Archegos Founder Hwang Convicted on 10 Counts Following Collapse of Firm

Archegos Founder Bill Hwang Found Guilty on 10 Charges

A jury in federal court in Manhattan on Wednesday found the investor Bill Hwang guilty on charges arising from the collapse of Archegos Capital Management, which led to roughly $10 billion in losses for a handful of big Wall Street banks.

The 12-person jury deliberated for nearly two days after a two-month trial that featured testimony from 21 prosecution witnesses. Two key witnesses were former employees of Archegos, which Mr. Hwang had set up in 2013 as a giant family office that traded like a hedge fund but without much regulatory oversight.

In all, Mr. Hwang, 60, was charged with 11 counts of securities fraud, wire fraud, conspiracy, racketeering and market manipulation. The jury found him guilty on 10 of those charges and found him not guilty on one of the seven counts of market.

What’s Past is Prologue: Enforcing the Federal Securities Laws in the Age of Crypto

In short, my tenure as Director has coincided with extreme volatility and investor risk in the crypto markets. This has been vividly demonstrated by the dramatic increase in the number of complaints about crypto that investors submitted to the SEC’s Office of Investor Education and Advocacy (“OIEA”), from 820 in fiscal year 2019, the first year that OIEA’s annual list of Top Ten Categories of Complaints included crypto, to 5,357 in fiscal year 2023.

In response to this upheaval and rampant noncompliance, we have redoubled our enforcement efforts, some of which I was privileged to highlight in my speech at William & Mary. Perhaps unsurprisingly, there have been even more developments in the crypto markets since those remarks. Just days later, the Pew Research Center released a survey finding that nearly a third of Americans who had ever invested in, traded, or used crypto, no longer held any. The number of lower-income Americans who had gotten out of crypto was even higher, at 43%, providing another vivid rejoinder to the narrative that crypto will uplift the unbanked, help them build wealth, and increase upward mobility.

The same survey found that a whopping three-quarters of Americans who have heard about crypto do not believe that crypto is reliable and safe. Given the continued noncompliance in this space, they have good reasons to be concerned….

New Senate bill bans lawmakers from trading individual stocks

A bipartisan group of Senators unveiled a new proposal that would ban members of Congress, their spouses and dependent children from trading individual stocks.

Oregon Democratic Senator Jeff Merkley, Michigan Senator Gary Peters, Georgia Democratic Senator Jon Ossoff and Missouri Republican Senator Josh Hawley are outlining a new version of a measure dubbed the “ETHICS Act,” Ending Trading and Holdings in Congressional Stocks. Peters, who chairs the Senate Homeland Security and Governmental Affairs committee, pledged his panel would take up the bill in his committee later this month.

Merkley previewed the new proposal in an exclusive interview with NPR, saying, “if you want to serve in Congress don’t come here to serve your portfolio, come here to serve the people.”

SEC’s ‘Swiss Army’ Accounting Law Tested by Cyber Breach Charges

R.R. Donnelley & Sons Co. agreed last month to pay $2.1 million to settle Securities and Exchange Commission charges that the marketing and printing company violated disclosure and internal accounting control rules stemming from a 2021 cybersecurity breach.

The settlement, which comes amid heightened SEC focus on cybersecurity, represents a new—and expansive—take on the accounting control provisions. The regulator included a similar accounting charge in its high-profile suit against SolarWinds Corp., and a federal judge in Manhattan is poised to weigh in on the SEC’s approach.

Applying the accounting rules to a cyber hack is an “incredibly slippery slope,” Hilgers Graben PLLC partner Scott Mascianica said.

“Clearly in the cybersecurity realm it’s fraught with peril for all issuers who are the victim of any hack,” Mascianica, a former SEC lawyer, said. “But you could extrapolate it to a whole host of things.”

$20M and Still Going: Is Partner Pay a Bubble?

“It’s not like the tulip bubble or the tech bubble,” said Alisa Levin, co-founder of the legal search firm Greene-Levin-Snyder, adding that it could slow or stall but “I don’t think it’s going to burst.”

Not long ago, $10 million annually was an astronomical sum for even the highest-profile lateral partners. More recently, $20 million—once “unheard of”—seemed to be the standard of top partner pay at the most elite firms. Now, according to some industry observers, $25 million to $30 million is the new top rung for valuable laterals, high-performing partners and some Big Law leaders: still very rare, but previously unfathomable, and another checkpoint along the route that has Big Law looking more like the big businesses they count as clients.

Trump to Address Bitcoin Event in Show of Support for Crypto

Donald Trump will speak at a Bitcoin conference this month, according to the event’s organizers, an address that would highlight his growing embrace of the cryptocurrency industry.

The presumptive Republican presidential nominee is due to deliver his speech on July 27 on the main stage of the Bitcoin 2024 event in Nashville, Tennessee, organizer BTC Media LLC said in a statement late Wednesday.

Jury Finds Healthcare Company CEO Misled Investors Over Covid-19 Tests

A federal jury has found SCWorx’s former Chief Executive Marc Schessel guilty for his participation in a scheme to mislead investors about the healthcare company’s procurement of Covid-19 rapid test kits.

The jury convicted Schessel, who founded the company in 2012 and headed it until 2021, of two counts of securities fraud, the U.S. Attorney’s Office of the District of New Jersey said Wednesday.

Schessel made false claims in the early days of the Covid-19 pandemic about having a binding contract to acquire millions of Covid tests from an Australian supplier, the prosecutor’s office said, leading to a surge in the company’s share price.

US appeals court rejects lenient test for asset freezes in SEC enforcement actions

A U.S. appeals court has just deepened a split among the federal circuits on the proper test for asset freezes in cases brought by the U.S. Securities and Exchange Commission.

The Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled on Tuesday that the SEC cannot sidestep the stringent, four-part test for obtaining a preliminary injunction when it seeks to freeze the assets of a defendant in an enforcement action.

That conclusion is at odds with precedent from the New York-based 2nd Circuit, which requires the SEC only to meet one element of the four-part test. To obtain an asset freeze in the 2nd Circuit, the SEC must simply establish an inference that a defendant violated federal securities laws.