Former Capital One CFO Settles with SEC for $1.8 Million and 5 Year Bar

On November 20, 2006, the Commission settled insider trading charges against David M. Willey, former CFO of Capital One Financial Corporation. The SEC alleged that Willey traded Capital One stock in advance of a negative announcement concerning supervisory action by the Federal Reserve Board of Governors. Without admitting or denying the charges, Willey agreed to a permanent injunction ordering him to pay over $1.8 million in disgorgement, prejudgment interest and penalties and consented to a five year officer and director bar. In connection with the settlement, the SEC also dropped similar charges against Willey’s wife. http://sec.gov/litigation/litreleases/2006/lr19918.htm

Legislation Proposed by Rep. Frank May Indicate Direction of New Congress on Securities Issues

The change in Congressional leadership may have an immediate and significant impact on the SEC and the securities laws. Rep. Barney Frank (D-MA) is scheduled to become Chairman of the House Financial Services Committee in the next Congress. His recent actions may suggest the direction that committee will take. For example, Rep. Frank introduced H.R. 4291, “The Protection Against Executive Compensation Abuse Act.” Under that bill, a company would be able to recapture incentive compensation tied to performance numbers where those numbers proved to be inaccurate and require a restatement (See also SOX Section 304). The bill would also require shareholders to specifically approve any “golden parachute” tied to the sale or purchase of substantial company assets. Compensation filings would also have to be posted on the corporation’s website under the proposed legislation.

Previously, Rep. Frank introduced a bill directing the President’s Working Group on Financial Markets to conduct a study on hedge funds, “The Hedge Fund Study Act,” H.R. 6079. This bill has passed the House. Another bill dealing with hedge funds is H.R. 5712. This bill would authorize the registration and monitoring of hedge funds by the SEC, effectively reversing the decision of the DC Circuit in Goldstein v. SEC, 2006 WL 1715766 (D.C. Cir. June 23, 2006) (No. 04-1434) (see secactions.com post August 20, 2006).