bakerlaw.com
2016 Year-End Securities Litigation
and Enforcement Highlights
JANUARY 2017
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2016 YEAR-END SECURITIES LITIGATION AND ENFORCEMENT HIGHLIGHTS
Table of Contents
Supreme Court Cases Review .................................. 5
Securities Law Cases ........................................13
Insider Trading Cases ....................................... 21
Settlements .............................................. 29
Investment Adviser and Hedge Fund Cases ....................... 33
SEC Cooperation and Whistleblower Programs ......................41
CFTC Cases and Developments .................................47
Securities Policy and Regulatory Developments ..................... 53
by
Marc D. Powers, Mark A. Kornfeld, Melissa L. Kosack, Brian W. Song, Jonathan A. Forman,
Marco Molina, Jonathan D. Blattmachr, Nexus U. Sea, Joshua B. Rog, Michelle N. Tanney,
Camille C. Bent, Elias Trahanas, Erica Barrow, Victoria Stork, and Maria de Dios.
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2016 YEAR-END SECURITIES LITIGATION AND ENFORCEMENT HIGHLIGHTS
Welcome to the 2016 Year-End Report from the
BakerHostetler Securities Litigation and Regulatory
Enforcement Practice Team.
The purpos e of this Report is to prov ide a periodic survey, apa rt from our team
Executive A lerts, on matter s we believe to be of interest t o sophisticated gen eral
counsel, chief compliance officers, compliance departments, legal departments, and
members of t he securities and co mmodities indust ries at financial ins titutions, privat e
investment funds, and public companies.
We issue this S ecurities Litiga tion and Enforcemen t Highlights Repor t at mid-year and
shortl y after year-end. We hop e you find the informatio n and commentary us eful and
welcome your c omments and suggest ions. We encourage you to co ntact any of the
practic e team members listed a t the end of the Report .
This Report highlights recent, significant developments, including, but not limited to:
Supreme Court Cases, including clarifying the meaning of “personal gain” in the insider trading
context; declining to stay the Uni ted States Secu rities and Exchange Commission’s (“SEC”)
enforcement action de spite constitutional challenge to the use of in-hou se courts; the Circuit split
on whether the SEC’s use of its in-house cou rts is constitutional; and the potential to determine the
scope of Securitie s Litigation Uniform St andards Act of 1998 (“SLUSA”) preemptio n;
Securities Law Cases, including the endorsement of “price maintenance” theory; finding rebuttal
of the fraud-on-the-market pr esumption if investor would have pu rchased securities even while
knowing of alleged f raudulent misstatements; the acceptance of the materi alization-of-risk
standard for loss caus ation; finding class action tolling doctrine does n ot apply to statutes of
repose and extension of Ind yMac ruling to the Sec urities Exchange Act of 1934 (“Exchange Act”);
and applying the disg orgement provision of the Sarbanes-Ox ley Act of 2002 (“Sarbanes-Oxley
Act”) based on the issu er’s misconduc t, even if corpo rate office rs did not engage in personal
misconduct;
Insider Trading Ca ses, including the continued post-Newman and Salman impact; the role of
data analytics i n increasing insider trading charges; high lighting the SEC’s commitment to pursuing
insider trading char ges derived from pre-merger trades; and other re cent, noteworthy insider
trading cases;
Settlements, including historic settlem ents with financial institutions stemming from l itigation
derived from the finan cial crises and the SEC’s strong enforcement trend with resp ect to the
critical importance of corporate oversight;
