James G. Lundy

Partner

Overview

Jim Lundy’s mission is to empower public companies and financial services firms to overcome enforcement investigations by the SEC and other regulators with their reputations and relationships with their stakeholders unscathed. Jim resolves these high-stakes enforcement matters drawing on his deep technical insights and emotional intelligence developed over 20 years of practice, including service with the SEC’s Division of Enforcement for almost a decade.

Jim’s clients include public companies and boards of directors, investment advisers, broker-dealers, hedge and private equity funds, investment banks, futures trading firms, and their principals. Jim has helped these clients shut down multiple high-stakes SEC investigations with no charges filed, and he has negotiated lowered enforcement settlement demands by hundreds of millions of dollars. Jim also leads internal investigations; serves as an independent monitor; provides counsel on governance, compliance and policy issues; handles cybersecurity regulatory investigations; and defends clients in complex financial services litigation. In addition, he develops appropriate strategies for registrants being examined to avoid enforcement referrals by the Division of Examinations. Regarding his compliance and governance counseling practice, Jim spent the last several years of service with the SEC helping lead the Division of Examinations program for the Midwest region.

After leaving the SEC and before joining the firm, Jim served as associate general counsel at a futures and securities firm affiliated with a European-based global bank. While there, he handled matters involving complex futures, derivatives and securities transactions across from the CFTC, SEC, FINRA, CME Group, CBOE, NFA, and state attorneys general offices. He previously worked on the trading floors of the CME Group.

Jim is the co-leader of the firm’s White Collar Defense and Investigations team and co-leads the firm’s SEC & Regulatory Enforcement Defense practice.

Government Experience

  • SEC Division of Enforcement — Served as a Senior Trial Counsel and as a Branch Chief for nine plus years
  • SEC Division of Examinations — Served as a Senior Regulatory Counsel for three years and assisted with leading the SEC’s examination program for the Midwest Region

Representative Matters

Public Companies and Internal Investigations

  • Representing the CEO of a public company in the automotive industry in an SEC enforcement investigation under the SEC’s Earnings Per Share (EPS) Initiative.
  • Represented a CEO and a public company in the logistics industry in a parallel investigation by the SEC and the Department of Justice into the company’s accounting practices after a multi-year restatement that led to the resignation of the CFO, and subsequent charges against him and certain other officers of the company. While the CFO was criminally convicted, no charges have been filed against the CEO or the company by the SEC or Department of Justice. Also provided counsel to the company’s board of directors and audit committee.
  • Led an internal investigation of a global public company in the semiconductor industry regarding potential internal control and financial reporting violations due to misappropriations of company funds by an officer of an Asian subsidiary, and provided counsel to the company’s board of directors and audit committee. As a result of the internal investigation, we were required to self-report to the SEC. However, based on the remedial efforts and other strategies, the SEC was convinced not to pursue an enforcement action.
  • Led an internal investigation for a $2 billion private equity fund complex based on the misappropriations of the controller of the advisory affiliate, and reported to an independent committee of the board of directors. After significant investigative efforts, we concluded that, while violative conduct occurred, the issues did not require self-reporting to the SEC, and then developed and implemented a remediation plan to detect and prevent said or similar conduct in the future.
  • Represented one of the largest variable annuity providers in the industry in an investigation into its disclosures regarding a multi-billion dollar product line involving additional annuity benefits, required minimum distributions and the corresponding illustration disclosures. After a multi-year investigation, obtained a termination letter from the SEC closing the investigation without action.

Investment Advisers, Broker-Dealers and the Financial Services Industry

  • Representing the general counsel and chief compliance officer of a private equity fund in an investigation involving the valuations of illiquid assets and complex custody-rule compliance issues.
  • Represented a dually registered investment adviser and broker-dealer in an investigation conducted by the SEC’s Asset Management specialty unit after a referral from the Division of Examinations, and obtained termination notices for both the investment adviser and the broker-dealer closing the investigation without charges. This was despite the Division of Examinations’ deficiency letter alleging obstruction of justice and securities fraud violations by the firm.
  • Represented the chief compliance officer of a large mutual fund complex in an SEC investigation involving trading and valuation issues for certain illiquid holdings of a fixed income mutual fund. The SEC focused its investigation on the alleged mismarking of underlying bonds to inflate their pricing and valuation at the end of a quarter. Based on strategies used at the client’s SEC testimony session and a “white paper” submission, the SEC issued a termination notice closing its investigation without charges.
  • Represented the former CEO of an investment advisory firm that was defrauded by a counterparty of almost $200 million. This counterparty’s main principal was sentenced to 25 years in prison in the parallel criminal case. The SEC engaged in a multi-year investigation of the investment advisory firm, the CEO and other individuals regarding purported due diligence and disclosure failures. At the close of their extensive investigative efforts, the SEC advised that they planned to recommend fraud charges and pursue significant monetary relief. After zealously advocating with a series of pre-Wells formal presentations and strategic negotiations, the SEC agreed to settle on a technical compliance violation, a five-figure penalty and no individual bar.
  • Represented an investment advisory firm in the SEC’s Share Class Selection Disclosure (SCSD) Initiative and avoided charges. Devised strategies unique to this client to self-report, while advocating that the SEC should exercise its discretion to not charge this client pursuant to the terms of the SCSD Initiative. These efforts resulted in the SEC issuing a termination notice and not charging this client, despite the self-reporting.
  • Retained to represent a European-based SEC registered investment adviser in an SEC parallel investigation related to a former principal previously indicted for public corruption and bribery by the Department of Justice. Obtained a termination letter from the SEC closing the investigation into the foreign registrant without any action.
  • Represented multiple investment advisory firms around the country across various SEC Regional Offices and the SEC’s Asset Management specialty unit for the SCSD Initiative. Devised strategies to collectively save these clients millions of dollars in disgorgement for their self-reporting settlements. Then represented multiple clients around the country in the follow-up “sweep” investigations related to financial conflicts-of-interest disclosures.
  • Represented a dual registrant in an SEC investigation regarding certain undisclosed fee markups and revenue sharing practices and disclosures. Through pre-Wells negotiations, persuaded the SEC to not pursue the alleged revenue-sharing violations, resulting in a favorable settlement for the client.
  • Retained to represent a broker-dealer managing a cyber-breach related to the conduct of one of its institutional investment adviser firm clients regarding risks of potential regulatory exposure, litigation risk and remedial efforts.
  • Working with multiple brokerage clients in defending against FINRA enforcement and examination matters.

Futures and Derivatives

  • Appointed by the Hon. Amy J. St. Eve of the U.S. District Court for the Northern District of Illinois to serve as independent monitor for one of the first “spoofing” manipulative trading enforcement actions instituted by the CFTC. (CFTC v. Igor B. Oystacher and 3Red Trading LLC, 15-cv-9196, N.D. Ill.)
  • Represented a sub-adviser to a mutual fund in an investigation conducted by the SEC’s Complex Financial Instrument (CFI) specialty unit and, after a multi-year investigation, obtained a termination letter closing the investigation without charges. The client’s derivatives-based hedging strategy resulted in the mutual fund losing almost $100 million (after a potential notional loss of nearly $275 million), due to unforeseeable extreme market volatility. SEC CFI investigated this sub-adviser for securities fraud, among other purported violations, but through a series of presentations and other advocacy efforts, they were persuaded to terminate the investigation without taking action.
  • Represented a futures trader affiliated with a futures commission merchant (FCM) in CFTC and CME Market Regulation investigations into the trader’s and the FCM’s practices regarding alleged manipulative trading in certain exchanges of futures for physical transactions. After presenting the trader for interviews with the CFTC and the CME, and making submissions regarding the compliance of the transactions with the regulatory requirements, the CFTC and the CME closed their investigations without taking action against the trader and the FCM.
  • Represented a proprietary trading firm in an investigation by CME Market Regulation Enforcement regarding a trader at the firm inadvertently causing a failure of the Equity Options Globex match engine. Market Regulation originally sought several hundred thousand dollars in fines. Through strategic submissions and negotiations, the client settled the matter favorably for a supervisory violation and less than half of the original settlement demand.
  • Retained by a cryptocurrency consulting firm to provide counsel regarding the registration requirements for the futures and securities industries.
  • Represented multiple futures traders in investigations by the CFTC into their trading and alleged spoofing.

Examinations and Other Representations

  • Represented a national municipal finance consulting firm in a voluntary examination by the Division of Examinations regarding SEC municipal adviser registration issues. Through advocacy efforts during the examination process, the staff became educated that the client’s business practices did not trigger the SEC municipal adviser registration requirements. The staff closed its examination without referring the matter to the Division of Enforcement or finding significant deficiencies.
  • Represented multiple clients being examined by the Division of Examinations, and the issues included: assessing illiquid assets, valuation practices and related disclosures; findings of multiple claimed misrepresentations in advertising materials; and whether a business line of a registered investment adviser and the related fee structure required broker-dealer registration.
  • Provide counsel to clients regarding SEC policy issues on high-profile industry matters. For example, meeting with the SEC chairman, commissioners, their counsels, and senior SEC staff in the Divisions of Trading and Markets and Investment Management on behalf of multiple clients regarding the SEC’s “Reg BI” package of rules and guidance, and drafted and submitted comment letters to the SEC on behalf of these clients.
  • Retained to serve as an expert consulting witness on the SEC and CFTC enforcement practices for a litigated proceeding in Europe regarding the LIBOR investigations.
  • Retained to serve as an expert witness in a dispute between two principals of a financial services firm regarding the examination and enforcement referral practices of the Division of Examinations.

Faculty Positions

  • Loyola University — Taught securities regulation for 11 years.

Personal Interests

Jim is actively involved in his community and was a member of his children’s school’s athletic association board for nine years. Also, he is a supporter of Special Olympics Chicago, the Warrior Scholar Project and LINK Unlimited Scholars. As a lifelong snow skier, Jim is proud that all four of his children, now in their teens and twenties, are officially better on the black diamonds than he ever dreamed he could be.

Credentials

Bar Admissions

Illinois

Court Admissions

U.S. District Court for the Northern District of Illinois, Trial Bar

Education

DePaul University College of Law
J.D.

DePaul University
M.B.A.

University of Illinois at Urbana-Champaign
B.A.

Insights & Events

Other Perspectives

Leadership & Community

Pro Bono

Jim volunteers his time to teach trial advocacy to the Marist High School Mock Trial Club.

Professional Associations

  • Association of SEC Alumni (ASECA), Director, 2021-24
  • Securities Industry and Financial Markets Association (SIFMA)
  • Investment Adviser Association
  • Futures Industry Association, Law & Compliance Executive Committee Member, 2018-20
  • National Society of Compliance Professionals

Civic Activities

  • Marist High School Law Alumni Association — Vice President

Firm Leadership

  • Co-leader, White Collar Defense and Investigations Team; Co-founder/Co-leader, Best Interest Compliance Team; National Integration Partner; Co-chair, Lateral Recruiting, Chicago Office

Honors

  • Federal Bureau of Investigation (FBI) — Exceptional Service in the Public Interest Award
  • Securities & Exchange Commission (SEC) — Shannon D. Ayers Examination Award of Excellence; Chairman’s Award for Excellence; multiple SEC Director’s Awards; multiple SEC Special Act Awards

Awards Methodology

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