The U.S. Securities and Exchange Commission
("SEC") recently reaffirmed its
determination to hold those involved in market abuse violations
accountable. To illustrate, the following three charges are
On 10 February 2012, the SEC announced that it was charging yet
another person in the Galleon insider trading case involving Raj
Rajaratnam. Numerous defendants have been charged in the Galleon
insider trading case to date. This time it concerned a managing
member of hedge fund investment adviser Whitman Capital LLP and his
firm for violating insider trading prohibitions. Allegedly, Whitman
traded in the listed securities based on non-public information
which he received from a former employee of the Galleon Group hedge
A second insider trading case involves unlawful trading by a
former vice-president of Coca Cola. On 8 March 2012, the SEC filed
a charge in which it claimed that the former VP allegedly used
non-public information about an imminent acquisition by the company
to purchase securities of Coco Cola Enterprises on the day before
the acquisition. According to the SEC the former VP misappropriated
the material non-public information, whereas he had a relationship
of trust and confidence with the company, was regularly in
possession of sensitive and confidential information and also
signed a non-disclosure agreement confirming that he would maintain
Another example of the SEC's focus on market abuse
violations is the charge against BankAtlantic Bancorp and its CEO
on 18 January 2012. The charges inter alia include accounting fraud
and misleading investors about BankAtlantic Bancorp's real
estate portfolio at the time that the real estate market
floundered. According to the SEC, Bancorp presented misleading
information on earning calls in 2007 to conceal losses in its real
estate portfolio. Furthermore, BankAtlantic Bancorp allegedly filed
incorrect reporting statements.
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Under what courts call the "crime-fraud exception" to the attorney-client privilege, the privilege does not protect communications between clients and their lawyers which further client wrongdoing. Courts agree that the exception applies to crimes and traditional common law intentional fraud.
Two days ago the United States Securities and Exchange Commission charged oil field services company Weatherford International with violating the Foreign Corrupt Practices Act by authorising bribes and improper travel and entertainment for foreign officials in the Middle East and Africa to win business including kickbacks in Iraq to obtain United Nations oil-for-food contracts.
The U.S. Court of Appeals for the District of Columbia perpetuated a circuit split in United States v. Glover in suppressing wiretap evidence. In Glover, the prosecutors obtained a wiretap order from a district judge in D.C. for a listening device on a truck in Maryland.
Regulators speaking at the American Conference Institute’s 30th International Conference on the Foreign Corrupt Practices Act tout large penalties, enhanced international cooperation, and a renewed focus on individual prosecutions.
On November 26, 2013, Weatherford International ("Weatherford" or "the Company"), an oil-field services company that trades on the New York Stock Exchange, agreed to pay $253 million in criminal and civil penalties as part of a global settlement with the U.S. government to resolve claims that the Company and its subsidiaries violated the Foreign Corrupt Practices Act ("FCPA") and various export control and sanctions laws.