The Binance Monitorship: "There Has Been Nothing Remotely Close to This"

Binance Monitor Must Build an ‘Army’ for Unique Compliance Role

Big Law attorneys, forensic accountants, and crypto consultants began positioning themselves months ahead of a plea deal by Binance Holdings Ltd. to land a lucrative monitorship that’s rife with pitfalls.

The individual chosen after the world’s largest crypto exchange submits its top three preferences to the Justice and Treasury departments this month must build a global operation to inspect Binance’s compliance with anti-money laundering and sanctions laws.

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“There has been nothing remotely close to this when it comes to complexity, length, scope”—and to monitor what was “a criminal enterprise, essentially,” said Jim Richards, the former global head of financial crimes risk management at Wells Fargo.

Bernie Madoff victims get $159 million from Ponzi recovery fund

The fund for victims of Bernie Madoff’s historic Ponzi scheme has begun its ninth payout, distributing about $159 million in government-seized funds to nearly 25,000 people worldwide, the Department of Justice said Monday.

The announcement, made 15 years after Madoff’s arrest — and more than two years after his death in prison — underscored the continuing impact of Madoff’s nearly $65 billion securities fraud scam.

The collapse of the world’s largest fraud scheme “devastated thousands of lives,” said Nicole Argentieri, acting assistant attorney general of the DOJ’s criminal division, in a press release.

With its latest distribution, the fund has paid out over $4.2 billion to more than 40,800 victims who lost money from the scheme, the DOJ said.

Kirkland & Ellis: is it party over for the world’s most profitable law firm?

… Partners at Kirkland & Ellis have invested hundreds of millions of their own dollars in deals done by the private equity groups they advise, say people with knowledge of the firm.

Kirkland’s lawyers have put so much money into their clients’ funds that they have an internal market which enables them, on occasions, to trade their holdings, according to those people. It has been a lucrative sideline for many Kirkland partners, supplementing profit-based remuneration that for top earners routinely exceeds $20mn.

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But as rising interest rates curtail buyout dealmaking and fundraising, the law firm that built its fortune on servicing private equity faces a reckoning. The co-investing perk, which has drawn criticism for the potential conflicts it creates, has become less attractive for partners. Some of them have been left out of pocket after buyout groups struggled to sell assets this year, some of the people said.

SBF’s Lawyer Says Client Was ‘Worst’ Witness He Has Ever Seen

Sam Bankman-Fried went off-script when he took the stand.

That’s the view of David Mills, the behind-the-scenes architect of the FTX co-founder’s defense at trial. The once high-flying crypto mogul repeatedly veered away from his lawyers’ strategy, including on how to handle prosecutors’ tough questions on cross-examination.

“He may be at the very top of the list as the worst person I’ve ever seen do a cross examination,” says Mills, a Stanford Law School colleague and a close friend of Bankman-Fried’s parents.

Musk Can’t Escape Investor Suit Over Flip-Flop on Twitter Buyout

Elon Musk must face a Twitter investor lawsuit that accuses him of fueling uncertainty about his proposed buyout in an effort to drive down the social media platform’s stock price, a California federal judge ruled.

US District Judge Charles Breyer on Monday kept alive claims involving three of Musk’s statements last year about the deal being put on hold and the number of fake accounts on the platform. Musk “did give an impression materially different from the state of affairs that existed,” according to the ruling.

The Cost of Private Fund Regulation

The huge gap between the SEC’s and advisers’ cost estimates is concerning because the SEC routinely justifies its rules on cost-benefit grounds. If the SEC is naïve about how burdensome its rules are, it risks overregulated and slowing down economic growth. On the other hand, it is hard to know how much to trust industry members’ cost estimates. After all, they have an incentive to exaggerate to convince the SEC to loosen up its regulations.

In a new paper, I estimate the cost to private fund advisers of complying with the SEC’s Dodd-Frank-era rules to see whose predictions were more accurate….

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My main conclusion is that the SEC predicted compliance costs far more accurately than most industry commenters. Using administrative data from the SEC, I document that a statistically significant number of advisers bunch beneath the $150 million threshold. Based on the level of bunching I observe, I estimate that the average cost of complying with the SEC’s private fund rules was $54,000 per year from 2013 to 2022. This figure sits comfortably within the SEC’s predicted range but is far below most industry-provided estimates. Additionally, I find that compliance costs appear to have been somewhat higher for private equity fund advisers (around $84,000 per year) than for hedge fund advisers (around $30,000 per year).

Biotech CEO Pleads Guilty to COVID-19 Securities Fraud Scheme

A California man pleaded guilty yesterday to securities fraud, wire fraud, and obstruction of an official proceeding in connection with his scheme to defraud investors by making false and misleading statements about the purported development of a new, blood-based COVID-19 test, leading to millions of dollars in investor losses.

According to court documents, Keith Berman, 70, of Westlake Village, was the CEO and sole director of Decision Diagnostics Corp. (DECN), a public medical device company. Berman and DECN were in precarious financial condition in the lead up to the COVID-19 pandemic, and Berman wrote in internal emails that he needed a “new story” to “raise millions.” Additionally, Berman had spent hundreds of thousands of dollars of company money on personal expenditures, despite publicly claiming not to take any compensation. Faced with these financial difficulties, from February through December 2020, Berman engaged in a scheme to defraud investors by falsely claiming that DECN had developed a 15-second test to detect COVID-19 in a finger prick sample of blood. Despite his claims to the investing public, Berman knew that no such test existed.