1-2 Punch: Supreme Court Follows Jarkesy With Loper Opinion, Overruling Chevron

Supreme Court’s Chevron Ruling Limits Power of Federal Agencies

The Supreme Court on Friday reduced the power of executive agencies by sweeping aside a longstanding legal precedent, endangering countless regulations and transferring power from the executive branch to Congress and the courts.

The precedent, Chevron v. Natural Resources Defense Council, one of the most cited in American law, requires courts to defer to agencies’ reasonable interpretations of ambiguous statutes. There have been 70 Supreme Court decisions relying on Chevron, along with 17,000 in the lower courts.

The decision is all but certain to prompt challenges to the actions of an array of federal agencies, including those regulating the environment, health care and consumer safety.

SEC Charges Consensys Software for Unregistered Offers and Sales of Securities Through Its MetaMask Staking Service

The Securities and Exchange Commission today charged Consensys Software Inc. with engaging in the unregistered offer and sale of securities through a service it calls MetaMask Staking and with operating as an unregistered broker through MetaMask Staking and another service it calls MetaMask Swaps.

According to the SEC’s complaint, since at least January 2023, Consensys has offered and sold tens of thousands of unregistered securities on behalf of liquid staking program providers Lido and Rocket Pool, who create and issue liquid staking tokens (called stETH and rETH) in exchange for staked assets. While staked tokens are generally locked up and cannot be traded or used while they are staked, liquid staking tokens, as the name implies, can be bought and sold freely. Investors in these staking programs provided funds to Lido and Rocket Pool in exchange for the liquid tokens. The SEC’s complaint alleges that Consensys engages in the unregistered offer and sale of securities by participating in the distribution of the staking programs and operates as an unregistered broker with respect to these transactions.

Binance must face bulk of US SEC crypto lawsuit, judge rules

A federal judge ruled late Friday that the majority of a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance, the world’s largest cryptocurrency exchange, can proceed.

The decision by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia deals a blow to Binance, which had asked the court to toss the SEC’s lawsuit that alleges Binance and its founder and former CEO Changpeng Zhao broke securities laws.

***

The ruling adds to the exchange’s woes after Binance agreed in November to pay $4.3 billion to settle with the Department of Justice and the Commodity Futures Trading Commission over illicit finance breaches.

Still, Friday’s ruling marks a partial victory for the broader cryptocurrency sector as she sided with a previous judge in saying that the SEC had not made its case that secondary sales of Binance’s tokens – sold by sellers other than Binance on exchanges- were not securities.

Wall Street Law Firms Are in a Poaching Frenzy. Kind of Like the N.B.A.

Hotshot Wall Street lawyers are now so in demand that bidding wars between firms for their services can resemble the frenzy among teams to sign star athletes.

Eight-figure pay packages — rare a decade ago — are increasingly common for corporate lawyers at the top of their game, and many of these new heavy hitters have one thing in common: private equity.

***

This is pushing up lawyers’ pay across the industry, including at some of Wall Street’s most prestigious firms, such as Kirkland & Ellis; Simpson Thacher & Bartlett; Davis Polk; Latham & Watkins; and Paul, Weiss, Rifkind, Wharton & Garrison. Lawyers with close ties to private equity increasingly enjoy pay and prestige similar to those of star lawyers who represent America’s blue-chip companies and advise them on high-profile mergers, takeover battles and litigation.

Numerous people compared it to a star-centric system like the N.B.A., but others worried that higher and higher pay had gotten out of hand and could strain the law firms forced to stretch their budgets to keep talent from leaving.

Peak ‘Roaring Kitty’? Dog-Tweet Rally Shows His Power and Limits

The latest social-media frivolity this week from the man known as Roaring Kitty sent traders frantically reading into a cartoon featuring, of all things, a dog.

Was Keith Gill getting into WOOF? (Petco Health & Wellness Co.) Perhaps PET? (Wag! Group Co.) Or, quite possibly, the company that was co-founded by Ryan Cohen, GameStop Corp.’s current chief executive, CHWY? (Chewy Inc.)

His legions of retail traders — tracking @TheRoaringKitty on X and u/DeepF——ingValue on Reddit — didn’t wait to find out. Each stock jumped by at least 12% after the dog post, triggering trading halts that in pre-meme years were usually reserved for merger news or management changes.

Incident Response Plans Are Now Accounting Controls? SEC Brings First-Ever Settled Cybersecurity Internal Controls Charges

The settlement marks a striking expansion of the SEC’s view of its oversight authority relating to public company cybersecurity policies and procedures. In particular, the SEC Enforcement Division’s “expansive interpretation” of Section 13(b)(2)(B)—the internal accounting controls provision added to the Securities Exchange Act of 1934 (the “Exchange Act”) by the Foreign Corrupt Practices Act of 1977 (the “FCPA”)—as covering incident response policies is in clear tension with the Director of the SEC’s Division of Corporation Finance’s (“Corp Fin”) recent statement disclaiming any intent on the part of the Commission to prescribe particular cybersecurity risk management policies and procedures. The RRD settlement also troublingly suggests that, in the wake of a successful cyberattack, public companies can expect the Enforcement Division to pursue any substantial intrusion as evidence of an underlying per se internal controls violation.

1H24 Securities Suit Filings Project YE Totals Ahead of Last Year’s Pace

The number of federal court securities class action lawsuit filings in the year’s first half reflected a filing pace that projects year-end numbers ahead of last year’s full-year totals.

According to my tally, there were 109 federal court securities class action lawsuit filings in the first six months of 2024. (Please note that the figures in this post do not include or discuss state court securities class action lawsuit filings.) The first-half filings, if annualized for the full twelve months of the year, suggest a year-end total number of filings of 218, ahead of the 213 securities suits filed in full-year 2023. But while the year-end projected number suggests a slight increase over 2023, it is worth noting that the 108 2024 first-half filings total was actually slightly behind the 114 filings in the first half of 2023.