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 November 29, 2013.

Why securities lawyers should give thanks to Native AmericansAlison Frankel, On the Case

On this Thanksgiving Eve, as we recall the generosity of the Wampanoags who helped early Bay Colony settlers learn how to survive in the New World, securities class action lawyers may want to spare a thanks or two for 12 members of the Ute tribe as well. Why? Because if the U.S. Supreme Court ends up eliminating fraud-on-the-market reliance in the Halliburton case to be heard later this term, one of the few remaining avenues for securities class actions is open because of a case those Utes brought to the Supreme Court back in 1971.

To Block Out Insiders Like Steven Cohen Is To Blind The Stock Markets

John Tamny, ForbesIndeed, for do-gooders and those who simply think it's unfair that CEOs trade on non-public information, they should celebrate the [Steve] Cohens of the world who constantly seek an information edge. While Cohen was never found to have done anything wrong, it's people like Cohen and his employees who will do the sleuthing that exposes to the marketplace good and bad news that public companies might not be so quick to disclose either verbally, or through share sales/purchases.

Proposed Ponzi Legislation Seeks Sweeping and Controversial Reforms

Jordan D. Maglich, Ponzitracker

In short, the Bill seeks enactment of a significant set of reforms that would significantly alter many facets of Ponzi jurisprudence, including the determination of customer losses, definition of a customer, and the ability to seek the clawback of avoidance transfers.  While it is not yet clear as to whether all of the above-referenced reforms will actually be included in a final and enacted bill, a more extensive discourse regarding these changes is essential.  According to www.govtrack.us, which tracks legislation, the Bill has currently been referred to committee, and has been given a 33% chance of getting past committee and a 5% chance of ever being enacted….

SEC Enforcement: Talking the Talk, But Walking the Walk?

John C. Coffee, Jr., CLS Blue Sky Blog

Almost everyone has an opinion about securities enforcement.  Many are disappointed (and even angry) that “few high level executives” have been prosecuted (criminally or even civilly) in connection with the 2008 financial crisis.[1]  Deep in their bunker, the SEC still has some diehards who maintain that fraud has been fully prosecuted, but, even there, attitudes are changing.  The shift is much clearer at the Department of Justice (“DOJ”), which has just settled with JPMorgan for $13 billion and may be in hot pursuit of still unnamed defendants.[2]  Even if the SEC is presenting itself as a more aggressive enforcer under its new Chair, questions remain about whether its behavior has truly changed.

Although there is a surplus today of opinions about how enforcement should change, there is a paucity of facts.  Why is it that enforcers have underperformed?  What practical steps are possible?  Provocative new proposals are being made, but they too need to be informed by better factual evidence as to how regulators actually behave….

Mark Cuban Escapes SEC Shark Tank, But Will You?

Kirkland Alert

Despite two recent trial victories by individuals (including Mark Cuban) against the SEC, Chair Mary Jo White has made it clear that the SEC will continue to aggressively pursue individuals and perhaps take even more cases to trial....

As a result of the SEC's approach, it is imperative that at the inception of an investigation, prospective defendants anticipate a Hobson's choice — settlement with severe sanctions (including a possible admission) or trial....

But staying out of the SEC shark tank remains the preferable course. Companies must integrate a risk-based, properly resourced compliance program into their business operations, one that management embraces through word and action and that constantly adjusts to account for experience, emerging business risks and regulatory priorities. Companies that adopt this approach not only increase the odds of preventing violations in the first place, but are well-positioned to legitimately claim to the SEC that misconduct that occurs despite a strong control environment is best understood as aberrational or roguish behavior for which the entity should not be held responsible.

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