Financial Reporting, Disclosures and Restatements
WilmerHale’s securities enforcement lawyers lead the field in the representation of accounting firms, public corporations and financial institutions, and their officers and directors, in investigations into corporate accounting and disclosure matters and restatements of company financials.
We have advised numerous boards and board committees in connection with internal investigations concerning revenue recognition, earnings reporting, public statements, and related accounting and disclosure matters. We also regularly represent corporate boards and companies regarding alleged misconduct by senior corporate officers. We often act as the primary interface with the Department of Justice, the SEC, exchanges and a company’s public accountants when restatements lead to enforcement actions.
Our work in this area has included advice on topics including alleged accounting fraud, cybersecurity breaches, whistleblower complaints, audit deficiencies, valuation and revenue recognition errors, noncompliance with regulatory and disclosure standards, and maintenance of appropriate books and records.
Market Structure, Algorithmic Trading and Market Access
WilmerHale’s securities regulatory and enforcement teams have helped clients resolve a broad range of federal and state investigations and enforcement actions relating to trading and equity market structure, including dark pools, algorithmic trading, stock exchange practices, and the market access rule.
Backed by the firm’s sophisticated securities regulatory and compliance practices, which have significant experience counseling industry leaders on SEC initiatives relating to market infrastructure and operations, our enforcement teams are particularly well positioned to navigate regulatory responses to the evolution of trading venues, broker-dealer order routing practices, automated trading, alternative trading systems and other developments shaping the equity markets.
Clients benefit from our broad experience conducting wide-ranging and complex internal investigations, including those in highly public matters for the boards of directors and management of some of the largest, most recognized companies in the world. We understand the challenges and opportunities that internal investigations provide to influence and affect both corporate strategy and potential government action.
Financial Products and Retail
WilmerHale has extensive experience advising broker-dealers, banks, investment companies, investment advisers, individuals and other market participants facing investigations and enforcement actions relating to the creation and retail sale of complex financial products.
Our lawyers combine seasoned technical insight into financial products and practices, deep familiarity with regulatory history and trends, and an understanding of the regulators and their perspectives gleaned from significant government interaction and experience, including with the SEC Complex Financial Instruments Unit and the recently created SEC Retail Strategy Task Force.
Our team has handled numerous enforcement investigations and actions by the SEC, CFTC, FINRA, and other federal and state regulatory agencies concerning complex structured products; municipal and mortgage-based debt underwriting, distribution and trading; and suitability issues for new and novel products, including blockchain and distributed ledger technology. We also have significant experience representing securities industry trade associations in advancing collective client interests with regulators.
Exchanges and Clearing Agencies
WilmerHale’s Securities Enforcement Practice represents and defends exchanges, alternative trading systems (ATSs) and securities clearing organizations in US Securities and Exchange Commission (SEC) investigations and compliance examinations.
Working closely with the firm’s Broker-Dealer Compliance and Regulation Practice, which regularly advises exchanges, ATSs, prime brokers and custodian banks on federal securities laws and regulations, we help clients navigate investigations and examinations related to Regulation SCI, Regulation SHO, Regulation ATS, SRO rulemaking and rule compliance, broker-dealer and exchange registration and governance, exemptive order compliance, trade financing, securities lending, and order handling procedures, among many other issues.
WilmerHale regularly represents corporate, institutional and individual clients in insider trading investigations and enforcement actions conducted by the SEC, the DOJ, FINRA, and a range other regulatory and law enforcement bodies. Our lawyers also regularly assist corporate management, boards of directors, and committees of boards of directors in examining potential violations of the insider trading laws or corporate insider trading policies.
We have helped clients resolve investigations and enforcement proceedings into alleged misappropriation of information in the context of cyber breaches, mergers and acquisitions, clinical trials and the FDA approval process, and many other complex corporate events.
Anti-Corruption Advisory and Investigations
Renowned as a Foreign Corrupt Practices Act (FCPA) powerhouse and regularly recognized at or near the top of Global Investigations Review’s list of the world’s leading investigations and compliance practices, WilmerHale has significant experience representing companies and individuals in corruption inquiries around the world.
Our team, which has been practicing in this area since the enactment of the FCPA, ranks among the top law firms in the industry and has advised on the most FCPA public settlements of any law firm. In 2016 alone, the firm handled five DOJ and/or SEC settlements, along with a publicly announced DOJ/SEC declination. The firm has also obtained numerous non-public declinations for clients who were under investigation by enforcement authorities.
Data Breaches and Cybersecurity
A series of recent, high-profile cybersecurity events have attuned public companies and other regulated entities to the intersection between cyber risk and the federal securities laws.
WilmerHale’s Securities Enforcement Practice advises on all aspects of securities-related cyber incident response and preparedness. Working closely with the firm’s Cybersecurity and Privacy Group, our lawyers advise on best practices to minimize the risk of missteps in the immediate aftermath of a breach, lead independent investigations into the root cause of a cyber intrusion, review existing disclosure controls and procedures, and help shape an effective governance and disclosure response.
Incident Response: We have represented multiple companies and regulated entities in US Securities and Exchange Commission (SEC) enforcement inquiries and proceedings arising from cyberattacks and data breaches, including matters involving allegations of insider trading relative to the timing of public disclosure. The firm’s broader regulatory and securities litigation teams have extensive experience responding to congressional inquiries and shareholder litigation in the wake of cyber events.
Preparedness: We guide boards, audit committees and senior management seeking to adapt to the evolving cybersecurity landscape and implement appropriate internal controls and risk management protocols in advance of a potential data breach, and advise financial institutions on the risks of insider threats, which have become an area of increased focus for the SEC and the Financial Industry Regulatory Authority. Our lawyers bring significant experience in advising on the adoption of policies and procedures for safeguarding customer information under the SEC’s Regulation S-P, and have guided numerous clients through related enforcement proceedings.
WilmerHale’s Securities Enforcement Practice represents audit firms, their senior management, and individual partners and employees in investigations and enforcement proceedings in the United States and around the world.
Our lawyers have been involved in many of the most prominent audit and accounting cases of the last two decades, including numerous Big Four representations. We have helped audit firm clients navigate internal investigations, regulatory inquiries, enforcement proceedings and litigation alleging financial reporting deficiencies or auditor misconduct related to—among other topics—auditor independence, sufficiency of audit procedures, cyber breaches, purported “channel stuffing” and misvaluation of illiquid assets, conflicts of interest, and claims related to the failure of the mortgage-backed securities market and the 2007–2008 financial crisis.
Our experience spans investigations and enforcement actions brought by the US Securities and Exchange Commission, the Department of Justice and other federal agencies, and proceedings brought by the Public Company Accounting Oversight Board, the Financial Industry Regulatory Authority, state attorneys general, and state boards of accountancy.
We have successfully defended auditors in securities class actions, opt outs, derivative actions, negligence suits and other litigation in federal and state courts, and have represented accounting firms appearing before Congress, federal regulatory agencies and standards-setting bodies in inquiries, proceedings and testimony.
We have represented Big Four networks and member firms in Asia, Canada, the Caribbean, Central and South America, and Europe in investigations and litigation involving matters of US and UK law, potential breaches of network codes of conduct, cross-border litigation, and regulatory matters. Our work outside the US has ranged from representing a firm in connection with the largest corporate failure in Caribbean history to defending the auditor in investigations and litigation arising from India’s biggest financial fraud to conducting a multijurisdictional defense of an auditor caught up in the Yukos matter in Russia.
HIGH-FREQUENCY TRADINGRepresented a prominent global hedge fund in parallel SEC and DOJ inquiries regarding customer order flow and execution quality, including in the client’s “dark pool.” Secured declination in the DOJ proceeding and a favorable settlement with the SEC.
PARALLEL INVESTIGATIONS AND LITIGATIONTook over as counsel to a Palo Alto–based health technology and medical laboratory services company in federal and state law enforcement and regulatory investigations, private civil litigation in federal and state courts, and corporate restructurings, following explosive media exposés about the company in national publications.
DATA BREACH INVESTIGATIONRepresented the board of a financial industry company in a highly publicized data breach. Conducted an internal review and provided advice not only about the legal framework around data privacy and security but also about the related governance, securities and liability regimes. Our work for the client built on our representation of one of the largest retailers in investigations and litigation arising from an analogous breach.
INTERNAL GOVERNANCE INVESTIGATIONSRepresented the board of a confectionary products producer in successive internal investigations concerning potential insider transactions by board members and a failed acquisition of a Chinese confectionary brand. We worked with senior management and board committees to review and enhance governance practices.
ENFORCEMENT PROCEEDINGS AND TRIALS ARISING FROM PUERTO RICO FINANCIAL CRISISSuccessfully represented a corporate and investment bank in Puerto Rico Office of the Commissioner of Financial Institutions, FINRA and SEC proceedings in connection with FINRA’s actions against prominent financial services firms for allegedly failing to supervise the sale, concentration and leverage involved in selling Puerto Rico closed-end funds prior to the financial collapse of the Puerto Rico fixed income market in 2013. Following resolution of the regulatory inquiries, we have continued to represent the client in multiple class actions and client arbitrations arising from the same events.
PCOAB AND SEC CLOSING LETTERSObtained closing letter from the SEC and PCOAB following a multi-year investigation into a major accounting firm’s relationship with its largest client. Allegations included embezzlement by a company employee facilitated by a junior member of the audit team, as well as potential violations of auditor independence rules by the auditor.
INTERNAL INVESTIGATION OF CORPORATE CONDUCTConducted an independent review of a client’s competitive intelligence and data-gathering practices. We reported results to the board and new senior management, and coordinated our work with ongoing criminal and civil inquiries.
INVESTIGATION OF ACCOUNTING FOR GOVERNMENT CONTRACTRepresented a client in a 16-month SEC investigation concerning accounting treatment of a multi-year, multi-billion-dollar defense contract. After presentation to senior enforcement staff, the SEC closed its investigation.
DEFENSE OF CEO THROUGH TRIALSuccessfully defended a financial company CEO in SEC proceedings, including through trial and then potential retrial. In the first trial, the jury cleared our client of half the SEC’s counts. When the SEC opted to proceed on the remaining counts (despite a jury having deadlocked 11–1 in the defendants’ favor on the remaining counts), we convinced the court to severely limit the SEC’s ability to present evidence in the retrial, based on the earlier judgment. The SEC then dropped all remaining charges.
DOJ AND SEC FCPA INVESTIGATION, WITH FOLLOW-ON COMPLIANCE REVIEWRepresented a Fortune 100 global manufacturer in a parallel DOJ and SEC investigation into violations of the FCPA and other securities laws. The inquiry focused on the use of consultants and sales agents in the Middle East and Asia, as well as the company’s revenue recognition practices over a decade. We successfully resolved the government inquiries and advised the company on a comprehensive overhaul of its compliance programs and financial controls.
REPRESENTATION OF AUDIT COMMITTEE IN MULTI-YEAR RESTATEMENTRepresented the audit committee of public company in its investigation of a significant, multi-year restatement of its audited financials. At the same time, we are handling related DOJ and SEC investigations. We have coordinated extensively with company auditors, to permit completion of the restatement of the company’s financials in a timely manner.
Ranked Band 1 for Securities Regulation:
National Tier 1 Firm for Litigation: Regulatory Enforcement
U.S. News-Best Lawyers® “Best Law Firms” List
Metropolitan Tier 1 Firm – Washington DC for Litigation: Regulatory Enforcement
U.S. News-Best Lawyers® “Best Law Firms” List
- Chambers USA: America’s Leading Lawyers for Business (2021) – Describes our “market-leading practice in the securities regulatory space” and our “deep bench of former SEC and government agency officials.” Clients describe us as “consummate professionals” with “excellent working relationships with the regulators” and as “an absolutely terrific team,” adding, “They know the enforcement world inside and out, and have incredible resources that they can bring to bear when necessary.”
- Chambers USA: America’s Leading Lawyers for Business (2020) – Individually recognizes six WilmerHale attorneys to its regulation enforcement and advisory tables, including “a luminary in the securities space,” “an insightful lawyer who is terrific on disclosure issues,” and a lawyer described as “absolutely a star.”
- Global Investigations Review – Named WilmerHale a finalist in its 2021 “Most Impressive Investigations Practice of the Year,” “Most Important Court Case of the Year” and “Most Important Development of the Year” contests. Since 2015, the firm has been ranked at the top of GIR’s list of the world’s most accomplished investigations practices. GIR also gave WilmerHale a 2016 nod as “Most Impressive Investigations Practice of the Year” for its cross-border work in both high-profile internal and government-led investigations.