Jim partners with investment advisory firms, broker-dealers, hedge funds, futures trading firms, public and private companies, and their boards and committees on regulatory enforcement matters. With Jim’s deep financial regulatory enforcement experience, he is also called upon by peers to serve as an expert witness and consulting witness regarding SEC and CFTC practices.
Investigations and Enforcement
Jim has helped clients shut down high-stakes SEC investigations with no charges filed, and he has negotiated down SEC settlement demands by hundreds of millions of dollars. He also develops appropriate strategies for avoiding OCIE enforcement referrals and examination significant deficiencies.
While serving as associate general counsel at a futures and securities firm affiliated with a European-based global bank, Jim handled matters involving complex futures, derivatives and securities transactions before the CFTC, SEC, Financial Industry Regulatory Authority (FINRA), Chicago Mercantile Exchange (CME), National Futures Association and Chicago Board Options Exchange. He previously worked on the trading floors of the Chicago Board of Trade and the CME.
Compliance and Policy
Jim helps financial clients achieve and maintain regulatory compliance. He assesses and revises policies, procedures, processes and controls, and he develops remediation plans to correct issues. Jim has served as an independent compliance monitor, and he assesses and provides counsel regarding best-interest compliance, fiduciary compliance and other regulatory issues impacting financial services firms.
Additionally, Jim gives clients a voice in SEC policy issues. He represents clients in meetings with the SEC Chair and Commissioners and their counsels and senior staff regarding developing and new rules, including Regulation Best Interest. Jim also prepares and submits comment letters to the SEC.
- SEC Division of Enforcement — Served as a Senior Trial Counsel and as a Branch Chief for nine years
- SEC Office of Compliance Inspections and Examinations — Served as a Senior Regulatory Counsel for three years and assisted with leading the SEC’s examination program for the Midwest Region
- Represented a dually-registered SEC investment adviser and broker-dealer in an investigation conducted by the SEC’s Asset Management specialty unit after a referral from OCIE and obtained termination notices for both the investment adviser and the broker-dealer closing the investigation without charges. This was despite OCIE’s deficiency letter alleging obstruction of justice and securities fraud violations by the firm.
- Represented a sub-advisor 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 this mutual fund losing almost $100 million of the mutual fund’s holdings (after a potential notional loss of nearly $275 million), due to unforeseeable extreme market volatility. SEC CFI investigated this sub-advisor for securities fraud, amongst other purported violations, but through a series of presentations and other advocacy efforts, they were persuaded to close the matter without taking action.
- Appointed by the Hon. Judge 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.)
- Representing a chief executive officer and the public company 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 chief financial officer, and subsequent charges against him and certain other officers of the company. Also provided counsel to the company’s board of directors and audit committee regarding these issues.
- Represented the chief compliance officer of a large mutual fund complex in an investigation conducted by the SEC’s New York Regional Office regarding 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 an investment advisory firm in the SEC’s Share Class Disclosure Initiative (SCSD Initiative). 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 strategic efforts resulted in the SEC issuing a termination notice and not charging this client, despite the self-reporting.
- Represented a futures trader affiliated with a futures commission merchant (FCM) regarding CFTC and CME Market Regulation investigations into the trader’s and the FCM’s practices regarding alleged manipulative trading in certain exchange 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 multiple investment advisory firms around the country across from 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.
- Co-led an internal investigation of a global public company 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 against the client.
- 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 certain 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 to a technical compliance violation, a five-figure penalty, and no individual bar.
- 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 that the issues were not quantitatively or qualitatively material to require self-reporting, and then developed and implemented a remediation plan to detect and prevent said or similar conduct.
- Represented an investment adviser in an SEC investigation that preceded the SCSD Initiative regarding this firm’s practices, disclosures, and conflicts of interest regarding Rule 12b-1 fees and shareholder services fees. After the completion of its investigation, the SEC demanded a multi-million dollar settlement. Strategic negotiations resulted in a favorable resolution of the matter for approximately half of the SEC’s initial demand and no findings of any “willful” violations.
- 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.
- Represented a proprietary trading firm in an investigation by CME Market Regulation 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 Market Regulation settlement demand.
- Retained to represent a European-based SEC foreign registrant in an SEC parallel investigation related to a former principal indicted for public corruption and bribery by the Department of Justice.
- 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.
- Representing an investment adviser in a “sweep”-type investigation regarding the firm’s disclosures and practices related to its use of brokerage services and the expenses, priorities, and conflicts of interest related to those services and the firm’s best execution obligations.
- Representing multiple clients across from SEC Regional Offices around the country regarding the SEC’s revenue sharing disclosure investigations, and representing multiple clients regarding the SEC’s SCSD Initiative follow-up investigations for firms who elected not to self-report.
- Representing multiple futures traders in investigations by the CFTC into their trading and alleged spoofing.
- Working with multiple brokerage clients in defending against FINRA enforcement and examination matters.
- Retained by a cryptocurrency consulting firm to provide counsel regarding the registration requirements for the futures and securities industries.
- Represented a national municipal finance consulting firm in a voluntary examination by OCIE regarding SEC municipal adviser registration issues. Through advocacy efforts during the examination process, OCIE became educated that the client’s business practices did not trigger the SEC municipal adviser registration requirements. OCIE closed its examination without referring the matter to SEC Enforcement or finding significant deficiencies.
- Representing a client in an examination by OCIE regarding investments in illiquid assets and the valuation practices and related disclosures regarding said assets.
- Regularly requested by clients to assist with high-stakes examinations by OCIE to advise on appropriate strategies for avoiding significant deficiencies and enforcement referrals, and to counsel clients in assessing and revising policies, procedures, processes, and controls.
- 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 regarding the SEC and CFTC enforcement practices for a litigated proceeding in Europe regarding the LIBOR scandals.
- 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 OCIE.
- Retained to serve as an expert witness regarding the SEC regulatory requirements that are applicable to representatives departing one firm and joining another.
- Loyola University — Taught securities regulation for 11 years
Jim is actively involved in his community and was previously a member of his children’s school’s athletic association board for nine years. He also coaches youth sports.