2015 Mid-Year Securities Litigation and
Enforcement Highlights
July 2015
Authors: Marc D. Powers, Mark A. Kornfeld, Brian W. Song, Jonathan A. Forman,
Jonathan D. Blattmachr, Margaret E. Hirce, Beth Howe, Marco Molina,
Samir Ranade, and Joshua B. Rog
Table of Contents
I. Supreme Court Cases Review ..................................... 2
II. Securities Law Cases .................................................. 7
III. Insider Trading Cases ............................................... 13
IV. Investment Adviser and Hedge Fund Cases .............. 17
V. CFTC Cases and Developments ............................... 21
VII. Securities Policy and Regulatory Developments ........ 25
VIII. The SEC Cooperation and Whistleblower Program ... 29
1
Welcome to the 2015 Mid-Year Report from the BakerHostetler Securities Litigation and
Regulatory Enforcement Practice Team
The purpose is to provide a periodic survey, apart from our team Executive Alerts, on matters we
believe of interest to sophisticated general counsel, chief compliance officers, compliance
departments, legal departments, and members of the securities and commodities industries at
financial institutions, private investment funds, and public companies.
We issue this Securities Litigation and Enforcement Highlights report at mid-year and shortly after
year-end. We hope you find the information and commentary useful, and we welcome your
comments and suggestions. We also encourage you to contact any of our practice team members
listed at the end of the report.
This report highlights recent, significant developments, including but not limited to:
Supreme Court cases, including the United States Supreme Court review of the scope of Section
11 of the Securities Act of 1933 (“Securities Act”), the duty of 401(k) trustees to monitor plan
investments, and federal agency discretion to significantly modify interpretive rules without a notice
and comment period (the Supreme Court also granted certiorari to resolve a circuit split on whether
Section 27 of the Securities Exchange Act of 1934 [“Exchange Act”] confers independent federal
jurisdiction);
Securities law cases, including the United States Court of Appeals for the First and Second
Circuits’ examination of scienter and materiality under Sections 10(b) and 20(a) of the Exchange
Act, proof of loss causation and forward-looking statements under Rule 10b-5, litigation under the
Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), and challenges to the SEC’s use of
administrative proceedings under the Dodd-Frank Wall Street Reform and Consumer Protection
Act (“Dodd-Frank Act”);
Insider trading cases, including the impact of the United States Court of Appeals for the Second
Circuit’s decision in United States v. Newman and other recent, noteworthy insider trading cases;
Investment adviser and hedge fund cases, including enforcement actions by the United States
Securities and Exchange Commission (“SEC”) relating to misappropriation of client assets,
improper valuations, and conflicts of interest;
Commodities and futures regulation and cases, including continued efforts to curtail spoofing
and interest rate manipulation;
Securities policy and regulatory developments, including the adoption of rules by the SEC
relating to modernization of data reporting, the implementation of diversity standards, and
cybersecurity; and
The SEC’s Cooperation and Whistleblower Programs, including the first award in an anti-
retaliation whistleblower case, an award to a compliance officer, and additional settlements
pursuant to the Municipalities Continuing Disclosure Cooperation Initiative (“MCDC Initiative”).
