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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, related 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 said, "If I was going to litigate with the SEC, I would want him on my team."
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.
- Persuaded the SEC to drop an intensive investigation of a public company’s revenue recognition practices.
- 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.
- Successfully 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.
- 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.
- Defending swaps traders in an ongoing CFTC investigation of potential manipulation of an interest-rate benchmark.
- Representing 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.
- Successfully represented a trader in a NYSE Regulation inquiry concerning wash sales in equity index-linked notes.
- Successfully represented a trader in a FINRA inquiry concerning a former colleague's alleged mismarking of credit default index tranche positions.
- 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.
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 the SEC and potentially other federal government agencies have authority to seek disgorgement at all.
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 to pay $1.6 million to settle charges it had violated SEC recordkeeping requirements.
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 presided over the proceeding was hired in violation of the U.S. Constitution’s Appointments Clause. The decision directly conflicts with the D.C. Circuit’s August 2016 decision in Lucia v. SEC.
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 and Exchange Commission, in that it overruled a key aspect of the Second Circuit’s 2014 decision in United States v. Newman, which had curtailed the government’s ability to bring insider trading cases when the insider did not financially benefit from passing the confidential tip. In so doing, Salman reaffirmed the continuing validity of a central holding in the Supreme Court’s 1983 decision in Dirks v. SEC—that liability can exist when “an insider makes a gift of confidential information to a trading relative or friend.” Nonetheless, because the Court decided Salman narrowly, it left in place legal hurdles that DOJ and the SEC may have trouble clearing if they continue to bring far-reaching insider trading cases, especially those involving multiple tiers of tippees.
November 18, 2016, Law360
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 to any provision in an employee agreement that could be interpreted as impeding whistleblowing activity—regardless of whether the agreement has actually stifled potential whistleblowers or was intended to do so.
February 4, 2016, Covington Alert
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
May 16, 2013, Covington E-Alert
May 1, 2013, Law360
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
March 11, 2013, Covington E-Alert
Attorney-Client Privilege: Practical Guidance
February 11, 2013
November 25, 2012, Bloomberg View
September 27, 2012, Covington E-Alert
August 22, 2012, Covington E-Alert
March 28, 2012, Covington E-Alert
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 14, 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
The Law of Open-Market Manipulation
October 21, 2009
Auditor Independence Update
October 15, 2009, ABA Securities Fraud Institute
Recent Developments in Insider Trading Law
September 30, 2009
September 15, 2009, Securities Law 360
August 7, 2009, Covington E-Alert
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 ...
- The Legal Aid Society, Pro Bono Publico Award (2016)
- Chambers USA - America's Leading Business Lawyers, Securities/Regulation/Enforcement (2012-2017)
- 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 (2013-2016)