Company Sources of Information
Do you wonder how the government receives information that leads it to open an investigation? Good question. An investigation may be sparked in a myriad of ways. Years ago, it might have been from a Wall Street Journal or New York Times article in the morning paper that sparked the curiosity of a government attorney. […]
Auditors’ Section 10A Reporting Obligation
“Likely” illegal acts Section 10A of the U.S. Securities Exchange Act of 1934 requires that an auditor report to the Securities and Exchange Commission (SEC) when, during the course of a financial audit, an auditor detects likely illegal acts that have a material impact on the financial statements and appropriate remedial action is not being […]
How to Determine the “Right” Lawyer for Auditors
The “right” lawyer depends on the context When it comes to representing the audit firm’s interests in an SEC or DOJ investigation, it may be entirely appropriate that the lawyer or law firm that has previously represented the firm in other contexts also defend the audit firm’s interests in what may be a protracted, years-long […]
How the SEC Defines Digital Assets
Digital assets are based on blockchains, which are chains of transaction blocks. They include cryptocurrencies, which use their own blockchains, and “crypto tokens [that] are built on an existing blockchain.” Cryptopedia, Digital Assets: Cryptocurrencies vs. Tokens (Mar. 23, 2021) (“Digital Assets”). A “token” can be defined as an instrument (tool) that is (1) perceptible using one […]
What about Non-Fungible Tokens (NFTs)?
A digital asset need not be a financial product generally or a cryptocurrency specifically1; it can be a digital collectible—a blockchain-tracked, non-duplicable digital item or image. Digital collectibles are becoming a popular product in an emerging industry; such a product may become a digital asset and also an investment if a secondary market demand for […]
The SEC’s Cryptocurrency Suppression Program
Introduction In 2017, the U.S. Securities and Exchange Commission (“SEC”) established an agency-wide program dedicated to shutting down the cryptocurrency industry: what we call the cryptocurrency-suppression program (“Suppression Program”).1 The SEC’s rhetorical objective is to protect investors. We think that the real objective is to prevent disintermediation. Banks are intermediaries between savers and borrowers: they receive […]
About Government Subpoenas for Auditors
We’ll speak in the context of an SEC subpoena, but any subpoena issued by the government–whether by the SEC, DOJ, CFTC, or some other agency–will have similar considerations and parallel processes Before a Subpoena is Issued Often (although by no means always) the first indication of the existence of an SEC investigation is a […]
About government subpoenas
How did we come to the government’s attention? Many clients wonder how the government came to focus on them. Where did the original information come from? How did the government learn about our audit client or us? The answer will vary, of course, and it may be impossible to know for sure, but click here […]
You’re an investor and you lost money
Have I been defrauded? Just because you’ve lost money in the markets does not mean that you’ve been defrauded. Markets go up, but they go down, too. The question is whether or not the investment professional who advised you placed you into investments that were not suitable for your profile as an investor, whether they […]
Your firm has accused you of something improper.
Your firm says you did something wrong You’ve worked hard to build your reputation in the industry, and it doesn’t take much to tarnish everything you’ve built. Sometimes a customer will make a complaint and the firm will react defensively, blaming the financial adviser for something beyond their ability to control. Sometimes, someone else within […]