May 20, 2016

Insider Trading: A Director, Golfer & Gambler Walk Into a Bar…

The long-sought insider trading case involving big golfer Phil Mickelson was finally brought yesterday (here’s a statement from Enforcement Director Andrew Ceresney). This truly is a high profile case considering Mickelson is so well known & the gambler involved is the most successful gambler in the US. The kicker for our community is that Mickelson got his trading tips from this gambler who routinely got inside information from a board member – over a period of five years! Mickelson won’t be brought up on criminal charges (his civil charges named him as a “relief defendant”) – but the director is (and already has pleaded guilty)! Not just the usual civil stuff from the SEC. Great story to tell your directors to scare them straight (this blog by David Smyth analyzes the case nicely).

This Stanford report about “What actions should the board of directors take when the CEO engages in behavior that is questionable but not illegal?” is also worth including in your board materials…

Tune in on June 2nd for the webcast – “Yes, It’s Time to Update Your Insider Trading Policy” – to hear Chris Agbe-Davies of Spectra Energy, Ari Lanin of Gibson Dunn, Alan Dye of Hogan Lovells and and Marty Dunn of Morrison & Foerster provide practical guidance on revisiting your insider trading policy, as well as your insider trading training program for officers, employees and directors.

SEC Urges Senate to Tweak Email Privacy Bill

Here’s an excerpt from this WSJ article from early in the week:

The Securities and Exchange Commission is pressing the Senate to scale back legislation it says will hamper its civil fraud cases, after the agency was caught flat-footed when the House unanimously backed the measure two weeks ago. SEC Chairman Mary Jo White, joined by her two fellow commissioners, on Thursday urged key Senate lawmakers to make changes to an email-privacy bill that aims to restrict the SEC and other civil agencies from subpoenaing email providers, such as Google, Hotmail and Yahoo.

House and Senate versions of the bill “pose significant risks to the American investing public by impeding the ability of the [SEC] to investigate and uncover insider trading, illegal pyramid schemes, and other types of fraud,” the SEC officials wrote in a letter to Senate Judiciary Committee Chairman Charles Grassley (R., Iowa) and other key senators. The letter was signed by Ms. White and commissioners Kara Stein and Michael Piwowar.
Thursday’s letter is significant because it is unusual for all three SEC commissioners to agree on an issue at the politically divided agency. Ms. White is an independent, while Ms. Stein is a Democrat and Mr. Piwowar is a Republican.

SEC Commissioners: Two Nominees Passed By Committee (But Still Might Not Be Confirmed)

Yesterday, as noted in WSJ article, the Senate Banking Committee approved of the two SEC Commissioner nominees – Lisa Fairfax and Hester Peirce – by a voice vote about six weeks after their hearing was suddenly curtailed, but there still could be trouble in obtaining confirmation on the Senate floor, according to the article…

Broc Romanek