Friday, April 24, 2015

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges BlackRock Advisors With Failing to Disclose Conflict of Interest to Clients and Fun Boards
April 20, 2015 (Litigation Release No. 71)
BlackRock Advisors LLC has been charged by the SEC for failing to disclose a conflict of interest of one of their top portfolio managers. Daniel J. Rice III founded Rice Energy, a natural gas and oil company, while managing energy sector funds and separately managed accounts at Blackrock Advisors. Rice personally invested about $50 million in Rice Energy. A joint venture between Rice Energy and Alpha Natural Resources would later become the largest holding in the largest fund managed by Rice (BlackRock Energy & Resources Portfolio). BlackRock has agreed to settle charges by paying a $12 million penalty and having an internal review conducting by an independent compliance consultant. Additionally, former chief compliance officer Bartholomew A. Battista was charged with failing to report a “material compliance matter” to BlackRock’s boards of directors and has agreed to settle those charges by paying a $60,000 penalty.

Fort Worth Regional Director David Woodcock to Leave SEC
April 20, 2015 (Litigation Release No. 72)
It has been announced that David Woodcock, Regional Director of the SEC’s Fort Worth Office, is leaving the SEC later this spring. Woodcock has been Regional Director since 2011 and has been chairman of the Enforcement Division’s Financial Reporting and Audit Task Force since its inception. Following Mr. Woodcock’s departure, Associate Regional Directors Marshall Gandy and David Peavler will share duties as acting Regional Directors.

SEC Announces Million-Dollar Whistleblower Award to Compliance Officer
April 22, 2015 (Litigation Release No. 73)
The SEC has announced an award of $1.4-1.6 million to a compliance officer for providing information that assisted the SEC in bringing an enforcement action against the officer’s company. The SEC’s whistleblower program has awarded over $50 million to 16 whistleblowers since it began in 2011. Awards are funded solely by SEC sanctions.

SEC Charges Issuer for Failing to Make Public Filings
April 22, 2015 (Litigation Release No. 74)
Real estate investment firm W2007 Grace Acquisition I Inc. has been charged by the SEC for failing to submit public filings. In November 2007, W2007 Grace filed a notice to the SEC of exemption from filing public reports because, at the time, they had fewer than 300 holders of preferred shares. In the SEC’s order, W2007 Grace is found to have improperly counted holders as of January 1st, 2014 and, therefore, should have resumed filing public reports. They have agreed to settle charges with a $640,000 penalty.


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