Court Imposes Sanctions Against SEC in DEBT Box Case

SEC Blasted by Judge for ‘Abuse of Power’ in Crypto Case Against DEBT Box

A federal judge in Utah took the extremely unusual step of sanctioning the Securities and Exchange Commission, saying that the regulator abused its authority in a case against crypto platform Digital Licensing Inc., known as DEBT Box.

The SEC’s conduct “constitutes a gross abuse of the power entrusted to it by Congress and substantially undermined the integrity of these proceedings and the judicial process,” Robert Shelby, a federal district court judge in Salt Lake City, said in an 80-page legal filing on Monday. He also ordered the agency to pay DEBT Box’s attorney’s fees and other costs related to the restraining order that the regulator had sought against the crypto platform.

Does the Plaintiff Law Firm Matter in Securities Suit Outcomes?

IWe have all seen the various league tables showing which plaintiffs’ firms have had the highest average securities class action settlements. But do these firms wind up at the top of the tables because they produce better outcomes for the plaintiff class, or do they produce these results simply because they are better at winning the race to become lead counsel in the better cases? As three academics put it in their recent paper, “do the plaintiffs’ lawyers matter”?

In their paper, New York Law Professor Stephen J. Choi, University of Richmond Law Professor Jessica M. Erickson, and University of Michigan Law Professor Adam C. Pritchard survey securities class action lawsuit settlements in order to determine whether the “top tier” plaintiffs’ firms actually produce better outcomes for the plaintiff class. Interestingly, the authors conclude that while the top firms produce better outcomes in a narrow subset of cases, in most other cases they do not. The authors suggest these observations have important implications for both claimants and courts. The authors’ paper can be found here. The authors’ March 12, 2024, column in the CLS Blue Sky Blog about their paper can be found here.

KPMG Inspection Cheating Case Wraps But Painful Lessons Linger

One of the worst ethics breaches in the modern era of auditing ended with a fizzle recently as the last criminal conviction tied to a scheme to falsely inflate KPMG’s inspections results was tossed out.

The federal criminal case may have crumbled but that doesn’t negate the legacy of the inspections cheating scheme that tarnished the reputation of one of the largest firms in the US and undermined a process that is meant to protect investors.

SEC FISCAL YEAR 2025 CONGRESSIONAL BUDGET JUSTIFICATION

On behalf of the U.S. Securities and Exchange Commission (SEC), I am pleased to submit the fiscal year (FY) 2025 budget request of $2.594 billion in support of 5,621 positions and 5,073 full-time equivalents. As the SEC’s funding is deficit neutral, any amount appropriated to the agency will be offset by transaction fees.

Evergrande Accused of Falsifying Revenue by $78 Billion

China Evergrande Group, the defaulted developer at the heart of China’s real estate crisis, falsely inflated revenue by more than $78 billion in the two years leading up to its failure, according to the nation’s top securities regulator.

Evergrande’s main onshore unit Hengda Real Estate Group boosted its 2019 income by about 214 billion yuan ($29.7 billion) by recognizing sales in advance, and another 350 billion yuan in the 2020 annual results, the developer said in a filing Monday, citing a notice from the China Securities Regulatory Commission.

World’s Largest Pension Fund Seeks Information on Bitcoin Under Portfolio Diversification Plan

Japan’s state pension fund, the world’s largest, is seeking information on bitcoin (BTC) as it considers options for portfolio diversification in response to changes in society, the economy and technology.

The Government Pension Investment Fund (GPIF), which has $1.4 trillion in assets under management, requested data on potential investment diversification tools such as bitcoin and precious metals like gold, which the company considers illiquid and does not currently hold, it said Tuesday.