Fenwick securities enforcement co-chair Michael Dicke spoke with Law360 about the first enforcement actions from the U.S. Securities and Exchange Commission under the “Silicon Valley Initiative.”
The SEC stated nearly two years ago it would begin closely watching the conduct of private companies as well as emerging platforms that trade in private company securities, and would bring enforcement cases as needed to protect investors.
The first enforcement actions involved claims of fraud and technical violations of SEC rules around stock options offerings, and the private companies involved settled the charges with the SEC.
Formerly the head of enforcement for the SEC’s San Francisco regional office, Dicke told Law360, “Now we are seeing some of the results. Within the same week, the same SEC office here overseeing the Valley filed two important cases against private companies.”
Dicke said it was unclear whether more cases will arise from the Rule 701 probe, but noted the SEC’s message about the need for compliance has taken root.
“They made some public noise saying we’re concerned people aren’t complying with [Rule 701 requirements], and then they did this sweep. Definitely, private companies took notice,” Dicke said.
Dicke has co-authored Fenwick articles looking at the SEC’s increased scrutiny of unicorns and other private companies and the secondary market trading of pre-IPO shares, as well as the SEC’s first enforcement action resulting from a Rule 701 option grants investigation.
The full article is available on Law360 (subscription required).