce the federal securities laws extraterritorially after the Supreme Court’s rejection of the “conduct-and-effects” test in Morrison. Continue reading →

Oral Downloads of Interview Memoranda to Government Regulators Waive Work Product Protection

by Andrew J. Ceresney, Bruce E. Yannett, Kara N. Brockmeyer, Robert B. Kaplan, Julie M. Riewe, Colby A. Smith, Jonathan R. Tuttle, Ada Fernandez Johnson, and Ajani B. Husbands

In a decision that makes clear the importance for counsel conducting internal investigations to think carefully about the consequences of providing oral summaries of witness interviews to government investigators, a federal Magistrate Judge recently held that a law firm waived work product protection for its interview memoranda when counsel provided oral downloads of those interviews to the U.S. Securities and Exchange Commission (“SEC”).[1] Noting that “very few decisions are consequence free events,” the Court held that there was “little to no substantive distinction” for purposes of work product waiver between providing the actual notes and memoranda and reading or orally summarizing the notes. The Court, however, rejected the notion that a waiver of work product protection extends to information the law firm shared with its client’s accounting firm, holding that the accounting firm and the company shared a “common interest.” Continue reading →

SEC Leadership Discusses Continuing Priorities

by Mary Jo White, Andrew J. Ceresney, Kara Novaco Brockmeyer, Robert B. Kaplan, Julie M. Riewe, Jonathan R. Tuttle and Arian M. June

SEC Chairman Jay Clayton, Co-Directors of Enforcement Stephanie Avakian and Steven Peikin, and Acting Director of the Office of Compliance, Inspections and Examinations (“OCIE”) Peter Driscoll participated in a panel discussion on Tuesday, September 5, at NYU Law School. The moderated discussion, followed by questions from the audience, was titled “The Securities and Exchange Commission: Priorities Going Forward.”

In sum, the SEC officials emphasized that investors should expect no major shift from the SEC in terms of enforcement or examinations. While there has been some discussion in recent months of frauds victimizing retail investors, there will not be a major paradigm shift in the kinds of cases the Commission will focus on. The panelists also spent a significant amount of time discussing cybersecurity and cyber-related enforcement actions, as well as the SEC’s increased use of big data in investigations and examinations. Continue reading →