Drinker Biddle’s SEC & Regulatory Enforcement Defense Team regularly represents investment management firms, broker-dealers, public companies, audit committees, corporate officers and directors, accounting firms, and other members of the financial industry in connection with investigations and enforcement actions instituted by the:

  • Securities and Exchange Commission (SEC);
  • Commodity Futures Trading Commission (CFTC);
  • Financial Industry Regulatory Authority (FINRA);
  • National Futures Association (NFA);
  • Public Company Accounting Oversight Board (PCAOB);
  • Federal Energy Regulatory Commission (FERC);
  • Attorneys general (U.S. and state);
  • Securities fraud investigations conducted by the Department of Justice (DOJ); and
  • Other self-regulatory organizations.

We have extensive experience handling a wide variety of financial regulatory defense matters, compliance matters with enforcement exposure (including guidelines to prevent non-line supervisory liability), white collar criminal defense, and internal corporate and firm investigations, as well as civil, regulatory, administrative and criminal investigations, hearings and trials. Our team includes SEC alumni who served the agency for more than two decades in senior roles collectively—as an assistant director, senior trial counsel and branch chief in the SEC’s Division of Enforcement. In these roles, they led complex and high-profile investigations involving a range of violations, including supervisory and compliance failures, investment management, broker-dealer cases, insider trading, offering fraud, market manipulation, municipal securities fraud and accounting fraud with the involvement of audit firms. They also served in or worked closely with the Enforcement Division’s Market Abuse Unit, Asset Management Unit and Municipal Securities and Public Pensions Unit. Our team also includes a certified public accountant, two certified fraud examiners and former DOJ prosecutors with decades of trial experience.

We consistently achieve superior results for our clients, including negotiating favorable settlements, obtaining terminations letters from regulatory agencies and obtaining favorable verdicts at criminal trials, civil trials and administrative hearings. The team also maintains the SECurities Law Perspectives blog, which provides reports, discussions and analyses on noteworthy trends in SEC enforcement and regulatory activity. Our team’s insights and perspectives on SEC developments are based on members’ direct knowledge of and familiarity with the industry and the federal securities laws, combined with their understanding and knowledge of the internal workings of the SEC.

SEC and Regulatory Enforcement Defense

SEC Investigations

Investment Advisers and Broker-Dealers

  • Represented a registered investment adviser to a family of mutual funds in a “distribution in guise” investigation conducted by the Enforcement Division's Asset Management Unit.
  • Represented a “Robo” adviser in connection with an investigation involving potential misrepresentations and omissions to clients and investors.
  • Represented a registered investment adviser in connection with an investigation by the SEC involving the calculation of management fees and expenses.
  • Represented the former general counsel of a publicly traded real estate investment trust in an investigation regarding various disclosure issues.
  • Represented the general counsel of an investment advisor in an SEC investigation involving inter-fund loans.
  • Represented the managing partner of a hedge fund in an enforcement action under Section 10(b) of the Exchange Act relating to investment “churning” and “soft dollar” relationships.
  • Represented a broker-dealer in an SEC investigation centered on the adequacy of financial disclosures pertaining to pharmaceutical research and development-based projections.
  • Represented a former CEO of a registered investment adviser in an SEC Asset Management Unit investigation regarding a $50 million counterparty fraud that caused the failure of the firm.
  • Represented a registered investment adviser in connection with a “pay-to-play” investigation conducted by the U.S. Attorney’s Office for the Middle District of Pennsylvania involving payments to several Pennsylvania State Treasurers.

Public Companies and Their Officers, Directors and Employees

  • Represented the former CFO of a public company in connection with an investigation focused on revenue recognition related to sales of software, hardware and professional services.
  • Represented a public company in an investigation focused on accounting for, and disclosure of, certain intercompany accounts receivable.
  • Represented a former CEO of a microcap public company in connection with SEC and DOJ investigations regarding the manipulation of the company’s stock, as well as misleading and false statements in public filings.
  • Represented a regional bank holding company in an investigation pertaining to the adequacy of its accounting for loan and lease losses and other-than-temporarily impaired investments, and the sufficiency of its internal control environment.
  • Represented a former CEO of a public company in connection with an investigation involving potential misrepresentations and omissions in public filings, press releases and earnings calls.
  • Represented bank officers and employees in connection with an investigation involving its accounting and internal controls relating to loan loss reserves for commercial loans, and its public disclosures regarding loan loss reserves.
  • Represented a former director of a publicly traded international health care financing company in a shareholder and bondholder class action lawsuit alleging securities fraud and related claims under Sections 10(b) and 20(a) of the Exchange Act involving numerous alleged accounting irregularities, as well as related investigations brought by the SEC and DOJ.

Private Companies

  • Represented separately a Nevada-based trust company and a commercial lender in an investigation into certain private securities offerings.
  • Represented a third-party service provider to hedge funds and private equity funds in an SEC investigation regarding a registered investment adviser’s disclosure of fees. Resulted in no action being taken against the service provider.
  • Represented a limited partnership named as a relief defendant in an enforcement action under Section 10(b) of the Exchange Act and Section 17 of the Securities Act involving a Ponzi scheme and other misappropriations of investor funds.
  • Represented a sponsor of an EB-5 visa program in connection with an investigation focused on disclosures to investors and potential investors.

Auditing Firms and Accountants

  • Represented a Big Four audit engagement partner in a Section 10(b) enforcement action involving purchase price adjustments, bad debt reserves and intercompany transfers.
  • Represented a major national accounting firm in an investigation involving the valuation and disclosure of thinly traded, investment-related assets by a hedge fund client.
  • Represented a Big Four accounting firm in a formal investigation pertaining to the sufficiency of entity-level internal controls and the timing and accuracy of revenue recognition by a publicly traded client.

CFTC Investigations

  • Represented U.S.-based and UK-based individuals and registered investment advisers in connection with NFA and CFTC investigations.
  • Represented a former trader charged in a market manipulation action.
  • Represented an NFA-member firm at a Business Conduct Committee hearing in connection with a complaint alleging violations of NFA Rule 2-45.
  • Represented an individual in connection with an investigation focused on foreign currency trading in a pooled investment vehicle.
  • Appointed by the court to serve as an independent monitor for one of the first “spoofing” manipulative trading enforcement actions instituted by the CFTC.

FINRA Investigations

  • Represented registered representatives in connection with investigations involving issues such as selling-away, potential conflicts of interest, and non-reporting of felony convictions.
  • Advised an algorithmic options marketing firm in responding to a market regulation investigation involving market access issues.

FERC Investigations

  • Counseled Powhatan Energy Fund in a $34 million market manipulation dispute with the Federal Energy Regulatory Commission.

PCAOB Investigations

  • Represented an office managing partner of a major national accounting firm, who served as the concurring partner on a purportedly deficient audit, in a PCAOB investigation, concerning alleged workpaper violations under both PCAOB standards and generally accepted auditing standards (GAAS).

Internal Investigations

  • Conducted an internal investigation involving potential unlawful insider trading by a senior executive as well as potential whistleblower and retaliation claims on behalf of a pharmaceutical company.
  • Conducted an internal investigation involving allegations of wrongful termination based on conflicts of interest on behalf of a pharmaceutical company.
  • Conducted an investigation of alleged insider trading involving senior-level executives of the company on behalf of a Special Committee of the Board of Directors of a Fortune 500 company.
  • Conducted an internal investigation into a fraud perpetrated by the controller and supervisory failures by the CFO, and counseled on assessing self-reporting issues on behalf of a $2 billion private equity fund.

Parallel SEC and DOJ Investigations

  • Represented registered investment advisers in connection with third-party subpoenas issued in a civil investigation by the U.S. Attorney’s Office for the Southern District of New York and an SEC investigation involving foreign currency trading.
  • Represented vice president of a major broker-dealer in parallel SEC and USAO securities fraud investigations concerning “market timing” activities.
  • Represented an individual located in Greece in market manipulation actions charged by the SEC and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
  • Represented an attorney who advised several microcap public issuers in parallel SEC and DOJ investigations focused on market manipulation, sham public offerings, false and misleading press releases and reports submitted to FINRA.
  • Represented an individual in an insider trading investigation by the SEC and DOJ involving several layers of tipping.
  • Represented the founder of an investment company in a fraud and obstruction of justice DOJ investigation.
  • Represented a former company executive in connection with a Foreign Corrupt Practices Act (FCPA) investigation by the DOJ into the activities of the French conglomerate Alstom. Case concluded with no charges against our client.

Compliance Consulting

  • Counseled registered investment advisers in connection with SEC regulatory examinations regarding appropriate strategies to avoid significant deficiencies and enforcement referrals.
  • Counseled clients in assessing and revising policies, procedures, processes and controls in connection with the complex and often overlapping regulatory requirements under which registered investment advisers and broker-dealers operate.
  • Counseled clients with respect to FCPA compliance, including policies and procedures.
  • Advised boards of directors of registered investment companies with regard to SEC issues.
  • Counseled insurance companies in connection with responding to NYDFS Section 308 investigative notices seeking to confirm compliance with Office of Foreign Assets Control (OFAC) sanction rules.

Trial Experience

  • Obtained a not-guilty verdict for a corporate and securities law partner in a 25-count indictment alleging conspiracies to commit securities fraud and wire fraud in connection with financial statement disclosures and business acquisitions.
  • Obtained dismissal of all FCPA and conspiracy charges on behalf of a client following a four-month trial in United States v. Goncalves, et al. (D.D.C.).
  • Represented the former CEO of a national bank in a three-week criminal trial on charges that he conspired with other bank executives to commit securities fraud and other violations by causing the bank to understate its loan loss reserves and otherwise delay the recognition of loss.
  • While at the SEC, one of our attorneys first-chaired a four-week, 20-plus witness trial before the SEC’s Chief Administrative Law Judge and led the cross-appeal of the case to the Commission.

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Visit us at the SECurities Law Perspectives blog, a site designed to provide reports, discussions, and analyses on noteworthy trends in SEC enforcement and regulatory activity from the perspective of a former SEC enforcement attorney, as well as from other attorneys at Drinker Biddle who have significant experience representation individuals and entities in connection with SEC and other regulatory investigations and litigation.