Insights & Regulatory Updates
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.
SEC Announces Departure of Enforcement Director Gurbir S. Grewal; Sanjay Wadhwa Named Acting Director, Sam Waldon Named Acting Deputy Director
On October 2, 2024, the Securities and Exchange Commission (SEC) announced the departure of Gurbir S. Grewal, Director of the Division of Enforcement, effective October 11, 2024. Following his departure, Sanjay Wadhwa, the current Deputy Director of the Division, will step into the role of Acting Director. Meanwhile, Sam Waldon, Chief Counsel of the Division, will assume the position of Acting Deputy Director.
Key Takeaways from SEC Fraud Charges Against the Kubient Officers
In early October, the Securities and Exchange Commission (SEC) filed accounting fraud charges in the U.S. District Court for the Southern District of New York against the CEO, CFO, and Audit Committee Chair of Kubient, Inc. Kubient, a technology company that claims to employ artificial intelligence to detect fraud in digital advertising, is now at the center of an enforcement action highlighting serious governance failures at the highest levels of management.
SEC Charges Accountant Olayinka Oyebola and His Firm With Aiding and Abetting Massive Fraud
The Securities and Exchange Commission (SEC) has taken significant enforcement action against Olayinka Oyebola and his accounting firm, Olayinka Oyebola & Co. (Chartered Accountants), alleging their role in a sprawling securities fraud orchestrated by Mmobuosi Odogwu Banye, a businessman with an ambitious—and, it turns out, fictitious—empire of U.S.-based companies.
SEC Charges Keurig Over Misleading Recyclability Claims of K-Cup Pods
On September 10, 2024, the SEC charged Keurig Dr Pepper Inc. (Keurig) with making misleading statements regarding the recyclability of its widely used K-Cup coffee pods. The action is part of the SEC’s ongoing initiative to combat “greenwashing”—the practice of making exaggerated or unsubstantiated claims about a company’s environmental practices or products.
SEC Enforcement Sweep Targets Companies and Insiders for Late Filings under Section 16 and 13(d), (g), and (f)
The SEC’s fiscal year is winding down, and once again, we are seeing what is becoming a predictable, if not formalized, year-end tradition: a broad Enforcement sweep targeting companies and insiders for failing to meet timely filing requirements under Sections 16(a), 13(d), 13(g), and 13(f) of the Exchange Act. This year, 23 respondents—both corporate entities and individuals—were charged for violations stemming from late short-swing trading reports (Forms 3, 4, and 5) and beneficial ownership reports (Schedules 13D and G). Penalties ranged from $10,000 to $750,000, totaling more than $3.8 million. The SEC’s use of data analytics to identify these reporting failures continues to demonstrate the agency’s commitment to leveraging technology to enforce even technical compliance obligations.
New FinCEN AML Rule Brings Heightened Scrutiny to Registered and Exempt Reporting Investment Advisers
On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) finalized a rule that imposes new Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) program requirements on registered investment advisers (RIAs) and exempt reporting advisers (ERAs). For the first time, these advisers will be formally recognized as “financial institutions” under the Bank Secrecy Act (BSA), and thus subject to its AML/CFT regulations. The new rule will go into effect on January 1, 2026, signaling a significant shift for both RIAs and ERAs, who will need to implement comprehensive compliance programs to meet these requirements.
SEC Updates Dollar Threshold for Qualifying Venture Capital Funds: What It Means for the Industry
On August 22, 2024, the Securities and Exchange Commission (SEC) adopted a new rule that updates the dollar threshold for a fund to be considered a "qualifying venture capital fund" under the Investment Company Act of 1940. The rule raises the threshold from $10 million to $12 million in aggregate capital contributions and uncalled committed capital, reflecting inflation adjustments mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.
The Aftermath of PFAR’s Demise: Navigating Private Equity Compliance in a New Regulatory Landscape
The recent vacating of the Securities and Exchange Commission’s (SEC) Private Fund Adviser Rules (PFAR) by the Fifth Circuit Court has sent ripples through the private equity (PE) industry. What was initially viewed as a burdensome regulatory overhaul for PE firms is now seen as a moment of reprieve, but also a pivotal point that raises larger questions about the future of SEC oversight. While many private equity firms are breathing a sigh of relief, this regulatory pause is unlikely to signal the end of increased scrutiny from the SEC. In fact, firms may need to prepare for a more nuanced and evolving approach to compliance in the wake of PFAR’s collapse.