Media Mentions
2011
“Whistleblower Rules and Attorney-Client Privilege”
Compliance Week, March 1, 2011
Steven Scholes advised any company conducting its own investigation of whistleblower allegations made to the SEC, “Don’t expect a direct or implied request for a privilege waiver from the SEC enforcement staff. Generally, under the SEC’s current enforcement program, the SEC staff does not seek such waivers.” He added that in most such circumstances, “the SEC staff will (to conserve its own resources) defer its own investigation to an internal investigation being conducted by the company.” The SEC could conduct a parallel investigation, Mr. Scholes noted, but “the best way to avoid this situation is for a company to conduct a credible investigation.”
Steven S. Scholes, SEC Defense, Securities Litigation, Trial, White-Collar & Securities Defense
“Business Litigation: A Look into 2011”
Compliance Week, January 4, 2011
Steven Scholes singled out two types of business litigation for more activity in 2011. The first is lawsuits against banks by institutional investors, where he expects that a “tremendous amount of activity … is really just now starting to work its way through the system.” The second is insider trading claims against analysts and consultants who research proprietary company data and sell it to investors without permission. Noting that this would extend the reach of securities laws, Mr. Scholes anticipates “a very interesting series of investigations and lawsuits as to how this all plays out.”
Steven S. Scholes, SEC Defense, Securities Litigation, Trial, White-Collar & Securities Defense
2010
“White Collar Defense Boom Lures Public Servants Away”
Law360, September 28, 2010
Fredric (Rick) Firestone, a former Associate Director of the SEC’s Division of Enforcement, commented on the fact that many of the Division’s leaders are former federal prosecutors. “It’s probably unprecedented,” Mr. Firestone said of the leadership emphasis on Department of Justice alumni, which many see bringing more aggressive enforcement tactics to the SEC.
Fredric D. Firestone, Michael A. Ungar, SEC Defense, Securities Litigation, White-Collar & Securities Defense
Fredric Firestone was interviewed by Boardmember.com on July 21 concerning the whistleblower provisions of the Dodd-Frank financial reform act. He noted the "significant effect on public companies" of the act's provision that a whistleblower providing information on securities law violations could receive 30% of any recovery exceeding $1 million. Because such recoveries can be hundreds of millions of dollars, "[A] corporate insider whistleblower would potentially have a very large payday at the end of the process. So the types of cases and the potential recoveries involved have actually expanded and increased..." Mr. Firestone added that because this provision gives "incentive for corporate insiders to run to the government in the first instance [of a problem] rather than perhaps going within the company itself," it is "more imperative than ever that companies design and implement effective compliance programs and policies."
Fredric D. Firestone, Corporate Responsibility and Governance, SEC Defense, Securities Litigation
Steven Scholes is mentioned in a March 6 Wall Street Journal profile of Thomas Quinn, who according to the story has been involved in securities fraud for more than five decades. Mr. Scholes recalled that, when he was deposing Quinn while serving as a receiver for the SEC in a 1996 Quinn-related case, a plane flew by towing an advertising banner that read, “Leave Tommy Alone.” Mr. Scholes said he couldn’t help but laugh as Quinn read the message out loud.
Steven S. Scholes, SEC Defense, Securities Litigation, Trial
Fredric Firestone was featured in a February 3 US Fed News story that discussed his announced departure as an Associate Director of Securities and Exchange Commission’s Division of Enforcement to become a partner in McDermott. During his 12-plus years at the SEC Mr. Firestone oversaw investigations and enforcement actions in all major program areas, and the Director of the Division of Enforcement called him “a first-rate talent … [who] will be sorely missed.” Mr. Firestone called his tenure at the SEC “an honor and a privilege.”
Fredric D. Firestone, Michael A. Ungar, SEC Defense, Securities Litigation, White-Collar & Securities Defense
Fredric Firestone was mentioned in the Washington Post (January 21) and OnWallStreet.com (January 22) as a new partner in McDermott’s Washington, DC office, where he will head the Firm’s SEC defense practice. Mr. Firestone previously was an associate enforcement director at the Securities and Exchange Commission, where he helped investigate accounting scandals at Enron and WorldCom and oversaw the investigation into the collapse of the auction rate securities market.
Fredric D. Firestone, Michael A. Ungar, SEC Defense, Securities Litigation, White-Collar & Securities Defense
Fredric Firestone and Michael Ungar were featured in a January 20 Law360 story about their move from the Securities and Exchange Commission to McDermott’s controversies business unit and SEC defense practice. Mr. Firestone was previously associate director of the SEC enforcement division and Mr. Ungar was branch chief of the division. With more than 20 years of SEC enforcement experience between them, the two partners will advise financial industry and other clients on SEC, criminal and self-regulatory agency investigations and enforcement actions. “I welcome the opportunities and challenges that lie ahead in offering strategic counsel to McDermott’s clients, particularly given the broad range of industries and matters in which the firm is involved,” Mr. Firestone said.
Fredric D. Firestone, Michael A. Ungar, SEC Defense, Securities Litigation, White-Collar & Securities Defense
2009
Steven Scholes was quoted extensively in Compliance Week (June 30) about the substantial increase in class action securities lawsuits related to the financial crisis. Mr. Scholes stated that such an increase “was only to be expected given the market dislocations we’ve had over the last 18 months or so,” adding that “a tremendous amount of litigation” involves structured financial products such as collateralized debt obligations. He also predicted there is “a significant likelihood there will be more” litigation over credit default swaps. An increasing number of lawsuits are targeting asset management firms, and Mr. Scholes attributed that to the “unprecedented size, scope and number of the alleged Ponzi schemes, which seem to be coming to light as a result in the decline in asset values. I think that wave is still building and has yet to crest.”
Steven S. Scholes, Class Action, Securities Litigation, Trial
Steven S. Scholes was quoted on January 14 by Law360 in an article regarding the decreasing number of securities litigation cases filed over the past few years. Mr. Scholes noted that the 1998 Securities Litigation Uniform Standards Act (SLUSA) pushed securities class actions into federal courts, thereby eliminating many follow-on state court securities claims. "That phenomenon has made the process much more efficient," said Mr. Scholes. He noted, however, that the number of cases filed will likely increase due to the financial crisis. "I think that it's increasing and will continue to increase. And frankly, I don't think there's much doubt about that," he said.
Steven S. Scholes, Securities Litigation, Trial
2007
Joel Chefitz was quoted in the January 9 issue of The National Law Journal in an article regarding his move to McDermott to head the securities litigation practice in Chicago. "I was just convinced in this marketplace in Chicago, the resident firms are those with a substantial presence and they're though to beat," he said.
Joel G. Chefitz, Securities Litigation, Trial
2006
William P. Schuman was quoted in an August 24 article published by Securities Law360 regarding options backdating investigations targeting attorneys and auditors involved in the development of executive stock options plans. Mr. Schuman commented that a new trend is arising where companies that are accused of options backdating may try to avoid severe punishments by arguing that they were merely following the direction of their legal and financial advisors. "If the companies and their management are being accused of wrongdoing, they may point to their legal and accounting advisors," he said.
William P. Schuman PC, Securities, Securities Litigation, Trial
2005
Eugene Goldman was interviewed on Bloomberg Radio on December 14 in regard to the SEC investigation into Hollinger.
Eugene I. Goldman, Securities Litigation, Trial
Eugene Goldman was quoted in the August 29 issue of Tire Business regarding "Wells notices" issued by the SEC. Mr. Goldman commented, "There are times when the Wells notice goes out and no action is brought." He said "If the company's restated, then they've already taken a hit in the marketplace. The issue is whether the SEC has uncovered additional things that would cause them to restate more." He outlined the potential enforcement action. The first tier applies to violations that don't involve fraud or substantial investor losses and carries fines of $50,000 per violation. The second tier applies to violations that include fraud, deceit or deliberate disregard of regulatory requirements but without significant shareholder losses and carries fines of $500,000 per violation. The violations can be multiplied by financial reports affected or other metrics, but fines have room for negotiation.
Eugene I. Goldman, Corporate Responsibility and Governance, Securities Litigation, Trial
Steve Scholes was quoted in the May issue of CFO Magazine on the increased cost for companies to settle securities lawsuits. In 2004 the number of suits settled was up 23 percent from 2003 but the total cost to settle the case more than doubled to $5.5 million. The larger settlements are mostly due to the larger losses incurred by the plaintiffs and pressure to settle quickly to focus on regulatory issues. "The claimed damages are massive," commented Mr. Scholes
Steven S. Scholes, Securities, Securities Litigation, Trial
Eugene Goldman was quoted in the January 9 issue of the Los Angeles Times on whether the SEC is lessening its zeal for tough enforcement. Over the past two years, SEC has hired more than 1,100 staff members. "They're adding attorneys. They're adding accountants. They're adding investigators," commented Gene. "Their settlement demands make us litigate for clients more than ever before. I don't see how that can mean less enforcement."
Eugene I. Goldman, Corporate Responsibility and Governance, SEC Defense, Securities Litigation, Trial
2004
Eugene Goldman was quoted by The Wall Street Journal Online on October 15 in regard to the U.S. Securities and Exchange Commission increasing their technology budget. Mr. Goldman commented on the SEC's move to convert paper documents into searchable electronic files. "They are moving as much as they can away from paper," he commented. Mr. Goldman, who left the SEC enforcement division in 1983, recalls investigators would dig through boxes of documents, tagging relevant items and creating an index of contents. "It took a lot longer back then," he recalled.
Eugene I. Goldman, SEC Defense, Securities Litigation, Trial
Eugene Goldman was quoted by Reuters on March 30 in regard to the possibility that the New York Stock Exchange will be sanctioned by the U.S. Securities and Exchange Commission for failing to properly supervise its floor traders. The article reported that some commission members are considering fining the NYSE or altogether removing the exchange's ability to regulate itself, even though the NYSE has implemented structural changes under John Reed. "All of the changes would certainly have impact on deterring the Commission from launching a nuclear bomb on the exchange in the regulatory context. But if they feel there was a serious breakdown, the SEC will probably proceed with disciplinary measures," commented Mr. Goldman.
Eugene I. Goldman, Corporate Responsibility and Governance, SEC Defense, Securities, Securities Litigation, Trial
2003
Eugene Goldman appeared on CNBC's Closing Bell program on May 14. Mr. Goldman was interviewed on issues arising from the SEC's hearings on whether hedge funds should regulated.
Eugene I. Goldman, Securities, Securities Litigation
2002
Eugene Goldman appeared on the CNBC show Squawk Box on July 15. Mr. Goldman was interviewed on SEC priorities and securities litigation.
Eugene I. Goldman, Corporate Responsibility and Governance, Securities Litigation, Trial
