SEC and Investigations

SEC Enforcement Expected To Surge On COVID Volatility
Following the erratic stock market swings fueled by the COVID-19 crisis, attorneys expect a surge in U.S. Securities and Exchange Commission investigations tackling a broad range of potential violations, from outright fraud to disclosure issues.
The SEC will put investment firms, broker-dealers and public companies under the microscope, closely examining the activities of corporate insiders, fund investment guidelines and risk disclosures — in some cases likely revealing problems that predate the pandemic by months or years, attorneys said.
“One thing I think you can be sure of is that SEC enforcement activity is going to increase, and both class action and derivative action shareholder litigation is going to increase,” said Steven Scholes, a partner at McDermott Will & Emery LLP and a former attorney in the SEC’s Division of Enforcement. “It’s likely that many issues that were not evident when the bull market was humming along will be exposed.”
The blatant offenders, such as those perpetrating schemes that are directly related to COVID-19, are likely to generate the greatest increase in investigations from the SEC and other regulatory agencies, attorneys said.
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