Tag Archives: Wayne M. Carlin

SEC Disbands ESG Enforcement Task Force

by John F. Savarese, Wayne M. Carlin, David B. Anders, and Carmen X. W. Lu

Photos of authors

Left to right: John F. Savarese, Wayne M. Carlin, David B. Anders and Carmen X. W. Lu. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

The U.S. Securities and Exchange Commission (“SEC”) has disbanded its Climate and ESG Task Force in the Division of Enforcement. The Task Force was established in March 2021 with the purpose of identifying ESG-related misconduct, including material gaps or misstatements in issuers’ disclosure of climate risks, and assessing disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies. According to the SEC, the “expertise developed by the task force now resides across the Division” signaling that the SEC will continue to pursue ESG-related matters as part of its broader enforcement strategy.

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Summer Takeaways in SEC Enforcement

by John F. Savarese,  and 

Photos of authors.

Left to Right: John F. Savarese, Wayne M. Carlin and David B. Anders (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

With the Labor Day holiday now behind us, it is a good time to review the SEC’s active enforcement docket and to look ahead to likely areas of continuing enforcement attention as we head into the fall.  The record over the past few months reflects a continuing emphasis on certain major program areas, along with progress on a new enforcement initiative:

Whistleblower Awards.  The whistleblower program continues to be a tremendous source of investigative leads for the enforcement staff.  In July and August alone, the SEC announced bounty payments to six whistleblowers totaling $196 million.  These announcements included an award of $82 million to a single individual who provided information that led to the opening of an investigation.  In addition, two separate whistleblowers received awards of $37 million each in connection with different matters.

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Implications of the SEC’s “Shadow Trading” Verdict

by John F. Savarese, Wayne M. Carlin, and David B. Anders

Photos of the authors

From left to right: John F. Savarese, Wayne M. Carlin, and David B. Anders (photos courtesy of Wachtell, Lipton, Rosen & Katz).

Last week, a jury in San Francisco returned a verdict in SEC v. Panuwat, finding that a corporate executive engaged in insider trading when he learned about an impending acquisition of his employer and then traded in the securities of an unrelated company in the same industry. The case has widely been described as “novel” but, in bringing this case, the SEC did not seek to extend existing law. Panuwat simply applied well-established principles of insider trading law to a new fact pattern. Yet in doing so, this action may well have implications for corporate trading policies. 

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White-Collar and Regulatory Enforcement: What Mattered in 2023 and What to Expect in 2024

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, David B. Anders, Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz

Photos of Authors

Top left to right: John F. Savarese, Ralph M. Levene, Wayne M. Carlin, and David B. Anders.
Bottom left to right: Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

This past year was yet another notable and intensely active one across the entire range of white-collar criminal and regulatory enforcement areas. We heard continued tough talk from law enforcement authorities, especially concerning the government’s desire to bring more enforcement actions against individuals and on the need to keep ramping up corporate fines and penalties. The government largely lived up to its talking points about increasing the numbers of individual prosecutions and proceedings, particularly with respect to senior executives in the cryptoasset industry. But there were some notable stumbles. The most striking example of this was DOJ’s failure to secure convictions in cases where it attempted to extend criminal antitrust enforcement in unprecedented areas, such as no-poach employment agreements and against certain vertical arrangements—neither of which has historically been viewed as involving per se violations of the federal antitrust laws. And, as in years past, many state attorneys general remained active throughout 2023, using broad state consumer-protection statutes to bring blockbuster cases across a wide array of industries, from ridesharing and vaping to opioids and consumer technology offerings.

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The SEC’s Enforcement Action Against SolarWinds Underscores Growing Scrutiny Over Cybersecurity Internal Controls, Reporting and Disclosures

by John F. Savarese, Wayne M. Carlin, and Carmen X. W. Lu 

From left to right: John F. Savarese, Wayne M. Carlin, and Carmen X. W. Lu. (Photos courtesy of Wachtell, Lipton, Rosen & Katz).

Recently, the SEC filed a complaint against SolarWinds and its chief information security officer for fraud and internal control failures relating to the company’s cybersecurity risk and incident disclosures. The complaint alleges, among other things, that SolarWinds repeatedly overstated the strength of its cybersecurity risk management practices in its public documents and knowingly concealed critical vulnerabilities affecting its key product and business. We see four important takeaways from the allegations set forth in the SEC complaint, which are being contested by the defendants:

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A Sign of the Times in SEC Cyber Enforcement

by John F. Savarese and Wayne M. Carlin

Author Photographs

From left to right: John F. Savarese and Wayne M. Carlin. (Photos courtesy of Wachtell Lipton Rosen & Katz LLP)

The SEC announced on March 9 its most recent enforcement action against a public company arising from a cybersecurity breach. In the Matter of Blackbaud, Inc. Blackbaud settled without admitting or denying the SEC’s findings. The facts of this case illustrate yet again a theme we have sounded before: as in any corporate crisis, it is critical that companies dealing with cyber breaches take adequate steps to assure that their public statements are accurate. In addition, in this case, the SEC has delivered on its programmatic goal of raising the level of corporate penalty payments.

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White-Collar and Regulatory Enforcement: What Mattered in 2022 and What to Expect in 2023

by John F. Savarese, David B. Anders, Ralph M. Levene, Sarah K. Eddy, Wayne M. Carlin, and Kevin S. Schwartz

(Photos courtesy of Wachtell, Lipton, Rosen & Katz) From left to right: John F. Savarese, David B. Anders, Ralph M. Levene, Sarah K. Eddy, Wayne M. Carlin, Kevin S. Schwartz.

Introduction

Each year we try in this wrap-up memo to flag the main enforcement developments that companies should be alert to in the coming year and also to identify steps companies should be taking to prepare themselves in the event of a significant white-collar or regulatory enforcement inquiry. Because policy preferences (and politics) often shape these developments, the early days of any new administration in D.C. are frequently harder to read, and teasing apart mere rhetoric from concrete changes in enforcement priorities can be challenging. But now, two years into the Biden administration, we can see some clear themes emerging: Penalties are up—way up; investigations appear to be moving a bit faster; cryptoassets and cybersecurity have become heightened risk areas; government expectations for what constitutes full cooperation have been amped up; and many new disclosure demands across a wide range of corporate activities are coming on line. At the same time, however, several time-tested verities remain firmly in place, including the need to maintain strong internal accounting controls, provide comprehensive (and frequent) training, instill a genuinely ethics-oriented tone at the top, stay vigilant in detecting internal misconduct, and react swiftly in the event problems do arise by self-remediating and self-reporting when appropriate. A company that positions itself in this way optimizes its chances not only of securing the best possible resolution in the event of criminal or civil charges but also of forcefully resisting enforcement action where warranted.

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SEC Division of Enforcement Forms New Climate and ESG Task Force to Target ESG-Related Misconduct and Potential Violations

by David M. Silk, Wayne M. Carlin, David B. Anders, Sabastian V. Niles, and Carmen X. W. Lu

Last week, the SEC Division of Corporation Finance announced (PDF: 131 KB) it would enhance its focus on climate-related disclosures and risks at the direction of the Acting Chair of the SEC. Yesterday, the SEC announced a new Climate and ESG Task Force within the SEC’s Division of Enforcement. This Enforcement Task Force will be heavily resourced, have access to ESG-related whistleblower complaints and referrals and focus on proactively identifying ESG-related misconduct (such as material disclosure “gaps” and misstatements), including by using data analysis to identify potential violations.

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White-Collar and Regulatory Enforcement: What Mattered in 2020 and What to Expect in 2021

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, David B. Anders, Sarah K. Eddy, Lauren M. Kofke, Carol Miller, and Tamara Livshiz

As we write this memorandum, a new administration is forming in Washington, with new leadership teams being nominated at DOJ, SEC, CFTC and other regulatory and law-enforcement agencies — thus prompting the question of what these changes may portend for white-collar and regulatory enforcement priorities, trends and policies. Having watched many administrations come and go over the years, our sense is that, in this area at least, continuity tends to prevail over disruption. That said, we can offer the following educated guesses on what to expect going forward:

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Supreme Court Limits SEC Disgorgement Remedy

by John F. Savarese, Wayne M. Carlin, and David B. Anders

In an 8-1 decision issued yesterday in Liu v. SEC (PDF: 193.50 KB), the Supreme Court upheld the SEC’s authority to obtain disgorgement from securities law violators, but also indicated some limitations on the scope of the remedy. Some observers had raised questions about the continued viability of the disgorgement remedy after the Court’s 2017 decision in Kokesh v. SEC (PDF: 2112 KB). Today’s decision makes clear that SEC disgorgement is alive and well. Nevertheless, in light of some comments in today’s opinion, the SEC will likely need to rein in some of its prior practices.

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