Insights & Regulatory Updates
SEC Charges North Carolina Resident with Insider Trading in Biopharmaceutical Company
In a recent enforcement action, the Securities and Exchange Commission (SEC) charged Matthew Groom, a North Carolina resident, with insider trading involving the Massachusetts-based biopharmaceutical company, Spero Therapeutics, Inc. According to the SEC’s complaint, Groom used confidential information obtained during his role as an IT consultant for Spero to avoid substantial financial losses ahead of a significant corporate announcement.
SEC Alleges Cumberland DRW Sold $2 Billion in Unregistered Securities
In a new enforcement action that adds fuel to the ongoing regulatory battle over digital assets, the U.S. Securities and Exchange Commission (SEC) has sued Chicago-based crypto trading firm Cumberland DRW. The lawsuit, filed on October 10, 2024, accuses Cumberland of operating as an unregistered broker and handling over $2 billion worth of crypto assets—specifically, tokens like Solana and Polygon—that the SEC claims are unregistered securities.
Start-Up AI and Robotics Company and CEO Face SEC Charges for Investor Fraud
In a recent enforcement action, the Securities and Exchange Commission (SEC) charged Destiny Robotics Corp., a start-up specializing in artificial intelligence (AI) and robotics, along with its founder and CEO, Megi Kavtaradze, for allegedly defrauding investors through false and misleading statements about the company’s operations and products.
Regulatory Update and Recent SEC Actions – October 2024
October 2024 has seen the Securities and Exchange Commission (SEC) continue its aggressive enforcement actions and regulatory updates, targeting a wide range of issues from improper record-keeping to non-compliance with new marketing rules. This month also saw key personnel changes within the SEC, the disbandment of the Climate and ESG Task Force, and the adoption of rules affecting venture capital funds and registered investment companies. Below are the highlights of recent SEC actions and regulatory developments.
SEC Commissioner Mark Uyeda Criticizes Agency’s Crypto Policy as a “Disaster”
In a striking rebuke of the U.S. Securities and Exchange Commission’s (SEC) approach to cryptoc regulation, SEC Commissioner Mark Uyeda publicly criticized the agency's handling of the industry, calling it a "disaster" during a Fox Business panel on October 10. Uyeda's remarks reflect growing internal dissent over how the SEC, under the leadership of Chair Gary Gensler, has enforced crypto policy without providing the much-needed clarity the sector requires.
Is the SEC Finished with NPAs and DPAs in FCPA Cases?
In 2010, the SEC introduced Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) as part of a strategy to strengthen its enforcement efforts by encouraging cooperation from companies and individuals. However, since then, the SEC has rarely used these tools, employing DPAs only twice and NPAs three times, mostly in FCPA enforcement actions. The last use of either agreement was in 2016 in cases involving Nortek and Akamai Technologies. Since then, the SEC has not returned to NPAs or DPAs, raising questions about whether the agency has moved away from these agreements for resolving FCPA cases.
SEC Charges “Magic Mushroom” Company and Two Individuals in $8 Million Pump-and-Dump
The Securities and Exchange Commission (SEC) has filed charges against Minerco Inc. (former over-the-counter ticker: MINE) and two individuals—Bobby Shumake Japhia and Julius Makiri Jenge—in connection with an alleged multimillion-dollar pump-and-dump scheme that defrauded investors out of approximately $8 million. The SEC's complaint alleges that the defendants generated millions of dollars in illicit profits by manipulating the market for Minerco’s stock through deceptive tactics and false promotions.
SEC Chair Gary Gensler on Crypto: ‘It’s Unlikely This Stuff Is Gonna Be a Currency’
In a recent speech at New York University School of Law, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler made headlines with his assertion that cryptocurrencies like Bitcoin (BTC) are unlikely to ever become widely accepted forms of currency. While this statement may have grabbed attention, it largely reiterates what many industry participants already understand: the primary value of crypto assets lies in their utility as a store of value or an investment vehicle, not as a replacement for fiat currencies. Gensler’s comments, while perhaps technically accurate, miss the mark in addressing the real issues facing the crypto industry today.
SEC Charges Three So-Called Market Makers and Nine Individuals in Crypto Crackdown
In a decisive move against market manipulation in the digital asset space, the Securities and Exchange Commission (SEC) recently announced fraud charges against three entities claiming to be market makers, as well as nine individuals. The charges stem from alleged schemes designed to create a false impression of active trading for various crypto assets offered and sold as securities to retail investors.
Pharmaceutical Executive Pleads Guilty to Insider Trading Charges
A former executive of a global pharmaceutical company pleaded guilty today in a Boston federal court to insider trading, admitting to earning more than $250,000 through unlawful trading activities based on confidential information.
New CPA Paths Emerge as States Try to Stem Accountant Shortage
The accounting industry is grappling with a growing workforce shortage, prompting states and professional organizations to rethink traditional pathways to becoming a Certified Public Accountant (CPA). In an effort to attract more candidates to the profession, several states are considering allowing aspiring accountants to bypass a fifth year of education—a long-standing requirement that many see as a significant barrier to entry.
FTX Bankruptcy Judge Approves $14 Billion Payback Plan for Creditors
In a significant development for the crypto industry, a Delaware bankruptcy court has approved a plan for FTX to return more than $14 billion worth of assets to its creditors. The embattled cryptocurrency exchange, which filed for bankruptcy protection in November 2022, previously estimated that it owed creditors around $11.2 billion.
Legal Implications of SEC Jurisdiction Over Secondary-Market Sales of Network Tokens
The ongoing dispute between Foris DAX Inc. ("Crypto.com") and the Securities and Exchange Commission (SEC) represents a pivotal moment in the regulatory landscape for digital assets. Crypto.com is challenging the SEC's assertion of jurisdiction over secondary-market sales of various network tokens, which are typically used to access or interact with blockchain networks.
SEC Adopts Rules Modifying Minimum Pricing Increments, Access Fee Caps, and Order Transparency
On September 18, 2024, the SEC unanimously adopted new rules modifying key aspects of the National Market System (NMS). These amendments affect minimum pricing increments, access fee caps, and order transparency for NMS stocks. The changes, effective in 2025 and 2026, aim to reduce trading costs, enhance market transparency, and better align pricing structures across different stock categories. Notably, the updates will influence trading strategies, compliance measures, and market behaviors, potentially triggering challenges from stock exchanges and other market participants.
October 2024 Regulatory Update
This update delves into recent shifts at the SEC, including leadership changes, policy updates, and enforcement actions that highlight the agency’s ongoing focus on compliance and investor protection. Keith Cassidy has taken over as Acting Director of the Division of Examinations, while Gurbir S. Grewal, Director of the Enforcement Division, has announced his departure.
Securities Enforcement Forum Central 2024 Recap: SEC Enforcement Trends and Strategic Priorities
The Securities Enforcement Forum Central 2024 delivered high-impact discussions on the future of SEC enforcement. With hundreds of top industry professionals gathered at the Ritz-Carlton Chicago, attendees gained exclusive insights into the SEC’s evolving priorities and key challenges—just days before the agency’s fiscal year-end. Highlights included a keynote with the SEC’s Chicago Regional Director, Tina Diamantopoulos, and panels featuring current and former senior SEC officials. Topics ranged from the implications of SEC v. Jarkesy and increased scrutiny on crypto assets, to insider trading strategies and cooperation credit standards.
Avoiding Fundraising Pitfalls: A Securities Lawyer’s Guide for Startups Raising Capital
For many entrepreneurs, raising capital is a necessary step toward building and scaling a successful business. However, raising capital isn’t just about convincing investors of your company’s potential—it’s also about navigating a complex web of federal and state securities laws. Failing to adhere to these regulations can result in serious consequences, ranging from penalties and rescission rights for investors to long-term barriers that impede your ability to raise funds down the road.
Interagency Statement on Supervisory Practices for Financial Institutions Affected by Hurricane Helene
In light of the widespread damage and disruptions caused by Hurricane Helene, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and state financial regulators have issued an interagency statement to provide regulatory guidance and relief to financial institutions operating in the impacted regions.
DOJ Takes Aim at Visa’s Dominance in Debit Card Market: Antitrust Lawsuit Alleges Anti-Competitive Tactics
The U.S. Department of Justice has launched an antitrust lawsuit against Visa, accusing the payments giant of exploiting its dominance in the debit card market to stifle competition and impose exorbitant fees on consumers and businesses. The suit, filed in the U.S. District Court for the Southern District of New York, claims that Visa uses its market power to pressure merchants, banks, and financial institutions into using its proprietary payment processing network, resulting in billions of dollars in fees that are ultimately passed on to consumers.
From Likes to Lawsuits: FINRA Flags Compliance Pitfalls in Influencer Marketing and Crypto Promotions
With social media influencers dominating the advertising space and crypto assets all the rage, it's no surprise that financial firms are exploring new ways to reach clients and promote products. However, the recent insights from FINRA’s Advertising Regulatory Conference highlight a cautionary tale for firms rushing to leverage these trendy marketing tactics: proceed with caution, and bring your compliance team along for the ride.