Throughout the week over at Securities Docket, I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending June 17.

No D.&O. Liability Risk? Don't Bet on It

DealBook | Michael W. Peregrine | Jun 17, 2011

[B]y most traditional standards — federal law, Delaware courts, best practices — the likelihood of personal liability for officer or board service may seem remote.... Well, [Responsible Corporate Officer Doctrine] is unconventional. It is extreme. It is more than a bit unfair. It is a credible fiduciary liability risk for officers and directors of health care companies. You cannot have a real discussion about officer-director liability profiles without recognizing the risk of an expanded application of R.C.O.D. And that's a real liability worry.

Dear Congress: Please Stop Robbing Us

fool.com | Rich Smith | Jun 17, 2011

Pardon my bluntness, but if these numbers are accurate, then it appears to me that either: (1) Congress is home to some of the savviest stock-picking geniuses in the history of Mankind, or ... (2) it's full of crooks. On her congressional website, Rep. Slaughter quotes law firm partner and former SEC enforcer Thomas Newkirk, who points out: "If a congressman learns that his committee is about to do something that would affect a company, he can go trade on that because he is not obligated to keep that information confidential." There's no law against it....

Getting Away With It

New York Times | Joe Nocera | Jun 14, 2011

Yet, despite the similarities, the two groups of investors have been treated completely differently since the crimes of their respective fund managers were exposed. For many investors in Madoff's Ponzi scheme — the “net winners” who took out more money than they put in — the experience has been hellish. Irving Picard, the trustee in the Madoff case, has sued many of them to recover some or all of their ill-gotten gains. By contrast, the Galleon investors have paid no price at all. They've been able to keep every ill-gotten penny. Why is this so? More to the point, why is it right?

Will Tourre be last SEC defendant to benefit from Morrison?

News & Insight | Alison Frankel | Jun 13, 2011

It's too bad for Fabrice Tourre, the former Goldman Sachs securities trader, that the portfolio manager on Goldman's notorious ABACUS investment vehicle, isn't a foreign company. If it were, Tourre might have entirely escaped Securities and Exchange Commission charges that he engaged in securities fraud in structuring and marketing the ABACUS synthetic collateralized debt obligation. Under a June 10 ruling by Manhattan federal district court judge Barbara Jones, Tourre is off the hook for allegedly defrauding ABACUS investors IKB and ABN Amro because they're foreign companies that dealt with overseas-based Goldman entities. So at least for those companies, Tourre's actions fall outside the purview of U.S. courts under the U.S. Supreme Court's 2010 Morrison v. National Australia Bank opinion.

Should Directors Be Held Liable More Often?

The D&O Diary | Kevin LaCroix | Jun 13, 2011

Davidoff seems very sure that directors are not being held liable often enough. However, it is not clear why he thinks directors should be held liable more often. Upon reflection, I can think of three possible reasons why it might be argued that directors ought to face civil liability more frequently: recompense; retribution; and deterrence. I examine each of these three reasons below and consider whether or not they substantiate the need for directors to face civil liability more frequently.

It is Time for the SEC to Follow Its Own Advice

SEC Actions | Thomas Gorman | Jun 13, 2011

Last month the Senator asked the SEC to furnish information regarding how it handled multiple referrals over the last decade from FINRA about suspicious trading by SAC Capital (here). Since several former SAC traders have been implicated in the on-going expert network insider trading inquiry and pleaded guilty there is a clear basis for congress to wonder what happened to those referrals. The SEC refused.... The question now is, should the Commission's own rules apply to it? Should the Senator and the public label the agency uncooperative and draw an adverse inference? Is it appropriate to assume that the SEC is just covering up a series of failures?

Nelson Obus: The man who decided to fight the SEC

New York Times | Susanne Craig | Jun 12, 2011

Obus is the target of an insider-trading investigation.He insisted from the start that he had done nothing wrong. But, almost a decade later, he is still fighting to clear his name. His case has become one of the longest-running civil actions by the Securities and Exchange Commission in recent memory - a sort of "Les Miserables" of Wall Street. "This has turned into a nightmare," Obus, 64, says. He has run up $6 million in legal bills.

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