US$650,000 Fine for Failure to Disclose SEC Investigation

The US Financial Industry Regulatory Authority (FINRA) has announced that it has fined Goldman, Sachs & Co (Goldman Sachs) US$650,000 for failing to disclose that two of its registered representatives had received formal notices from the SEC that they were subjects of investigations. In the case of one of the representatives, Fabrice Tourre, Goldman Sachs updated his regulatory record more than seven months after learning of his “Wells Notice”, and only after the SEC had filed a complaint. FINRA also found that Goldman Sachs’ supervisory procedures, manuals and policies were inadequate. FINRA executive vice president and acting chief of enforcement James Shorris stated that such failures “limited the ability of investors and other market participants to adequately assess the individuals through FINRA’s public disclosure program, BrokerCheck“. Goldman Sachs, neither admitting nor denying the charges, has agreed to review its supervisory procedures in the reporting area and implement necessary remedial measures.
FINRA’s media release (9 November 2010)

Related news item:
Reuters: Goldman fined for slow disclosure of SEC probes (9 November 2010)
(Source: FINRA; Reuters)

SEC Proposes Whistleblower Rewards Rules

The SEC has made available Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934 (3 November 2010) for public comment. The proposed rule “maps out a simple, straightforward procedure for would-be whistleblowers to provide critical information to the agency” and “conveys how would-be whistleblowers can qualify for an award through a transparent process that provides them a meaningful opportunity to assert their claim to an award”. SEC chairperson Mary Schapiro stated that “[w]histleblowers can be a source of valuable firsthand information that may otherwise not come to light. These high-quality leads can be crucial to protecting investors and recovering ill-gotten gains from wrongdoers”.

Comments on the rule proposal should be sent to the SEC by 17 December 2010.
SEC’s media release (3 November 2010)
(Source: SEC)

FTC Settles With Online Retailers Over Green Labeling

The US Federal Trade Commission (FTC) has announced that it has entered into an agreement worth US$400,000 with three online retailers to settle charges that they failed to notify customers of EnergyGuide information in relation to the sale of home appliances, in violation of the FTC’s Appliance Labeling Rule. FTC bureau of consumer protection director David Vladeck stated that “[c]ompanies selling appliances covered by the FTC’s rules, either online or in stores, have an obligation to provide EnergyGuide labels”. The settlement was the first time the FTC had targeted online retailers. A further two online stores have been notified that the FTC will seek US$640,000 in fines for similar charges.
FTC’s media release (1 November 2010)
(Source: FTC)

RoLIA Concerns Over Proposed ASIC Powers
Asia Pacific

The Rule of Law Institute of Australia (RoLIA) has expressed concern over proposals to enhance ASIC’s search warrant power in its submission (18 October 2010) to the Senate Standing Committee on Economics’ inquiry into the Corporations Amendment (No. 1) Bill 2010 (Cth). RoLIA stated that “conferring additional powers on a regulatory agency is a serious matter”, particularly in light of the fact that “Parliament is not apprised of the extent to which the existing powers are used, and with what safeguards, to ensure that individual rights and liberties are respected and upheld”. RoLIA made a number of recommendations, including that the proposed amendments regarding ASIC be referred to the Australian Law Reform Commission “as part of a review of the use of coercive powers by federal regulators”, that certain safeguards be inserted into the Bill, and that the Commonwealth Ombudsman and the Privacy Commissioner conduct a biennial audit of ASIC’s use of its coercive powers.

Related news item:
Money Management: Call to curb ASIC’s powers (21 October 2010)
(Source: Senate Standing Committee on Economics; Money Management; Lawlex Legislative Alert & Premium Research)

OFT Compliance Review
Europe, Middle East and Africa

The UK Office of Fair Trading (OFT) has released the following consultation papers (both dated October 2010) for comment:

Submissions on the consultation papers should be sent to the OFT by 21 January 2011.
Further information from the OFT
(Source: OFT)