Compliance and Supervision Archives

SEC Urges Supreme Court to Consider Nature of Disgorgement

We previously posted about how the Southern District of Florida’s and Eleventh Circuit’s decisions in SEC v. Graham undermined the SEC’s long-held position that disgorgement was not subject to the five-year statute of limitations. The SEC recently asked the Supreme Court to examine that decision by joining the petitioner’s request for certiorari in Kokesh v. SEC, a case in which the Tenth Circuit affirmed an award of disgorgement, holding that the five-year statute of limitations did not apply.

In Kokesh, the SEC obtained a final judgment in 2014 that included nearly $35 million of disgorgement that covered ill-gotten gains obtained as far back as 1995. The Tenth Circuit affirmed the final award, diverging with Graham, and holding that disgorgement was not a penalty or forfeiture to which the five-year statute of limitations applied. Kokesh applied for certiorari.

Last week, the SEC urged the Supreme Court to take the case. While briefly stating that the Tenth Circuit correctly ruled that disgorgement is not a penalty or forfeiture to which the statute of limitations applies, the SEC argued that “the issue is important to the administration of the securities laws, and the courts of appeals have reached conflicting conclusions” thereby warranting the Court’s review. Without the Supreme Court’s resolution, the SEC argued that it “is currently impeded by the decision in Graham from obtaining the full disgorgement remedies to which it is entitled” and described Graham as “a significant obstacle to national uniformity in administration of the securities laws.”

If the Supreme Court takes the case, the decision will directly impact the timing of SEC enforcement investigations and actions, as well as the types of remedies the SEC will seek. If the Court declines to grant certiorari, the SEC will likely try to seek different remedies in different jurisdictions for the same conduct. In the meantime, the SEC has increased its requests for tolling agreements in ongoing investigations in an apparent attempt to preserve its ability to seek the full range of remedies in the event that the investigation leads to the filing of an action.

SEC Affirms Commitment to FCPA Enforcement Actions

Andrew J. Ceresney, Director of the Division of Enforcement, reaffirmed the SEC’s focus on FCPA enforcement actions at the International Conference on the Foreign Corrupt Practices Act. Mr. Ceresney’s speech focused on companies’ need to self-report violations.

Mr. Ceresney stated that the SEC uses “a carrot and stick approach to encouraging cooperation,” where self-reporting companies can receive reduced charges and deferred prosecution and non-prosecution agreements, while companies that do no self-report do not receive any reduction in penalties. Mr. Ceresney warned that “companies are gambling if they fail to self-report FCPA misconduct.”

Mr. Ceresney gave examples of how this policy has benefited companies recently. Mr. Ceresney highlighted the SEC’s decision not to bring charges against the Harris Corporation after it self-reported violations and mentioned to examples where the SEC entered into non-prosecution agreements as a result of self-reporting.

Mr. Cerseney stated that the SEC’s “actions have sent a clear message to the defense bar and the C-Suite that there are significant benefits to self-reporting [to] and cooperation with the SEC” and that he expects “the Division of Enforcement will continue in the future to reinforce this message and reward companies that self-report and cooperate.”

Mr. Cerseney also spoke about recent cases that highlight “the Enforcement’s Division’s renewed emphasis on individual liability in FCPA cases[,]” noting that seven actions in the past year involved individuals. Mr. Cerseney stated that “pursuing individual accountability is a critical part of deterrence and . . . the Division of Enforcement will continue to do everything we can to hold individuals accountable.”

Mr. Cerseney’s remarks demonstrate that the Division of Enforcement does not expect to change its recent focus on FCPA violations and individual liability as it transitions to the new administration.

The SEC’s First Risk Alert of Fiscal Year 2017 Targets Registrant Rule 21F-17 Compliance

The Securities and Exchange Commission (SEC or Commission) Office of Compliance Inspections and Examination (OCIE) issued a Risk Alert on October 24, 2016, titled “Examining Whistleblower Rule Compliance.” This recent Risk Alert continues the SEC’s aggressive efforts to compel Rule 21F-17 compliance and puts the investment management and broker-dealer industries on formal notice that OCIE intends to scrutinize registrants’ compliance with the whistleblower provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank). By way of background, Dodd–Frank established a whistleblower protection program to encourage individuals to report possible violations of securities laws. Importantly, in addition to providing whistleblowers with financial incentives, Rule 21F-17 provides that no person may take action to impede a whistleblower from communicating directly with the SEC about potential securities law violations, including by enforcing or threatening to enforce a severance agreement or a confidentiality agreement related to such communications. As discussed in our prior publications, the SEC’s Division of Enforcement (Enforcement) has instituted several settled actions against public companies for violating the “chilling effect” provisions of Rule 21F-17. During the past two months, the SEC has filed two additional settled enforcement actions, as summarized below. Thus, as the SEC embarks on the start of its 2017 fiscal year (FY2017), Rule 21F-17 remains an agency-wide priority, and issuers, investment management firms, and broker-dealers—if they have not done so already—need to take heed and proactively remediate any vulnerabilities that they may have regarding their Rule 21F-17 compliance.

OCIE Alerts Registrants

As described previously, the SEC’s most recent annual report stated that assessing confidentiality terms and language for compliance with Rule 21F-17 was a top priority for fiscal year 2016 and that staff had started the practice of examining company documents for such compliance. Now, less than one month into FY2017, OCIE has formalized this practice and notified the registrant community accordingly.

The Risk Alert spells out how OCIE plans to examine documents for these compliance issues. First, OCIE staff will examine whether any terms that are contained in company documents “(a) purport to limit the types of information that an employee may convey to the Commission or other authorities; and (b) require departing employees to waive their rights to any individual monetary recovery in connection with reporting information to the government.” Second, regarding the books and records to be examined, staff will analyze the following types of documents: compliance manuals; codes of ethics; employment agreements; and severance agreements. Finally, the Risk Alert identifies provisions that may contribute to violations of Rule 21F-17 or may impede employees or former employees from communicating with the Commission, such as provisions that:

require an employee to represent that he or she has not assisted in any investigation involving the registrant;
prohibit any and all disclosures of confidential information, without any exception for voluntary communications with the Commission concerning possible securities laws violations;
require an employee to notify and/or obtain consent from the registrant prior to disclosing confidential information, without any exception for voluntary communications with the Commission concerning possible securities laws violations; or
purport to permit disclosures of confidential information only as required by law, without any exception for voluntary communications with the Commission concerning possible securities laws violations.

Enforcement Update

Since August 16, 2016, the SEC has instituted two additional enforcement actions for violations of Rule 21F-17 based on prohibitions contained in severance agreements. First, in the Health Net, Inc., matter, the relevant violations involved release language in severance agreements that required employees to waive their right to any monetary recovery resulting from participating in a whistleblower program, among other issues. As part of the settlement, Health Net agreed to pay a $340,000 civil penalty and to engage in undertakings similar to those in the prior Rule 21F-17 cases. A review of the SEC’s Rule 21F-17 stand-alone cases reveals that the penalties have increased with each matter and that Health Net payed the largest fine to date. More recently, and within a month of OCIE’s Risk Alert, an international beverage conglomerate agreed to pay a civil penalty for violations of Rule 21F-17, among other charges. The Rule 21F-17 violations were related to a liquidated damages provision in the company’s separation agreement that did in fact cause an employee to stop communicating with the SEC until he received a subpoena. In this case, the primary charges involved books and records violations and internal control infractions that arose under the terms of the Foreign Corrupt Practices Act of 1977. Consistent with one other Rule 21F-17 case, the SEC appears to routinely investigate possible Rule 21F-17 violations while investigating other charges.

Takeaways

OCIE’s first Risk Alert of FY2017 puts the investment management and broker-dealer industries on notice that OCIE staff will examine and scrutinizing company documents for Rule 21F-17 compliance. More importantly and not stated in the Risk Alert—when coupled with Enforcement’s ongoing and aggressive interest—this combination indicates that OCIE staff will be looking to refer violations of Rule 21F-17 to their receptive Enforcement colleagues. Thus, investment management and broker-dealer registrants need to be proactive in assessing their risks and in reviewing all agreements, policies and procedures that may create exposure to SEC Rule 21F-17 violations. If there are any potential violations, Registrants should then execute a remediation plan. Cleary, this Risk Alert serves as a “notice,” and registrants who fail to act will likely be subjected to an OCIE referral to Enforcement.

SEC Announces Record Number of Enforcement Actions Filed in FY 2016

On October 11, 2016, the SEC announced its enforcement results for fiscal year 2016, which ended on September 30th. Press Release No. 2016-212. In total, the SEC continued its trend of increased enforcement activity by filing 868 enforcement actions, a new single-year high, which included “a record 548 standalone or independent enforcement actions” and “judgments and orders totaling more than $4 billion in disgorgement and penalties.” In comparison, the SEC filed 807 enforcement actions (507 standalone or independent actions) in fiscal year 2015, and 755 enforcement actions (413 standalone or independent actions) in fiscal year 2014. Touting its recent successes, SEC Chair Mary Jo White announced in the press release that “[o]ver the last 3 years, we have changed the way we do business on the enforcement front by using new data analytics to uncover fraud, enhancing our ability to litigate tough cases, and expanding the playbook bringing novel and significant actions to better protect investors and our markets.”

This past fiscal year marked new highs for the SEC in the number of cases involving investment advisers or investment companies, as well as enforcement actions related to the Foreign Corrupt Practices Act. Other significant actions the SEC highlighted involved “combating financial fraud and enhancing issuer disclosure,” holding “attorneys, accountants and other gatekeepers accountable for failure to comply with professional standards,” “enhancing fairness among market participants,” “rooting out insider trading schemes,” “fighting market manipulation and microcap fraud,” “halting international and affinity-based investment frauds,” “policing the public finance markets,” and “cracking down on misconduct involving complex financial instruments.”

Under the whistleblower program, the SEC this past year awarded a record $57 million to 13 whistleblowers, brought the first standalone action for retaliation against a whistleblower, and charged multiple companies for Rule 21F-17 violations, which prohibits any action impeding an individual from communicating directly with Commission staff about possible securities laws violations.

In addition, the SEC announced victories in five federal jury or bench trials this year, including its first ever victory “against a municipality and one of its officers for violations of the federal securities laws.”

EB-5 Program Proves to Be Fertile Ground for Securities Law Violations

The SEC has brought approximately 20 litigated or agreed enforcement actions since February 2013 that have involved securities offerings that were made in connection with the EB-5 Immigrant Investor Program (the “EB-5 Program”). These enforcement actions have primarily charged that EB-5 sponsors have engaged in some sort of offering fraud or that an EB-5 sponsor improperly acted as an unregistered broker-dealer in connection with the sale of securities. Not only is the SEC devoting enforcement resources to this area, but in 2016, the SEC’s Office of Compliance Inspections and Examinations also announced that it would allocate examination resources to a number of priorities, including private placements that involve the EB-5 Program.

The EB-5 Program. Congress created the EB-5 Program, which is sponsored by the U.S. Citizenship and Immigration Services (“USCIS”), in 1990 to stimulate the U.S. economy and to provide foreign investors with a potential path to US residency. To qualify to apply for residency under this program, a foreign investor is required to make a qualified capital investment in a new U.S. commercial enterprise or a business project designated by USCIS as a “regional center” that is designed to create or preserve at least 10 permanent, full-time jobs for U.S. workers. Although the designation of a business opportunity as a “regional center” does not mean that either USCIS or the SEC approved of the quality of the investments that are offered by the business, the majority of EB-5 investments are made through one of these approved regional centers.

However, making an investment in the EB-5 Program does not guarantee a path to residency. Upon investing, a foreign individual must petition for conditional lawful permanent residency. EB-5 Immigrant Investor Process. USCIS will review the petition on the basis of the evidence of investment, investment in a new commercial enterprise, management of the new commercial enterprise, job creation, and job preservation. Upon approval of the investor’s petition for conditional lawful permanent residency, the investor must file an Application to Register Permanent Residence or Adjust Status or an Application for Immigrant Visa and Alien Registration. If the petition is approved, the foreign investor may then petition for the conditions to be removed after two years. USCIS will review that petition on the basis of the evidence of investment, job creation, and job preservation. If approved, the investor may live and work in the United States as a lawful permanent resident.

A foreign individual who invests in a fraudulent securities offering may lose the opportunity to obtain legal residency (and her initial investment) if the investment does not result in the creation of any jobs. Therefore, the SEC and the USCIS are on high alert for these types of scams and, in an effort to stop these offerings, are cooperating to send the message that violators will be prosecuted.

Examples of Actions that Involved Offering Fraud. On April 14, 2016, the SEC filed one of the most significant enforcement actions to date. In a 52-count complaint filed in the U.S. District Court for the Southern District of Florida against a Vermont-based ski resort, its owners, and its related businesses (in addition to several relief defendants), the SEC alleged violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 (the “Securities Act”) and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (the “Exchange Act”), for control person liability pursuant to Section 20(a) of the Exchange Act, and for aiding and abetting. Press Release 2016-69. The complaint alleged that the individuals and entities were engaged in a “massive eight-year fraudulent scheme” that used the EB-5 program to attract more than 700 foreign investors to finance the development of a ski resort and a biomedical research facility. Compl. ¶ 1, SEC v. Quiros, No. 1:16-CV-21301.

Of the $350 million that the defendants raised, they misused more than $200 million. Although the investors were told that their investments would fund a specific project, their investments instead went to funding deficits in earlier projects “in Ponzi-like fashion.” Press Release 2016-69. According to the SEC, the owner of the resort used a significant portion of the misused investments to “(1) finance his purchase of the [Vermont] resort; (2) back a personal line of credit to pay his income taxes; (3) purchase a luxury condominium; (4) pay taxes of a company he owns; and (5) buy an unrelated resort.” Compl. ¶ 4, Quiros, No. 1:16-CV-21301.

The defendants’ several misrepresentations and material omissions prompted the SEC to ask for preliminary and permanent injunctions, financial penalties, and disgorgement of ill-gotten gains plus interest, along with conduct-based injunctive relief against the owner of the resort and the CEO of the resort, and an officer-and-director bar against the owner of the resort. There are other examples of these types of actions. See, e.g., Press Release 2016-105 (announcing “fraud charges and an asset freeze against a husband and wife accused of misusing two-thirds of the money they raised from investors for the purpose of building and operating a new cancer treatment center”), Lit. Release 23409 (announcing court order to freeze assets of individual and her company after she was accused of using money raised from investors to purchase a boat and luxury cars), and Lit. Release 23077 (announcing charges against individuals who “conduct[ed] an investment scheme to defraud foreign investors” by misappropriating funds that were raised for an ethanol production plant that was never built and never created jobs).

Example of Unregistered Broker-Dealer Violations. In June 2015, the SEC shifted its focus from fraud and filed an action against unregistered brokers that facilitated EB-5 investments. Press Release 2015-127. The SEC alleged that Ireeco, LLC, and its successor, Ireeco Limited, acted as unregistered brokers for more than 150 foreign investors. The two businesses solicited EB-5 investors through Ireeco, LLC’s Web site and told investors that they would be matched with a regional center on the basis of their immigration status and their investment preferences. In reality, the businesses were directing investors to a small handful of regional centers that paid the businesses a commission per investor. In total, they placed $79 million in investments in regional centers.

The SEC alleged that this conduct violated Section 15(a)(1) of the Exchange Act because neither Ireeco, LLC, nor Ireeco Limited was registered as a broker-dealer or was associated with a registered broker-dealer in these securities transactions. Without admitting or denying the SEC’s findings, the respondents agreed to cease and desist from committing or causing any further violations of Section 15(a), to be censured, and to additional administrative proceedings to determine whether disgorgement of ill-gotten gains and/or civil penalties would be appropriate based on their violations. Release No. 75268. On May 12, 2016, the SEC affirmed the ALJ’s order that Ireeco, LLC, pay disgorgement of $1,700,000 plus prejudgment interest and that Ireeco Limited pay disgorgement of $1,479,633.85 plus prejudgment interest. Release No. 77824.

The Ireeco, LLC, case is not an isolated one. See, e.g., Press Release 2015-274 (announcing series of enforcement actions against law firms and lawyers nationwide for offering EB-5 investments without being registered to act as brokers) and L.R. 23298 (announcing administrative proceedings in which respondents agreed to settle charges that they acted as unregistered brokers in the sale of securities).

These cases highlight the recurring issues that the SEC is focusing on in the EB-5 context. The SEC’s Office of Investor Education and Advocacy and USCIS jointly published an investor alert to help prevent more individuals from falling victim to exploitations of the EB-5 program. Given that securities violations in connection with EB-5 Program offerings are a priority for 2016, EB-5 sponsors, including regional centers, broker-dealers, and other securities issuers, should expect SEC enforcement proceedings in this area to remain prevalent.

DC Circuit Upholds Constitutionality of SEC’s Use of Administrative Law Judges in First Appellate Ruling

In the first appellate ruling of its kind, the District of Columbia Circuit upheld the SEC’s use of administrative law judges in administrative proceedings as constitutional. The court in Raymond J. Lucia Cos. v. SEC denied Mr. Lucia’s petition for review in which he claimed that the SEC’s use of administrative law judges was unconstitutional.

Lucia argued that administrative law judges are “Officers of the United States” within the meaning of the Appointments Clause in Article II of the Constitution. Lucia urged the court to rule that the SEC’s use of administrative law judges was unconstitutional because those judges have not been appointed by the President, as the Constitution requires. The three-judge panel disagreed and concluded that the SEC’s administrative law judges are inferior officers/employees who are not governed by the clause. In making this determination, the panel considered the significance of the matters resolved by the administrative law judges, the discretion the administrative law judges exercise in reaching their decisions, and the finality of the administrative law judges’ decisions. The court found the last factor dispositive because the Commission ultimately must act to approve an administrative law judge’s decision. “As the Commission has emphasized, the initial decision becomes final when, and only when, the Commission issues the finality order, and not before then . . . . Thus, the Commission must affirmatively act—by issuing the order—in every case. The Commission’s final action is either in the form of a new decision after de novo review or, by declining to grant or order review, its embrace of the ALJ’s initial decision as its own.” Op. at 13. In that sense, the court concluded, administrative law judges have not been “delegated sovereign authority” such that they would come within the purview of the Appointments Clause.

The DC Circuit’s decision deals a significant blow to litigants bringing similar challenges in other federal courts. As other cases become ripe for substantive consideration after jurisdictional hurdles are cleared, this decision provides the SEC’s with strong ammunition to oppose similar constitutional challenges. While the Second and Eleventh Circuits recently addressed issues relating to the SEC’s use of ALJs, the opinions focused on the district court’s lack of jurisdiction to hear the cases because the plaintiffs had not raised their challenges in the SEC’s in-house court first, not the merits of the issues. Unless and until another circuit court rules the SEC’s use of ALJs unconstitutional, creating a split, the issue will likely not reach the Supreme Court.

Sixth Circuit Weighs Challenge to its Jurisdiction in Lawsuit Brought by GOP Committees against the SEC

The Republican parties of three states—Tennessee, Georgia, and New York—recently brought a lawsuit in the Sixth Circuit Court of Appeals against the Securities and Exchange Commission to challenge revised Rule G-37, which the Municipal Securities Rulemaking Board (“MSRB”) published earlier this year to limit pay-to-play practices in the municipal securities area. The revision extended Rule G-37 to cover not only brokers and dealers of municipal securities but also municipal advisers. It prohibits those advisers from engaging in municipal advisory business with a municipal entity for two years if the adviser, its staff, or its political action committee made a significant contribution to an official who could influence the award of municipal securities business. The rule also requires certain covered entities, such as municipal advisers, to publicly disclose contributions to government officials. The plaintiffs claim this new extension of the rule infringes upon the constitutionally protected First Amendment right of municipal advisers to make political contributions.

This lawsuit is not the first time these plaintiffs have attempted to challenge the constitutionality of regulations that limit the political contributions of certain financial players. In 2014, the New York and Tennessee Republican Parties filed a similar complaint in federal court in the District of Columbia that challenged, among other things, the constitutionality of SEC Rule 206(4)-5, which prohibited investment advisers from receiving compensation for services to government pension plan clients when those advisers made campaign contributions to parties or candidates who had the ability to influence awards of public investment advisory contracts. The district court dismissed the complaint on a technicality because the Securities Exchange Act of 1934 gives the courts of appeals exclusive jurisdiction to hear challenges to final orders promulgated by the SEC and then only if such challenges are brought within sixty days of promulgation of the rule. The D.C. Circuit Court affirmed.

Back in the Sixth Circuit, the plaintiffs learned their lesson from the D.C. Circuit and timely filed this complaint with the court of appeals. However, last week the SEC filed a motion to dismiss for lack of jurisdiction and the Sixth Circuit issued a halt to the briefing schedule to decide the potentially dispositive motion. In its motion to dismiss, the SEC argued that the Sixth Circuit did not have jurisdiction over this controversy because the SEC did not issue a final order or perform any action that would provide the Court with jurisdiction over the MSRB’s amendment to Rule G-37. In fact, the SEC claims Congress precluded it from using any funds to finalize, issue, or implement an order regarding the disclosure of political contributions, which the recently revised Rule G-37 requires municipal advisers to do. The SEC contends this same prohibition may in fact prohibit it from using funds to defend the MSRB rule on its merits. In their opposition filed yesterday, the plaintiffs strongly disagreed with these contentions. With Citizens United as backdrop, a challenge to these types of rules, which curtail political contributions, may have some teeth if a court ever actually gets to the substantive merits. The SEC has handed the Sixth Circuit a procedural “out” with its motion to dismiss, and it will be interesting to see if the court decides to take it.

Update: IRS, SEC, and Courts Diverge on Nature of Disgorgement

We previously wrote about decisions in SEC v. Graham from the Eleventh Circuit, __ F.3d __, No. 14-13562, 2016 WL 3033605 (11th Cir. May 26, 2016), and the U.S. District Court for the Southern District of Florida, 21 F. Supp. 3d 1300 (S.D. Fla. 2014), considering whether disgorgement claims and other remedies were subject to five-year statute of limitations on actions “for the enforcement of any civil fine, penalty, or forfeiture” codified in 28 U.S.C. § 2462. The Eleventh Circuit affirmed the decision of the lower court that the SEC’s disgorgement claims were time-barred, holding that “disgorgement” is synonymous with the plain meaning of “forfeiture” as it is used in the statute.

On May 6, 2016—shortly before the Eleventh Circuit issued its ruling in Graham—the IRS published non-precedential Chief Counsel Advice (“CCA”) on whether Internal Revenue Code Section 162(f) bars business expense deductions for disgorgement paid to the SEC of profits stemming from alleged violations of the Foreign Corrupt Practices Act (“FCPA”). The disgorgement payments were part of a consent agreement between the SEC and the taxpayer, whose subsidiary allegedly falsified accounting records in order to conceal gifts it made to officials of a foreign government in exchange for business benefits. The taxpayer paid additional penalties for which it specifically agreed it would not seek a tax deduction in a parallel agreement with the DOJ relating to the criminal case against taxpayer’s subsidiary. The IRS concluded that the taxpayer’s disgorgement payments were not deductible business expenses under § 162(f), which prohibits deduction of any “fine or similar penalty paid to a government for the violation of any law” as a business expense.

As explained in the CCA, § 162(f) has been interpreted to bar deductions of civil penalties where they are “imposed for purposes of enforcing the law and as punishment,” but to allow deduction of civil penalties if “imposed to encourage prompt compliance with a requirement of the law”—for example, “late filing charges or other interest charges”—or “as a remedial measure to compensate another party.” Emphasizing that disgorgement in securities cases has deterrent aims, is a discretionary remedy, and might be required even if there is no injured party or in amounts exceeding actual losses, the IRS determined that whether disgorgement is primarily punitive or primarily compensatory for the purpose§ 162(f) is a fact-specific inquiry. Additionally, disgorgement imposed as a “discretionary equitable remedy” or where the proceeds are used to compensate victims might still be primarily punitive if it resembles forfeiture, which remains non-deductible even when used to compensate victims. With respect to the FCPA disgorgement the taxpayer had made to the SEC, the IRS concluded that its purpose was primarily punitive, and therefore it could not be deducted, because there was no evidence that it was meant to compensate the government or some other party for loss.

The SEC, the IRS, and the Eleventh Circuit have thus articulated three distinct characterizations of disgorgement. To avoid the limitations period of § 2462, the SEC’s position, adopted by the D.C. Circuit in Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996), has been that disgorgement is a non-punitive equitable remedy. In the IRS’s view, disgorgement to the SEC may—but perhaps does not always—have a punitive purpose that bars tax deduction. The Eleventh Circuit has equated the statutory definitions of disgorgement and forfeiture, without commenting on whether disgorgement to the SEC is a “penalty.”

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Category: Compliance and Supervision