Bloomberg: SEC Enforcement Pace Under Trump Roughly the Same as Under Biden

SEC Fraud Enforcers Keep Pace Under Trump Despite Crypto Retreat

The SEC is maintaining roughly the same volume of cases under the Trump administration as it had previously, even as it pulls back on Biden-era actions targeting crypto and securities dealers and contends with potential personnel and funding cuts.

The Securities and Exchange Commission filed 44 enforcement actions from Inauguration Day to the end of June, compared with 48 filings over the same stretch last year, a Bloomberg Law review found.

“Everyone expected there to be a lot less SEC activity, because there’s been downsizing of government and a change in priorities,” said Mark Bini, a partner at Reed Smith LLP who represents companies in government investigations and litigation. “But I suspect that we are going to see a lot of these traditional heartland cases, because they’ve narrowed the focus.”

Enchanting, but Not Magical: A Statement on the Tokenization of Securities

Blockchain technology has unlocked novel models for distributing and trading securities in a “tokenized” format. Tokenization may facilitate capital formation and enhance investors’ ability to use their assets as collateral. Enchanted by these possibilities, new entrants and many traditional firms are embracing onchain products. As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities. Accordingly, market participants must consider—and adhere to—the federal securities laws when transacting in these instruments.

AI Tools in the Boardroom

Artificial Intelligence (AI) tools and processes are becoming increasingly pervasive in many industry sectors and in many phases of business. AI use is also spreading to corporate processes and functions. For example, as I recently noted, some companies many be using AI tools to draft the MD&A in their periodic reports. And, at least according to a recent post in the Harvard Law School Forum on Corporate Governance by lawyers from the Debevoise law firm, some corporate boards may be “adopting AI meeting tools to assist with the drafting of board and committee minutes.” As the memo’s authors note, board adoption of AI tools for these purposes may offer some benefits, but the use of the tools also entails risk, which board members will want to take into account in using the tools.

We’re Leaving Delaware, And We Think You Should Consider Leaving Too

It used to be a no-brainer: start a company, incorporate in Delaware. That is no longer the case due to recent actions by the Court of Chancery, which have injected an unprecedented level of subjectivity into judicial decisions, undermining the court’s reputation for unbiased expertise. This has introduced legal uncertainty into what was widely considered the gold standard of U.S. corporate law. In contrast, Nevada has taken significant steps in establishing a technical, non-ideological forum for resolving business disputes. We have therefore decided to move the state of incorporation of our primary business, AH Capital Management, from Delaware to Nevada, which has historically been a business friendly state with fair and balanced regulatory policies.

We could have made this move quietly, but we think it’s important for our stakeholders, and for the broader tech and VC communities, to understand why we’ve reached this decision. For founders considering a similar move, there is often a reluctance to leave Delaware, based in part on concerns for how investors will react. As the largest VC firm in the country, we hope that our decision signals to our portfolio companies, as well as to prospective portfolio companies, that such concerns may be overblown. While we will continue to fund companies incorporated in Delaware, we believe Nevada is a viable alternative and may make sense for many founders.