by T. GormanPosted on Posted in SECActions

In the most recent case imposing sanctions for failing to produce e-mail,  Morgan Stanley agreed to the entry of a consent decree which imposed a $15 million fine on the firm for failing to produce responsive e-mails in the SEC’s IPO and Research Analyst investigations.   The firm also consented to the entry of an injunction barring future violations of Exchange Act Section 17(b) and other rules.   http://www.sec.gov/litigation/litreleases/2006/lr19693.htm

 The SEC has previously imposed similar fines for failing to produce electronic materials on other firms.   See, e.g., the following SEC consent decrees:  UBS Securities, July 2005 (settled alleged violations of record-keeping regulations and failure to produce all relevant electronic communications, and agreed to pay $70,000 to the SEC, the NYSE, and the NASD); J.P. Morgan, February 2005 (settled with the SEC, the NYSE, and the SEC over loss of e-mails sought in stock analyst misconduct cases, and agreed to pay $2.1 million in fines); Symbol Technologies, June 2004 (agreed to pay $37 million fine to resolve an investigation by the U.S. Attorney’s Office for the Eastern District of New York and the SEC in connection with allegations of accounting fraud and destruction of incriminating documents); Lucent Technologies, May 2004 (agreed to pay SEC $25 million to settle claims of improper revenue recognition involving failure to preserve and produce documents); Bank of America, March 2004 (Agreed to $10 million settlement in connection with allegations by the SEC that it violated record-keeping requirements during an open investigation); AIG, September 2003 (Agree to $10 million fine to resolve an SEC inquiry where AIG’s document production was incomplete).   Difficulties with electronic discovery has become a recurring theme not only in SEC investigations but also in civil litigation.  See generally, Thomas Gorman & Tonya M. Esposito, Responding to SEC Subpoenas For Documents:  Cooperation Through Credible Assurances of Complete Production.

by T. GormanPosted on Posted in SECActions

Henry C. Yuen, the former chairman and chief executive officer of Gemstar-TV Guide International was ordered after a three week trial to pay over $22 million in disgorgement and penalties by the court. The SEC’s action claimed that Yuen knew but failed to disclose the fact that Gemstar was improperly recognizing and reporting revenue in an effort to meet projections for revenue growth. The complaint alleged that revenue was overstated by at least $248 million. After finding violations of the antifraud and reporting provisions of the Securities Act and the Exchange Act the court ordered Yuen to pay approximately $10.5 million in disgorgement as ill-gotten bonuses and trading profits obtained from his fraudulent conduct and an equal amount as a penalty. Yuen was also barred from being an officer or director of a public company.

http://www.sec.gov/litigation/litreleases/2006/lr19694.htm