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Gerald Hodgkins

Gerald Hodgkins has a broad securities enforcement practice focused on representing financial institutions, public companies and individuals in investigations and enforcement actions brought by the key financial regulators. A former Associate Director in the U.S. Securities and Exchange Commission’s Division of Enforcement, Jerry has extensive experience in matters before the SEC, with particular focus on public company accounting and disclosure, broker-dealer and investment adviser regulation, and U.S. anti-corruption law. He also represents clients in matters before the Public Company Accounting Oversight Board (PCAOB), the Financial Industry Regulatory Authority (FINRA) and the U.S. Department of Justice.

Since joining Covington in 2018, Jerry has represented or advised more than fifty Fortune 500 companies in matters involving the U.S. securities laws, including five Fortune 10 and ten Fortune 50 companies.  He also has represented or advised ten of the one hundred largest financial services firms in the U.S. as ranked by Fortune magazine. 

During his 20-year tenure at the SEC, Jerry oversaw more than 100 enforcement matters, covering the entire breadth of the SEC’s law enforcement authority. In addition to matters involving financial services regulation and public company oversight, Jerry oversaw multiple investigations involving insider trading, the Foreign Corrupt Practices Act (FCPA), and municipal securities regulation. The enforcement actions he oversaw included the largest penalty in SEC history for issuer reporting and disclosure fraud (SEC v. WorldCom), the first, and still largest, settlement involving the clawback of executive compensation under Section 304 of the Sarbanes-Oxley Act of 2002 (SEC v. William W. McGuire, M.D.), and the final dispositions in the SEC’s actions against former Enron officers, including summary judgment obtained by the SEC against Jeffrey K. Skilling, former Enron president, COO and CEO.

In 2023, Jerry was elected to a second term on the steering committee of the Corporation, Finance and Securities Law Community of the DC Bar. He frequently speaks at conferences and continuing education programs and has authored several articles focused on SEC enforcement.

In his free time, Jerry is principal trumpet for the Maryland-based Symphony of the Potomac.

Contact:Read more about Gerald HodgkinsEmail

On December 12, 2024, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (“NHTSA”) announced the publication of a final rule formalizing its whistleblower program. The Final Rule was officially published in the Federal Register on December 17, fulfilling an obligation established by Congress in 2015 under the Motor Vehicle Safety Whistleblower Act (“MVSWA”). 

The program provides for awards to current and former industry employees and contractors who report “original information” that leads to a successful resolution in which the federal government collects sanctions from automotive companies exceeding $1 million. Whistleblower awards can range from 10% to 30% of the collected sanctions. See 49 U.S.C. § 30172. 

Whistleblower awards are limited to recoveries for certain types of monetary sanctions. Notably, the relevant action must be brought by the “Secretary [of the Department of Transportation], NHTSA, or the U.S. Attorney General” under 49 U.S.C. Chapter 301, the part of the Motor Vehicle Safety Act (“MVSA”) containing defect and noncompliance reporting and recall provisions. 89 Fed. Reg. 101,952, 101,955 (Dec. 17, 2024) (to be codified at 49 C.F.R. § 513). Recoveries for other types of civil or criminal violations are excluded, “even if [they] involve vehicle safety issues and/or are based on facts common to an action taken under 49 U.S.C. Chapter 301.” 89 Fed. Reg. at 101,956. Actions brought by “other agencies” or “by the U.S. Department of Justice under any statute other [than] 49 U.S.C. Chapter 301” are, therefore, not covered. Although Chapter 301’s requirements are substantial, this limitation is likely to have significant implications. Companies that are involved in parallel-track or sequential enforcement actions will not face a potential NHTSA whistleblower award based on other types of alleged violations and enforcement actions. For example, any recoveries by the DOJ based on allegations of conspiracy, fraud, fraudulent statements or related violations, even if they “are based on” facts in common with a Chapter 301 violation, will not provide the basis for a MVSWA whistleblower award. 

The Final Rule’s publication follows NHTSA’s earlier publication of a Notice of Proposed Rulemaking (“NPRM”) in April 2023. NHTSA noted in the Final Rule that it “adopted the proposed rule without significant changes,” despite numerous comments on the NPRM. 

A number of the Final Rule’s features merit consideration by automotive companies. Of particular interest are (1) the Final Rule’s definition of “independent knowledge;” (2) NHTSA’s decision not to expand the internal reporting prerequisite; (3) NHTSA’s decision not to exclude directors, officers, and compliance function employees from whistleblower eligibility; (4) NHTSA’s decision not to render persons convicted of a related crime by a foreign tribunal ineligible as whistleblowers; and (5) NHTSA’s decision not to exclude information obtained by unlawful conduct subject to civil liability.Continue Reading NHTSA Publishes Whistleblower Program Final Rule

On Monday, November 7, the Supreme Court heard argument in Axon Enterprise, Inc. v. FTC and SEC v. Cochran to decide whether a party subject to an FTC or SEC administrative proceeding can simultaneously challenge the constitutionality of an administrative proceeding, or even of the agency itself, in federal district court rather than waiting for final agency action.  At least five Justices expressed some measure of support for the private parties’ arguments, which indicates that the Court may permit certain kinds of collateral constitutional attacks (e.g., due process and appointments clause claims) at the outset of administrative proceedings.

Although predicting the outcome of any case from the oral argument is extremely difficult, three Justices – Neil Gorsuch, Samuel Alito, and Clarence Thomas – expressed strong support for finding in Axon’s and Cochran’s favor. Through their questions, they implied that 28 U.S.C. Section 1331, which grants federal district courts “original jurisdiction of all civil actions arising under the Constitution of the United States,” provides a clear grant of jurisdiction over constitutional claims and neither the FTC Act nor the Securities Exchange Act of 1934 (“the Exchange Act”) could strip district courts of that jurisdiction. They also suggested that Free Enterprise Fund v. PCAOB requires a finding for the companies. In PCAOB, the Court held that a district court had jurisdiction to hear an appointments clause challenge to PCAOB’s structure despite the fact that the SEC had not yet issued a final order against Free Enterprise Fund.

Other justices appeared to favor the private parties, but not as overtly. Chief Justice John Roberts’s questions suggested that PCAOB may prove to be an insurmountable barrier to the government’s claims and that the availability of jurisdiction in other forums (i.e., the court of appeals) under the FTC Act and the Exchange Act clearly does not act as an implied removal of jurisdiction from Section 1331. Justice Brett Kavanaugh’s questions indicated that he believes that the issue may be decided solely by reference to the “wholly collateral” factor of the Thunder Basin test, which courts have used to guide determinations about when a party may bring an Article III challenge to agency proceedings before those proceedings have concluded. Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (holding that the statutory review scheme of the Federal Mine Safety and Health Amendments Act of 1977 precludes a district court from exercising subject-matter jurisdiction over a pre-enforcement challenge to the Act). He stated that clarity, certainty, and speed counseled in favor of permitting district courts to hear constitutional claims.Continue Reading Supreme Court Considers Whether to Allow Early Constitutional Challenges to FTC and SEC Administrative Proceedings