Considering the Attorney-Client Privilege Issues Raised in SEC's Dispute With Covington

Attorney-Client Confidentiality at Stake in Covington’s Dispute With SEC? White-Collar Lawyers Weigh In

Covington & Burling’s dispute with the Securities and Exchange Commission over regulators’ access to client information has implications for the sanctity of attorney-client relationships, according to white-collar lawyers contacted for this report.

The SEC sued the firm early this week, demanding that it comply with a subpoena for the identities of 298 clients whose information was reported to have been breached during a 2020 cyberattack. Regulators say they are investigating the possibility of insider trading or other securities violations that resulted from the 2020 breach, not necessarily involving the firm’s clients.

If the regulatory body succeeds in compelling the firm to hand over the client names, that decision may set a precedent guiding future litigation involving government investigations.

Just How Common Is Corporate Fraud?

Mr. Dyck is a professor of finance at the University of Toronto, who just published a provocative new study on the pervasiveness of corporate fraud. The study has been passed around in the world of academia in recent weeks, and has become a fascination among general counsels, corporate leaders and investors.

It suggests that only about a third of frauds in public companies actually come to light, and that fraud is disturbingly common. Mr. Dyck and his co-authors estimate that about 40 percent of companies are committing accounting violations and that 10 percent are committing what is considered securities fraud, destroying 1.6 percent of equity value each year — about $830 billion in 2021.

The Crypto Collapse and the End of the Magical Thinking That Infected Capitalism

I have come to view cryptocurrencies not simply as exotic assets but as a manifestation of a magical thinking that had come to infect part of the generation who grew up in the aftermath of the Great Recession — and American capitalism, more broadly.

For these purposes, magical thinking is the assumption that favored conditions will continue on forever without regard for history. It is the minimizing of constraints and trade-offs in favor of techno-utopianism and the exclusive emphasis on positive outcomes and novelty. It is the conflation of virtue with commerce.

Where did this ideology come from? An exceptional period of low interest rates and excess liquidity provided the fertile soil for fantastical dreams to flourish. Pervasive consumer-facing technology allowed individuals to believe that the latest platform company or arrogant tech entrepreneur could change everything….

CoinDesk Broke Big News About FTX. Now the News Is Closer to HomeThe article, by Ian Allison, raised the profile and readership for CoinDesk, one in a sea of publications that started up over the past decade to cover cryptocurrencies. Many of the publications have been accused of fawning over the industry, particularly as it shot to new heights in 2020. Some, including CoinDesk, are in the unusual position of covering an industry that helps fund their operations, setting off debates about their independence.

But now, the complications for CoinDesk are even greater. One of the businesses owned by its parent company, Digital Currency Group, a venture capital firm with stakes in numerous crypto projects, faces its own financial troubles and questions about its operations. It is part of the broader fallout in the crypto industry since FTX’s collapse.

AG Platkin Launches Office to Combat Securities and Financial Crimes

Attorney General Matthew J. Platkin today announced the creation of a new office within the Division of Criminal Justice that will focus on pursuing major financial crimes, including securities fraud, and holding white collar criminals accountable for their wrongdoing.

The newly created Office of Securities Fraud and Financial Crimes Prosecutions (OSFFCP) will enhance existing efforts to prosecute financial crimes by creating a dedicated office charged specifically with investigating and prosecuting crimes that undermine the fairness and integrity of our financial systems, exploit investors, and prey on vulnerable individuals across the State of New Jersey and beyond.