Mr. Meyers, a partner in the Washington, D.C., office, is a member of the Securities Litigation and Regulatory Enforcement group. Mr. Meyers’ practice focuses on the full range of SEC enforcement matters, including alleged accounting and financial fraud, broker-dealer issues, insider trading, and alleged false statements or omissions in SEC filings and elsewhere. Mr. Meyers has also successfully represented clients in private securities litigation.
Mr. Meyers is recognized by Chambers USA 2012 in Band 2 for securities litigation. According to Chambers, Mr. Meyers “consistently achieve(s) successful results for clients in the full range of SEC, PCAOB and FINRA enforcement investigation and litigation matters.”
Successful results include:
For Financial Institutions and Related Individuals
SEC v. Mozilo, et al. Representation of former President and Chief Operating Officer of Countrywide Financial Corporation, in SEC enforcement action alleging disclosure fraud by three of Countrywide’s senior executives. The case settled with client consenting, without admitting the allegations of the complaint, to certain injunctive relief, an out-of-pocket payment of $520,000, and an agreement not to serve as a director or officer of a public company for three years.
Representation of a Wall Street investment firm in numerous SEC and NASD investigations regarding a variety of issues. No enforcement action was taken against our client in any of these matters; however, three other major investment firms were fined and censured in at least one of the matters.
Representation of a trader at a hedge fund in SEC investigation into possible market timing; no enforcement action taken against our client, though the hedge fund and the broker-dealer through which it traded agreed to a settled enforcement action.
Representation of a former compliance officer of a major investment bank in SEC investigation into possible market manipulation; no enforcement action taken against our client.
Representation of a floor trader for a major investment firm in SEC and DOJ investigations into possible insider trading; no enforcement action taken against our client.
For Other Public Companies and Related Individuals
Representation of entities in several SEC accounting fraud investigations; no enforcement action taken.
Representation of public companies and other entities in internal investigations, including investigations resulting from whistleblower allegations, regarding possible accounting and other issues.
Representation of two public companies in SEC insider trading investigations of alleged insider trading with respect to those companies’ stocks.
Representation of the former CFO of an insurance company in connection with the SEC’s omnibus investigation of accounting for finite reinsurance. Client received a Wells notice indicating the Staff’s intent to pursue fraud and other charges but, following receipt of our Wells submission, the Staff terminated the investigation without taking any enforcement action against our client, though the company did enter into a consent agreement with the Commission.
Representation of a company and one of its officers in a SEC investigation of alleged accounting fraud in the oil and gas industry. Though the SEC staff issued Wells notices to the firm’s clients, it ultimately terminated the investigation without enforcement action against the clients, even though another company and several other individuals entered into consent agreements with the Commission.
Drafted a Wells submission on behalf of client, the CEO of a public company, in an insider trading investigation; ten days after the Wells submission was made, the staff decided to terminate the investigation without taking any enforcement action.
Representation of the former CFO of a company in the health care industry in a SEC investigation into possible accounting fraud. The SEC staff terminated the investigation without enforcement action against the firm’s client.
SEC v. Berry. Representation of the former General Counsel of KLA-Tencor Corp. and Juniper Networks, Inc. in SEC and private litigation alleging unlawful stock options backdating. Achieved partial Rule 12(b)(6) dismissal of the SEC’s original and first amended complaints as well as the private plaintiffs’ complaint. The private action settled, with client paying no money. The SEC action settled pursuant to a consent order that did not include an injunction against scienter-based fraud violations, the first instance to our knowledge in which the Commission did not require such relief against a General Counsel in litigated or settled actions alleging unlawful options backdating.
SEC v. Mercury Interactive, LLC, et al. Representation of the former General Counsel of Mercury Interactive, LLC in a federal court SEC enforcement action alleging unlawful stock options backdating. Achieved full dismissal (without prejudice) of the SEC’s first amended complaint and partial dismissal of the SEC’s original and second amended complaints. The case settled pursuant to a consent order that did not include an injunction against scienter-based fraud violations; this case and Berry are, to our knowledge, the only ones in which the Commission did not require such relief against a General Counsel in alleged options backdating cases.
SEC v. Espuelas, et al. Representation of the former Senior Vice President, Global Sales, of StarMedia Network, Inc. in a federal court SEC enforcement action alleging improper revenue recognition. The court dismissed the fraud and most of the other claims of the SEC’s original complaint as to the firm’s client, and it dismissed the allegations of the first amended complaint as to the client based on one of the two sets of transactions. The case settled pursuant to a consent order that required no civil penalty, no disgorgement, and no officer-and-director bar.
For Auditing Firms and Related Individuals
In re Doral Financial Corp. Sec. Litig., 563 F. Supp. 2d 461 (S.D.N.Y. 2008), aff’d, 2009 WL 2779119 (2d Cir. Sept. 3, 2009): obtained Rule 12(b)(6) dismissal with prejudice on the first motion to dismiss on behalf of PricewaterhouseCoopers LLP in a case alleging accounting fraud by a mortgage lender, and summary affirmance by Second Circuit.
In re Acterna Corp. Securities Litigation, 378 F. Supp. 2d 561 (D. Md. 2005): on behalf of PricewaterhouseCoopers LLP, obtained Rule 12(b)(6) dismissal with prejudice of federal securities law and state common law claims alleging accounting fraud (alleged overstatement of company’s goodwill as a result of two acquisitions).
In re Lawrence A. Stoler, CPA, Admin. Proc. File No. 3-12179 (July 31, 2006): representation of former engagement partner in SEC Rule 102(e) administrative proceeding with respect to audits of a defunct hedge fund; helped to negotiate consent order pursuant to which client agreed to cease and desist order and one year suspension from practice before the Commission, with right to reapply.
Representation of a partner at a Big 4 accounting firm in a PCAOB investigation in connection with client’s receipt of the PCAOB equivalent of a Wells notice. Following receipt of our Wells submission, the Division of Enforcement and Investigations declined to recommend any enforcement action as to our client.
Representation of individual auditor at a Big 4 accounting firm in the first-ever litigated PCAOB administrative proceeding. Matter is confidential.
Prior to joining the firm, Mr. Meyers served as Assistant Chief Litigation Counsel in the Securities and Exchange Commission’s Division of Enforcement. During his tenure, he received the Chairman’s Award for Excellence and the Capital Markets Award. While at the SEC, Mr. Meyers handled the following matters that involved significant litigation or other work in the district court, and was also involved in other prominent matters that were brought as settled actions.
The Global Research Analyst Settlement. Mr. Meyers was the SEC’s lead trial counsel in these path-breaking actions against 12 Wall Street investment banking firms and two individuals alleging conflicts of interest among research analysts, publication of fraudulent and/or misleading research and similar conduct at such firms. These actions resulted in a settlement exceeding $1.4 billion. Mr. Meyers’ primary responsibilities in this matter included negotiating certain settlement terms and the language of the complaints, drafting the final judgments and representing the Commission before the Court in obtaining approval of the proposed final judgments and responding to investors’ motion to intervene.
SEC v. Breed. Mr. Meyers obtained a final judgment, including full disgorgement, injunctive relief and a three-time civil penalty, against a defendant for insider trading, and final judgments against three of his family members as relief defendants. He also obtained discovery sanctions, including attorneys’ fees and costs, jointly and severally against relief defendants and their counsel.
SEC v. System Software Associates, Inc. Mr. Meyers obtained final judgments, including injunctions, disgorgement and a third tier civil penalty, in a financial fraud case alleging improper recognition of software license revenues. He also obtained a reported decision (145 F. Supp. 2d 954 (N.D. Ill. 2001)) denying defendants’ motion to dismiss.
SEC v. Leach. In this case alleging fraud regarding mini-tender offers, Mr. Meyers obtained final judgments containing full injunctive relief, full disgorgement and third tier civil penalties against two individuals and a company wholly owned by one of the individuals.
SEC v. Schiffer. Mr. Meyers obtained summary judgment for approximately $15 million in disgorgement (plus prejudgment interest) in this case involving material false and misleading statements, insider trading, market manipulation and sale of unregistered securities.
SEC v. Midpoint Trading Corp. In this insider trading case, Mr. Meyers obtained a temporary restraining order and a preliminary injunction freezing assets and according other relief against foreign defendants.
Mr. Meyers has written numerous articles and has spoken frequently on a variety of topics involving SEC enforcement, antitrust and trade regulation.
The SEC released its Fiscal Year 2013 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 15, 2013. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”) and provides additional information about the whistleblower award evaluation process.
Breakdown of Tips Received in FY 2013
The OWB reported a modest increase in the number of whistleblower tips and complaints that it received in 2013 – 3,238 tips in 2013 compared to 3,001 in 2012. Overall, the 2013 whistleblower tips were similar in number, type, and geographic source to the whistleblower tips reported in 2012. As in 2012, the most common types of allegations in 2013 were: Corporate Disclosure and Financials (17.2%), Offering Fraud (17.1%), and Manipulation (16.2%). Most whistleblowers, however, selected “Other” when asked to describe their allegations. In 2012, the most common complaint categories reported were also Corporate Disclosure and Financials (18.2%), Offering Fraud (15.5%), and Manipulation (15.2%). See Appendix B to the Report, listing tips by allegation type and comparing tips received in 2013 to those received in 2012. Read More
In a recent speech to the Securities Enforcement Forum, SEC Chair Mary Jo White fleshed out the Commission’s plan to pursue all violations of federal securities laws, “not just the biggest frauds.” She also addressed the looming question of whether this approach makes the best use of the agency’s limited resources.
Chair White compared the SEC’s strategy of pursuing all forms of wrongdoing, no matter how big or small, to the “broken window” theory of policing, which was largely credited for reducing crime in New York City under Mayor Rudy Giuliani. According to the “broken window” theory, a broken window which remains unfixed is a “signal that no one cares, and so breaking more windows costs nothing.” On the other hand, a broken window which is fixed indicates that “disorder will not be tolerated.” Chair White postulated that the same theory applies to the US securities markets: minor violations that go ignored may lead to larger violations, and may foster a culture where securities laws are treated as “toothless guidelines.” Characterizing the SEC as the investors’ “cop,” she declared that the SEC needs to be a “strong cop on the beat,” understanding that even the smallest securities violations have victims. Read More
Two victories for employers last week in Dodd-Frank and SOX whistleblower cases may provide a basis for at least a sliver of optimism among employers and whistleblower defense lawyers hammered by a recent series of employee-favorable decisions under the two main federal statutes covering whistleblowing activity.
Banko v. Apple
In Banko v. Apple Inc., Case No. 3:13-cv-02977-RS, a Northern District of California judge dismissed a Dodd-Frank retaliation claim where the employee only made a complaint internally to management and never complained to the Securities and Exchange Commission (SEC). The court followed the reasoning of the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C. (see Orrick’s prior blog post on Asadi) and rejected a broader interpretation of the Act adopted by four district courts and the SEC that Dodd-Frank covers internal reporting protected by the Sarbanes-Oxley Act (SOX) as well as reports to the SEC. Read More
Today the SEC announced that it is issuing a whistleblower award of over $14 million to a whistleblower who provided information that resulted in the recovery of investor funds. The significant whistleblower award comes after many critics have questioned the success of the SEC’s whistleblower award program which, to date, has only issued two much smaller awards since the program’s inception in 2011. The first award payment was issued in August 2012 for approximately $50,000. The second award, paid to three whistleblowers for information that stopped a sham hedge fund, has paid out approximately $25,000 with an expected total payout of $125,000. Read More
On September 26, SEC Chair Mary Jo White gave an important speech to the Council of Institutional Investors in Chicago. The speech, entitled “Deploying the Full Enforcement Arsenal,” provides the first detailed roadmap to the Commission’s enforcement priorities in the White administration. While some of the SEC’s enforcement program going forward will involve a continuation and reinforcement of efforts begun during the administration of former Chair Mary Schapiro and former Enforcement Director Robert Khuzami, much of it will entail new initiatives. The bottom line is that — not surprisingly — Chair White, a former U.S. Attorney, is committed to a vigorous, prosecutorial-minded enforcement program.
Here are the key takeaways from the speech: Individuals First. Perhaps most importantly, Chair White stated that the “core principle of any strong enforcement program is to pursue responsible individuals wherever possible.” Accordingly, she has “made it clear that the staff should look hard to see whether a case against individuals can be brought. I want to be sure we are looking first at the individual conduct and working out to the entity, rather than starting with the entity as a whole and working in.” She also indicated that the Commission is likely to seek more industry and officer-and-director bars against individuals. Chair White described this focus on individuals first as a “subtle” shift in approach, but it is one that, if followed in practice, will have significant consequences, particularly when paired with some of the other initiatives described below. Read More
On September 6, 2013, the SEC charged the former head of investor relations at First Solar Inc., an Arizona-based solar company, with violating Regulation FD, which is designed to prevent issuers from selectively disclosing material nonpublic information to certain market participants before disclosing the information to the general public. In this matter, the SEC determined that Lawrence D. Polizzotto violated Regulation FD when he indicated in “one-on-one” phone conversations with about 20 sell-side analysts and institutional investors that the company was unlikely to receive a much anticipated loan guarantee from the U.S. Department of Energy. When First Solar disclosed the same information the following morning in a press release, the company’s stock dropped 6 percent. In addition to a cease-and-desist order, Polizzotto agreed to pay $50,000 to settle the SEC’s charges. The SEC determined not to bring an enforcement action against First Solar, due in part to the company’s “extraordinary cooperation” with the investigation.
The Polizzotto action is noteworthy for several reasons. First, is the contrast between that action and the only Regulation FD case to go to litigation. In June 2004, the SEC filed a civil action against Siebel Systems, Inc. for violating Regulation FD and an earlier SEC cease-and-desist order, and against two of the company’s senior executives for allegedly aiding and abetting Siebel’s violations. The alleged violations were very similar to those alleged against Polizzotto: in both cases, the SEC alleged that the company, through its executives, violated Regulation FD by selectively disclosing material nonpublic information to analysts and favored investors in one-on-one meetings before disclosing it publicly. There were, however, several differences in the facts of the two matters. In the Siebel matter, the U.S. District Court for the Southern District of New York held that the nonpublic statements made at the one-on-one meetings were not material because they did not add to, contradict, or significantly alter the information that the company had previously made available to the general public. Although not literally the same as the public statements, the court found that the private statements generally conveyed the same material information. On the other hand, the SEC deemed that Polizzotto’s statements provided new information about the status of the loan guarantees for one of company’s major projects, even though a letter from a Congressional committee to the Energy Department about the loan guarantee program and the status of conditional commitments, including three involving First Solar, had already caused concern within the solar industry about whether the Energy Department would be able to move forward with its conditional commitments. The final blow to Polizzotto may have been First Solar’s recognition of the significance of private statements to analysts and particular investors about the loss of the loan guarantee. For example, a company lawyer had specifically advised that, in discussing this development, the company would “be restricted by Regulation FD in any [sic] answering questions asked by analysts, investors, etc. until such time that we do issue a press release or post to our website….” Thus, despite the fact that the court in the Siebel Systems action did not consider an 8 percent stock price movement following public disclosure to be material, the SEC here considered the 6 percent stock price movement to be material. Read More
Cloud computing may be the next shoe to drop. On the heels of Mary Jo White’s recent appointment as Chairman of the SEC and predictions that it may refocus enforcement on accounting fraud came word last week that the Commission is investigating IBM’s cloud-computing accounting. In an SEC filing, IBM defended its revenue accounting for cloud-based services, stating “[w]e are confident that the information we have provided has been consistently accurate.”
This may just be the tip of the iceberg for an industry estimated by some analysts to generate global revenues of $131 billion this year, 60% of which originate in the United States.
Cloud computing has no single definition but one basic expression would be the practice of storing and accessing information on servers accessed through the Internet. There are many cloud-computing business models, including Infrastructure as a Service (“IaaS”), in which customers access computing power, such as servers, through physical equipment owned by the provider; Platform as a Service (“PaaS”), in which customers use a provider’s computing environment—including operating systems, programming languages, and databases—to create applications remotely; and Software as a Service (“SaaS”), services that allows users to operate software remotely. Google Documents and the e-Discovery platform Relativity are just two cloud-based services that readers may be familiar with. Read More
While money market funds did not exist when Humphrey Bogart spoke his famous line in Casablanca, since the 2008 financial crisis, reforming money market funds have been the subject of high drama and intense scrutiny on Capitol Hill. Advocates for reform finally got their long awaited breakthrough last Wednesday, June 5, 2013, when the Securities and Exchange Commission voted unanimously to propose legislation that would reform money market funds. The SEC’s goal with the reform is to make money market funds less susceptible to “runs” that could harm investors.
The SEC’s goal of reform has been in the works for a long time, was championed by former Chair of the SEC, Mary Schapiro, and has been continued by current Chair Mary Jo White. A money market fund is a type of fixed-income mutual fund that invests in debt securities with short maturities and minimal credit risk. They first developed in the early 1970s as an option for investors to purchase a pool of securities that generally provided higher returns than interest-bearing bank accounts. Money market funds have grown considerably since then and currently hold more than $2.9 trillion in assets.
Money market funds seek stability and security with the goal of never losing money and keeping their net asset value (“NAV”) at $1.00. However, many felt reform was necessary after a money market fund “broke the buck” at the height of the financial crisis in September 2008 and re-priced its shares below its $1.00 stable share price to $0.97. Investors panicked and within a few days, investors had pulled approximately $300 billion from similar money market funds. Intervention from the United States Treasury Department prevented further runs on the funds. Read More
Orrick partner Jim Meyers provides his perspective to JD Supra in the May 14, 2013 article, “A Look Ahead at SEC Enforcement Actions – with Orrick’s Jim Meyers.” Jim comments on trends in Securities and Exchange Commission enforcement, the new arrivals of SEC chairwoman, Mary Jo White and Enforcement Unit co-head, Andrew Ceresney, the recent “Non-Prosecution Agreement” with Ralph Lauren, and more.
To read the full JD Supra article, please click here.
On April 24, 2013, the Public Company Accounting Oversight Board issued its inaugural “Policy Statement Regarding Credit for Extraordinary Cooperation in Connection with Board Investigations.” The Policy Statement reiterates many of the themes of the SEC’s “Seaboard Report,” and therefore many may view it as largely plowing over well-trodden ground. But, the Policy Statement merits close attention, because it is the first such statement the Board has issued since it was formed, it sets forth specific examples of conduct that is likely to earn credit for cooperation, and it focuses specifically on the auditing profession.
The Policy Statement identifies three forms of “extraordinary” cooperation that could result in audit firms and/or individuals receiving credit in enforcement investigations:
remedial or corrective action; and
According to the Board, “[a] firm or associated person may earn credit for self-reporting by making voluntary, timely and full disclosure of the facts relating to violations before the conduct comes to the attention of the Board or another regulator.” And, the sooner self-reporting is made, the more likely it will result in credit. The Board stressed, however, that self-reporting is “not eligible for cooperation credit” if it is “required by legal or regulatory obligations,” e.g., the auditor’s obligation under Section 10A of the Securities Exchange Act of 1934 to report a client’s illegal acts. Read More
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