The Day Before Securities Enforcement Forum 2023

A Wild Few Minutes Drive BTC Price Above $35,000 as Bitcoin ETF Optimism Starts to Thaw the Crypto Winter

It was exciting enough for crypto observers when bitcoin (BTC) topped $31,000 on Monday.

And then its price went straight up. Late in the day, bitcoin took out $32,000, then $33,000, then $34,000 and finally $35,000 in just a few minutes. Perpetual contracts listed on Binance’s exchange almost topped $36,000.

The original cryptocurrency was back at levels last seen in May 2022, before the Terra-Luna, Three Arrows Capital, Genesis and FTX debacles turned the mood so sour that BTC approached $15,000 and the very survival of the industry was, to some, called into question.

But the mood has improved markedly, fueled largely by prospects that bitcoin ETFs – which promoters say will make it dramatically easier to buy BTC, potentially hugely broadening the pool of potential investors – are on the way.

BlackRock’s spot Bitcoin ETF now listed on Nasdaq trade clearing firm — Bloomberg analyst

The iShares spot Bitcoin exchange-traded fund (ETF) proposed by investment firm BlackRock has been listed on the Depository Trust & Clearing Corporation (DTCC), suggesting potential approval by the United States Securities and Exchange Commission.

In an Oct. 23 X (formerly Twitter) thread, Bloomberg ETF analyst Eric Balchunas said the DTCC listing was “all part of the process” of bringing a crypto ETF to market. The iShares spot Bitcoin has a ticker symbol of IBTC for a possible listing on the Nasdaq stock exchange, which applied to list and trade shares of the investment vehicle in June.

The Supreme Court Should Curb the SEC’s Excessive Penalties

The governing statutes permit a maximum penalty of $11,000 to $1.1 million for a violation of the securities laws, but the SEC has used the laws to extract extremely large civil monetary penalties from defendants, especially in settled cases.

In 2022, several large broker-dealers agreed to pay a penalty of $125 million each because they failed to keep records of instant messages. In 2010, the SEC obtained a $535 million penalty from Goldman Sachs for a single transaction.

Sky-high penalties in SEC enforcement cases are possible because the maximum statutory penalty amounts are for “each violation” of the securities laws. The method of counting the number of violations is limited only by human ingenuity.

Did a broker-dealer commit one violation when the document retention system did not cover WhatsApp, or did it commit a violation with each of the tens of thousands of instant messages it didn’t retain.

Tesla Confirms Probe Into Executive Perks and Related-Party Deals

Federal prosecutors have sent subpoenas to Tesla seeking information about executive perks, deals with related parties and decisions to hire or fire employees, the electric-vehicle maker disclosed Monday.

Tesla’s quarterly report to investors confirmed the investigation previously reported by The Wall Street Journal. The Manhattan U.S. Attorney’s Office is scrutinizing personal benefits that Tesla may have provided Elon Musk since 2017, including a proposed house for the chief executive, the Journal reported in September.

Not Regulators’ Job to Tell Americans What They Can and Can’t Speculate On: SEC Commissioner Hester Peirce

In a new interview with CNBC, Peirce says that as a US regulator, it’s not her job to tell people what they can or cannot purchase or speculate on.

“I think people speculate about lots of different things, especially in low-interest rate environments. People speculate about lots of things. It’s not my job as a regulator to tell people what they can and can’t purchase and what they can and can’t speculate about.”

According to the SEC Commissioner, speculation is one of the driving forces of the American economy. Peirce says that the regulators’ role is to provide a framework, which should not be mistaken as a “seal of approval” for the assets in question.

Fifth Circuit Rejects Challenge to Nasdaq’s Board Diversity Rules

In a lengthy and detailed opinion, the Fifth Circuit has rejected two petitions challenging the SEC’s approval of Nasdaq’s board diversity rules. The rules require most Nasdaq-listed companies to have women and minority directors on their boards or explain why they don’t. The petitioners had argued that the rules violated constitutional free speech and equal protection provisions and also violated the SEC’s obligations under the Exchange Act and under the Administrative Procedures Act (APA). A unanimous three-judge panel rejected these arguments, in effect upholding the rules. The Fifth Circuit’s opinion can be found here.