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New York Securities Law Blog

Ex-CEO of Hertz settles federal charges in accounting scandal

Former Hertz Chairman and CEO Mark Frissora agreed to repay the car rental company nearly $2 million in incentive-based compensation stemming from charges that he facilitated fraudulent financial statements. The charges - related to a Securities and Exchange Commission (SEC) investigation - were filed on Aug. 13 in federal court in New Jersey. Frissora agreed to a settlement without admitting guilt.

The charges against Frissora included aiding and abetting Hertz's financial reporting, books and records violations along with violating the Sarbanes-Oxley Act when he failed to repay Hertz his incentive-based compensation. He served as Hertz's CEO for more than eight years, resigning in September 2014 after accounting problems surfaced at the company.

Under Armour receives Wells notice amid SEC probe

In July, the U.S. Securities and Exchange Commission (SEC) sent Wells notices to Under Armour and two of its executives. The notices of possible enforcement action are part of a probe into the activewear company's accounting practices, which the SEC claims may have violated securities laws by making sales seem stronger than they actually were.

A Wells notice itself does not necessarily indicate a securities law violation. However, such a notice means that the SEC is considering an enforcement action. Both the former CEO and current CFO of Under Armour also received Wells notices. Under Armour has denied any wrongdoing, and the company has indicated that it will cooperate with the SEC.

SEC issues notice seeking forensic tools for monitoring blockchains

The U.S. Securities and Exchange Commission (SEC) is looking for forensic tools to more closely monitor the crypto industry, particularly with regard to blockchain smart contracts.

The regulator issued a notice on July 30, requesting solicitations from companies that might provide software that can analyze blockchain code and the distribution of token sales funds. Necessary features of the tool would be "purchase and/or sale restrictions" and "token or coin sale specifications," according to the notice.

FINRA sanctions target unauthorized solicitation of cryptocurrency investments

A former broker was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in outside cryptocurrency business activities. According to FINRA, the ex-Wells Fargo broker attempted to start a cryptocurrency company without first disclosing his intent and obtaining approval from Wells Fargo. FINRA further claimed that the broker provided false information to Wells Fargo to try to conceal his outside activity.

Specifically, the broker was accused of violating FINRA Rules 3270 (which governs outside business activities), 3280 (which governs private securities transactions) and 2010 (which governs standards of commercial honor and principles of trade).

Former Refco CEO granted compassionate release from prison

Phillip Bennett, former CEO of Refco Inc., has won compassionate release from prison and is expected to be deported to the U.K. in the near future.

His release comes amid concerns about the spread of COVID-19 in U.S. prisons. In his request for early release, Bennett said his age (71), high blood pressure and high cholesterol raise the risk of his contracting the virus while incarcerated.

11 Class Actions Claim Crypto-Asset Exchanges Violated Securities Laws

Enthusiasm for Bitcoin has factored largely in many decisions to invest in the cryptocurrency market.

But according to 11 class actions filed on April 3 in the Southern District of New York, four crypto-asset exchanges and seven digital token issuers took advantage of that enthusiasm by unlawfully issuing and selling billions of dollars of unregistered digital tokens.

The lawsuits claim that the issuers and exchanges failed to comply with state and federal securities laws.

Recent trends in FINRA disciplinary actions

As you may know, the Financial Industry Regulatory Authority (FINRA) is a self-regulating association that conducts investigations into its members with regard to securities law compliance. FINRA oversees disciplinary actions for its broker-dealer members who violate FINRA rules or SEC regulations. 

SEC wins injunction against Telegram's new cryptocurrency

In a landmark digital currency ruling, a US District Judge in Manhattan has issued a preliminary injunction against Telegram. The Securities and Exchange Commission (SEC) initiated the lawsuit against Telegram in an attempt to bar the launch of the Company's Open Network blockchain. The judge maintained the SEC's claims that Telegram's initiative to produce a new digital currency for its TON platform involved the sale of unregistered securities.

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