Compliance Bricks and Mortar for February 21


These are some of the compliance-related stories that recently caught my attention.

SEC claims drunk lawyer had insider tipple By Kara Scannell in

The SEC sued Tibor Klein, a New York investment adviser, in September for allegedly buying securities of King Pharmaceuticals after learning from one of his clients that the drug company was in talks to be acquired by Pfizer. Mr Klein’s client and friend, Robert Schulman, a patent attorney at Washington law firm Hunton & Williams, allegedly became intoxicated after drinking several glasses of wine over dinner and “blurted out to Klein, ‘It would be nice to be King for a day,’” according to the SEC complaint filed in a Florida court.

Chasing Compliance: JPMorgan has paid out billions in penalties. Did it fix the problems? by Sue Reisinger in Corporate Counsel

A spokesman said bank officials would not comment for this story. But under pressure from regulators, the bank hired more than 3,000 employees last year to enhance its risk and compliance efforts. It also hired a new compliance chief and removed the compliance function from the purview of general counsel Stephen Cutler. In statements to shareholders and employees, chairman and chief executive Jamie Dimon expressed humiliation over bank mistakes. He said the bank spent over $1 billion in 2013 on reforms, and he vowed, “Our control agenda is now priority No. 1.”

Turning Blind Eye to Tippers No Protection From Charges by Patricia Hurtado in Bloomberg

U.S. prosecutors may bring charges for ignoring the source of illegal information used for trading, an appeals court ruled in its second decision in as many days widening the scope and penalties for insider cases

The Uneasy Connection Between Securities Disclosure and Job Creation by Ian K. Peck in the CLS Blue Sky Blog

The Jumpstart Our Business Startups Act (the “JOBS Act” or “the Act”) was signed into law in the spring of 2012, amidst the ongoing fallout from the 2008 financial crisis as well as a hotly-contested presidential election. Having received uncharacteristic bi-partisan support, the JOBS Act’s explicit goal is “To increase American job creation and economic growth by improving access to the public capital markets for emerging growth companies”. In order to accomplish this goal, the Act seeks to reduce the perceived regulatory burden that U.S. securities laws place on companies, mostly firms in the early stages of existence. This lessened burden focuses primarily on the amount and timing of required disclosure firms owe investors and potential investors.

Mark Cuban Visits D.C. to Speak About SEC Case, Enforcement Policy by Bruce Carton in Compliance Week

Cuban repeated a criticism that he also made from the courthouse steps in October following his victory at trial: that the securities laws, including the insider trading laws, are ineffective because the public often has no idea what is legal and what is illegal. How can a “Broken Windows” strategy work for the SEC, has asked, if people don’t even know what a broken window is in the securities law context?

Take Two Video: “The SEC’s Disclaimer” by Broc Romanek in The Corporate

Did you know that the disclaimer that SEC Staffers give when they speak is actually required by law? [Broc] recently learned that on my own even though I gave that disclaimer many times when I spoke in my capacity as a Staffer. Here is a 1-minute video about the disclaimer’s origins – [Broc] tried to inject some humor at the end:

Image of Brick work, Belconnen, Canberra is by Rebecca Dominguez


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