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Clients turn to David Kornblau, chair of the firm’s Securities Enforcement practice group, to represent them in sensitive and complex investigations, securities litigation, and internal investigations.
Chambers USA has ranked him for many years as one of the nation’s leading practitioners in securities enforcement, noting that he is "particularly adept at analyzing the weakness of a case through the prism of litigation and casting his clients' interests in the best possible light." His most recent ranking included a comment from a client who praised his "excellent judgment and perfect diplomatic touch with regulators."
Mr. Kornblau’s clients include investment banks, public companies, stock exchanges, asset management firms, senior executives, portfolio managers, and traders. As a former senior SEC Enforcement official and SEC trial lawyer, Mr. Kornblau uses his in-depth knowledge of the agency’s internal workings and personnel to help clients successfully navigate potentially damaging investigations. And as a former senior member of a sophisticated in-house legal department, he knows the importance of handling matters cost-effectively, communicating clearly and concisely, and keeping a keen eye on the client’s key strategic objectives.
A ten-year veteran of the SEC’s Division of Enforcement, he served as an SEC trial attorney and Chief Litigation Counsel during the “Enron Era” of large-scale corporate investigations and heightened enforcement activity. He also served as a Special Assistant U.S. Attorney in a criminal securities fraud prosecution. Before joining Covington in 2009, Mr. Kornblau was a Managing Director and the Head of Global Regulatory Affairs at Merrill Lynch, where he oversaw the firm’s responses to all regulatory and law-enforcement investigations.
- Negotiated a global settlement terminating five separate SEC investigations of the New York Stock Exchange. No individuals were charged, and no intentional wrongdoing was alleged.
- Achieved settlements with the SEC for two broker-dealers limited to alleged books-and-records violations.
- Persuaded the SEC to drop an intensive investigation of a public company’s revenue recognition practices.
- Defended a senior executive of a public company and a former senior portfolio manager of a large hedge fund in separate SEC insider trading investigations. Neither client was charged.
- Handled a novel and cost-effective settlement of an emergency SEC administrative action against a public company to deregister its stock based on its failure to file quarterly and annual reports. The settlement, achieved in eight days, allowed trading of the company’s stock to resume immediately and relieved the company of any obligation to cure its past filing deficiencies.
- Achieved a highly favorable settlement for the New York Stock Exchange in a widely reported SEC action involving the exchange’s dissemination of market data. No fraud or intentional wrongdoing was alleged, and no individuals were charged.
- Convinced a federal judge to narrow the scope of an SEC asset-freeze order in litigation against sixteen members of the Wyly family in the Southern District of New York.
- Significantly reduced the severity of SEC sanctions against two asset managers accused of breaching their fiduciary duties.
- Represented a large regional bank in an SEC inquiry concerning its mortgage loan repurchase reserve. The SEC took no action against our client.
- Represented a global technology company in an SEC investigation of its revenue recognition practices. The SEC took no action against our client.
- Defended swaps traders in a CFTC investigation of potential manipulation of an interest-rate benchmark.
- Represented FX traders in the global investigations of possible manipulation of foreign currency exchange markets.
- Represented a major investment bank in CFTC, SEC, and CBOE inquiries arising from the "flash crash" on May 6, 2010. The SEC took no action against our client.
- Negotiated a favorable settlement on behalf of a major investment bank in a FINRA investigation of alleged large proprietary wash sales.
- Conducted an internal investigation on behalf of a financial services firm into an alleged retaliatory discharge by its chief compliance officer.
- Represented a head subprime mortgage trader and other mortgage trading desk employees of several major investment banks in investigations by the SEC, the U.S. Attorney’s Office for the Northern District of California, the New York Attorney General’s Office, and the Nevada Attorney General’s Office. No charges were brought against any of our clients.
- Defended Merrill Lynch in dozens of investigations concerning, for example, subprime mortgage securities, auction rate securities, information barriers, institutional sales and trading, retail brokerage, pension consulting services, research analysts, mutual funds, municipal securities, and Treasury securities.
Pro Bono
- Co-lead counsel for the Disability Rights Network of Pennsylvania in a landmark civil rights action and settlement, which achieved a state-wide overhaul of Pennsylvania’s policies and practices for prisoners with serious mental illness.
October 9, 2020, Covington Alert
Last week, the SEC announced settled enforcement actions against two public companies and two former senior executives based on small allegedly improper quarterly accounting adjustments that cumulatively overstated the companies’ reported earnings per share (EPS) by as little as one penny. These actions arise from the agency’s ongoing EPS initiative, which ...
September 29, 2020, Covington Alert
Last week, a divided Securities and Exchange Commission amended its whistleblower rules, hailing the changes as adding “clarity, efficiency and transparency to its successful whistleblower program.” Although the agency made a large number of changes to the program, the amendments should not have a significant overall effect on SEC whistleblower activity, which ...
June 24, 2020, Covington Alert
On June 22, 2020, in Liu v. SEC, the U.S. Supreme Court, by an 8-1 majority, upheld the SEC’s decades-old practice of seeking disgorgement of ill-gotten gains from securities law violators in civil enforcement actions filed in federal district court. The SEC’s victory, however, was tempered by the Court’s insistence that disgorgement must be strictly limited to ...
January 8, 2020, Covington Alert
In United States v. Blaszczak,[i] a divided panel of the Second Circuit held that the federal wire fraud statute and a rarely used securities fraud statute criminalize insider trading beyond the reach of what is covered by the statute historically used to prosecute the offense. The decision may lead to an increase in insider trading prosecutions, including those ...
October 8, 2019, Covington Alert
A pharmaceutical company, Mylan, N.V., recently paid $30 million to settle an SEC enforcement action alleging multiple disclosure failures arising from an investigation by the Department of Justice.
October 2, 2019, Covington Alert
The enforcement staff of the Public Company Accounting Oversight Board (“PCAOB”) recently issued guidance for when it will recommend to the PCAOB disclosing the identity of non-party audit clients in disciplinary orders against auditors. The guidance confirms a policy change that we identified earlier this year.
SEC Chairman's Stance on Waivers Gives Companies More Certainty But Does Little to Stem Controversy
July 15, 2019, The Wall Street Journal
David Kornblau is quoted in The Wall Street Journal regarding a new SEC policy which will change the agency’s stance on waivers. According to Mr. Kornblau, the new policy doesn’t substantively change the SEC’s decision-making process on waivers, but it may make it easier for companies to enter into settlement agreements. “It allows the companies to make those ...
June 20, 2019, Hedge Fund Law Report
David Kornblau spoke with Hedge Fund Law Report to discuss the Wells notice process. Discussing the process—in which the SEC sends a letter to people or firms notifying them of impending enforcement—Mr. Kornblau says, “The pre-Wells process is a way for the staff to get feedback on the investigation without triggering a six‑month deadline for filing an ...
February 27, 2019, Covington Advisory
On February 26, 2019, the Public Company Accounting Oversight Board (“PCAOB”) for the first time issued disciplinary orders against auditors that protected the identity of the auditors’ client. In the past, the PCAOB had a practice of identifying the audit client by name in disciplinary orders if the matter involved violations of auditing standards by the ...
October 5, 2018, Covington Alert
Over 3,000 commenters submitted letters to the Securities and Exchange Commission ("SEC") concerning the agency's recently proposed amendments to its whistleblower rules. This response reflects the perceived importance of the SEC's proposal to companies and employees.
July 19, 2018, Covington Alert
Last week, in SEC v. Cohen, a federal district court dismissed an SEC enforcement action, in its entirety, on statute-of-limitations grounds. Most notably, citing the Supreme Court’s 2017 Kokesh decision, the court held that the injunction sought by the SEC in the case "would function at least partly to punish Defendants and is therefore a penalty" for purposes ...
June 21, 2018, Bloomberg Law
David Kornblau is quoted in a Bloomberg Law article regarding the Supreme Court's ruling that SEC in-house judges are constitutional officers, a decision that left open the status of 1,900 other officials in similar roles at agencies including the Federal Energy Regulatory Commission, National Labor Relations Board, and the Environmental Protection Agency. ...
April 24, 2018, Covington Alert
On Wednesday, April 18th, the SEC introduced a much-anticipated package of proposed rules and formal guidance concerning the standards of conduct for financial professionals. The more than 1,000-page proposal, which emerged eight years after Congress required the agency to conduct a study on the topic, addresses whether investment advisers and broker-dealers ...
March 28, 2018, Commercial Dispute Resolution
Commercial Dispute Resolution highlights the arrival of David Luttinger and Gerald Hodgkins at Covington. Commenting on Luttinger's addition, Mitchell Dolin says that the firm was “drawn to his superb national reputation as a trial lawyer in the coverage field and to his strengths as an individual and colleague.” According to David Kornblau, Hodgkins’ “broad ...
February 23, 2018, Covington Alert
On Wednesday, the Supreme Court issued its much-anticipated decision in Digital Realty Trust, Inc. v. Somers. Ruling 9-0, the Court held that the Dodd-Frank Act prohibits retaliation against whistleblowers only if they reported suspected wrongdoing directly to the SEC.
February 22, 2018, Law360
David Kornblau is quoted in a Law360 article regarding the Supreme Court's decision in Digital Realty Trust Inc. v. Paul Somers. According to Kornblau, the justices essentially found that the argument in favor of a narrow definition of whistleblower was “so lopsided” that “they didn’t really need to get into any of the subtleties about the Chevron doctrine.” He ...
February 12, 2018
WASHINGTON—Gerald Hodgkins has joined Covington as a partner in the Securities Litigation and Enforcement and White Collar Defense and Investigations practices in Washington. Mr. Hodgkins most recently served as an Associate Director in the Enforcement Division of the Securities and Exchange Commission and has worked at the SEC’s Enforcement Division since ...
Former SEC Enforcer Joins Covington's DC Office
February 12, 2018, Law360
Gerald Hodgkins and David Kornblau are quoted in a Law360 article regarding Hodgkin's recent arrival as a partner in Covington's Securities Litigation and Enforcement and White Collar Defense and Investigations practices. Hodgkins says he is looking forward to “enhancing” Covington’s SEC enforcement practice, as well as complementing its white collar and ...
Attys Eye Cases Impacting SEC Enforcement Powers In 2018
January 1, 2018, Law360
David Kornblau is quoted in a Law360 article regarding upcoming Supreme Court cases that could impact how the SEC regulates the financial industry. Commenting on the Digital Realty litigation, which could lead to a ruling on the broader issue of the Chevron doctrine, Kornblau says, “If the court goes down that road, it might call into question all kinds of ...
Whistleblower Retaliation: How Companies Should Prepare for the Supreme Court’s Upcoming Decision
December 15, 2017, New York Law Journal
Whistleblower Case Could Widen Into A Chevron Challenge
November 27, 2017, Law360
David Kornblau is quoted in a Law360 article regarding the upcoming Supreme Court case focusing on the reach of whistleblower protections under the Dodd-Frank Act. According to Kornblau, if the high court expands the scope of the case to include a review of the Chevron doctrine it could have important ramifications for all federal regulatory agencies in terms of ...
SEC enforcement ebbs in 2017
November 20, 2017, Compliance Reporter
David Kornblau is quoted in a Compliance Reporter article regarding the SEC's annual enforcement report for 2017. According to Kornblau, the report showed a decrease in enforcement actions compared to the prior year, as the industry expects a downshift in regulation by the agency under new SEC Chair Jay Clayton. “My sense is that the overall level of new ...
Whistleblower Protections Here To Stay, Expert Says
October 27, 2017, Law360
David Kornblau participated in a panel discussion at the Securities Enforcement Forum 2017 and is quoted in a Law360 article examining an upcoming Supreme Court ruling in a case challenging the Dodd-Frank Act's ban on retaliation against whistleblowers. According to Kornblau, the main takeaway for companies and employees watching the case is “what’s not at ...
October 26, 2017, The National Law Journal
David Kornblau participated in a panel discussion at the Securities Enforcement Forum 2017 and is quoted in a National Law Journal article. Commenting on whistleblower protections ahead of an upcoming Supreme Court decision, Kornblau says, "For companies, there really are risks either way this case comes out."
September 29, 2017, Law360
David Kornblau is quoted in a Law360 article regarding the effect the Supreme Court's upcoming docket may have on the legal framework for the securities industry. Commenting on the Digital Realty litigation, which focuses on the reach of Dodd-Frank Act’s whistleblower protections, Kornblau says, "This is one where the agency has actually gone through the process ...
June 15, 2017, Regulatory Compliance Watch
David Kornblau is quoted in a Regulatory Compliance Watch article regarding the Supreme Court's decision mandating a five-year statute of limitations on disgorgement assessed by the SEC. Commenting on the SEC's options, Kornblau says that one thing that the agency could do is rename disgorgement, “calling it restitution." The agency could argue that restitution ...
June 13, 2017, Business Insurance
David Kornblau is quoted in a Business Insurance article regarding the effect of the Supreme Court ruling in Kokesh on SEC disgorgement attempts. According to Kornblau, “It’s a highly significant ruling, not only because of the statute of limitations, but because it puts into play whether the SEC has the power to obtain disgorgement from a federal court in any ...
June 7, 2017, Covington Alert
On Monday, in Kokesh v. SEC, the Supreme Court handed a major loss to the Securities and Exchange Commission, unanimously holding that SEC claims for disgorgement of ill-gotten gains are subject to a five-year statute of limitations. The Kokesh decision also calls into question the proper measure of disgorgement (e.g., gross versus net profits) and even whether ...
June 7, 2017, Covington Alert
On Monday, in Kokesh v. SEC,1 the Supreme Court handed a major loss to the Securities and Exchange Commission, unanimously holding that SEC claims for disgorgement of ill-gotten gains are subject to a five-year statute of limitations. For decades, the SEC had taken the position that its disgorgement claims could reach back indefinitely, and recently obtained a ...
Industry digests 2017 SEC exam priorities
January 31, 2017, Compliance Reporter
David Kornblau is quoted in a Compliance Reporter article regarding industry’s reaction to the SEC’s 2017 examination priorities. “I think everybody is waiting with bated breath to see if the priorities and philosophy of the agency will take a different direction once Clayton and other commissioners are confirmed,” says Kornblau. “We are all in a guessing game ...
January 19, 2017, Covington Alert
Contractors are used to the Defense Contract Audit Agency scrutinizing their internal accounting practices, but in a recent cautionary tale a contractor found itself in the crosshairs of another federal law enforcement agency: the Securities and Exchange Commission (SEC). In a settlement recently made public, defense contractor L3 Technologies, Inc. (L3) agreed ...
January 4, 2017, Covington Alert
One piece of the ongoing debate over the Securities and Exchange Commission’s use of Administrative Law Judges to adjudicate enforcement actions may be heading to the U.S. Supreme Court. On December 27, 2016, in Bandimere v. SEC, the U.S. Court of Appeals for the Tenth Circuit invalidated SEC sanctions against an individual on the ground that the ALJ who ...
The Supreme Court Limits Newman, But the Government Still Faces Obstacles in Insider Trading Cases
December 8, 2016, Covington Alert
On December 6, 2016, in the first insider trading case the Supreme Court has decided in nearly two decades, the Court, in Salman v. United States, unanimously upheld a conviction for trading based on material non-public information provided by the defendant’s brother-in-law as a gift. The decision was a big win for the Department of Justice and the Securities ...
September 30, 2016, Covington Alert
The U.S. Securities and Exchange Commission (SEC) continues to aggressively pursue companies using severance and other employment agreements that could be perceived to discourage employees from reporting possible securities law violations. Three enforcement actions this past summer demonstrate the need for companies to proactively review and give consideration ...
September 28, 2015, Covington Alert
SEC Enforcement: Recommendations on Current Processes and Practices
July 15, 2015, U.S. Chamber of Commerce
January 9, 2015
NEW YORK, January 9, 2014 — Covington helped litigate and negotiate a settlement with the Pennsylvania Department of Corrections that paves the way for better treatment of prisoners with serious mental illness. Covington represented the Disability Rights Network of Pennsylvania in a civil litigation in the U.S. District Court for the Middle District of ...
Law360's SEC Survival Guide: The Wells Notice And Beyond
July 31, 2014, Law360
Covington partner David Kornblau is quoted regarding SEC investigations: "For a response aimed at the commission level, for example, know which aspects of the case might have a policy angle or get the attention of media, other law enforcement agencies or Congress, says David Kornblau, co-chairman of Covington & Burling LLP’s securities enforcement practice. ...
Attys Ready To Pounce On SEC's Outdated Admin Rules
June 18, 2014, Law360
David Kornblau is quoted regarding the U.S. Securities and Exchange Commission’s administrative proceedings.
Covington Lawyers Recognized by New York Super Lawyers
9/18/2013
NEW YORK, September 18, 2013 — New York Super Lawyers selected 36 Covington & Burling lawyers for its 2013 list of top legal talent. Super Lawyers selects no more than five percent of the total lawyers in the state based on peer review and the publication’s independent research. Twenty-three Covington lawyers were named New York Super Lawyers: • Martin ...
June 27, 2013, Covington E-Alert
April 18, 2013
WASHINGTON, DC, April 18, 2013 — Covington & Burling partners David Kornblau and Jonathan Sperling have been named recipients of the “2013 Burton Awards for Legal Achievement.” Their article, “Market Manipulation and Algorithmic Trading: The Next Wave of Regulatory Enforcement?” won in the legal writing for law firms category. The article, originally published ...
3/11/2013, Bloomberg BNA Securities Regulation & Law Report
Material Non-Public Information
3/21/2012 and 3/23/2011, Securities Industry and Financial Markets Association Compliance & Law Society Annual Seminar
February 20, 2012, Bloomberg BNA Securities Regulation& Law Report
September 27, 2011, Covington E-Alert
June 9, 2011
WASHINGTON, DC, June 10, 2011 — Covington & Burling LLP received 92 individual mentions and 32 practice mentions in the Legal 500 US 2011 edition. Legal 500 reviews the strengths and strategies of law firms in more than 90 countries in Europe, the Middle East, Asia, North and South America, and the Caribbean. Here are the Covington lawyers and practices ...
March 7, 2011, Securities Industry and Financial Markets (SIFMA) Law & Compliance Society
September 23, 2010, Covington E-Alert
Impact of Dodd-Frank on SEC Enforcement
September 16, 2010, Securities Litigation Committees of the New York City and District of Columbia Bar Associations
July 21, 2010, Covington Advisory
July 1, 2010, Covington E-Alert
Insider Trading: The Changing Landscape of Enforcement and Investigation Trends
June 25, 2010, ACI Hedge Funds & Investment Advisers Conference
Commencing the Investigation
June 8, 2010, PLI Internal Investigations Conference
April 29, 2010, Covington E-Alert
January 14, 2010, Covington E-Alert
SEC Inspections and Examinations in the Post-Madoff Era
November 23, 2009, PLI's Hedge Fund Enforcement & Regulatory Developments
Auditor Independence Update
October 15, 2009, ABA Securities Fraud Institute
September 15, 2009, Securities Law 360
5/18/2009
NEW YORK, NY, May 18, 2009 — Covington & Burling LLP is pleased to announce that David Kornblau, former Chief Litigation Counsel for the Securities and Exchange Commission’s Division of Enforcement, has joined the firm as a partner. He will be a member of Covington’s white collar and securities enforcement and litigation practices, and will be resident in the ...
- Benchmark Litigation, White Collar Crime Local Litigation Star and National Practice Area Star
- The Legal Aid Society, Pro Bono Publico Award (2016)
- Chambers USA - America's Leading Business Lawyers, Securities/Regulation/Enforcement (2012-2020)
- Legal 500 US, Litigation: Securities (2015-2017) and Financial Services: Litigation (2014)
- Finalist, Public Justice Foundation Trial Lawyer of the Year Award (2015)
- Burton Award for Legal Achievement (2013)
- New York Super Lawyers, Securities Litigation (2013-2019)
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