DOJ and SEC Bear Down on Private Funds

DOJ, SEC Will Keep Ramping Up Enforcement Around Private Funds

When the SEC announced its 2022 examination priorities last March, regulation of private equity and hedge funds, or private funds, was listed at the very top. The SEC explained it intended to focus on those funds’ “compliance programs, fees and expenses, custody, fund audits, valuation, conflicts of interest, [and] disclosures of investment risks,” among other things.

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The SEC is not the only regulator focused on private funds.

The US Attorney’s Office for the Southern District of New York, which has historically brought an outsized number of financial cases, expressly stated at a securities conference in March 2022 that it was focused on private equity and hedge funds.

Since then, prosecutors in the Southern District have brought criminal charges against individuals associated with Archegos Capital Management, Infinity Q Capital Management, and Allianz Global Investors US—all investment advisers that operated hedge funds marketed to institutional and high net worth investors.

Wall Street Firm Set to Reap Millions for Untangling FTX Empire

Sullivan & Cromwell, after surviving a push to kick it off the FTX bankruptcy, stands to reap huge fees to sort out the finances of Sam Bankman-Fried’s fallen crypto empire.

The Wall Street law firm has more than 150 people working on the FTX case, including 30 partners with rates that exceed $2,000 per hour, according to a court filing. Associates are billing between $810 and $1,475 per hour.

Costs for lawyers and others working on the case will likely climb to the hundreds of millions of dollars before the bankruptcy is over. “To untangle the financials and then figure out what to do in the actual Chapter 11, there are going to be a lot of humans working,” said Nancy Rapoport, a University of Nevada Las Vegas law professor.

White House Calls on Congress to ‘Step Up Its Efforts’ on Crypto Regulation

Four senior U.S. officials in the Biden administration published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market.

The officials – Brian Deese, director of the National Economic Council; Arati Prabhakar, director of the White House Office of Science and Technology Policy; Cecilia Rouse, chair of the Council of Economic Advisors; and National Security Advisor Jake Sullivan – wrote that Congress “should expand regulators’ powers to prevent misuses of customers’ assets … and to mitigate conflicts of interest.”

Other suggestions for Congress in the statement included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners.

Adani accuses short-seller Hindenburg of attacking India“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani’s statement said.

In response, the Hindenburg firm denied the accusations and said Adani’s response largely confirmed its findings and failed to address key questions. It said the group was trying to conflate its rise with the success of India itself.

“We believe India is a vibrant democracy and emerging superpower with an exciting future. We also believe India’s future is being held back by the Adani Group,” Hindenburg said in a statement. “We also believe that fraud is fraud, even when it’s perpetrated by one of the wealthiest individuals in the world,” it said.

Perella Weinberg London HQ Searched in Insider Trading Probe

Perella Weinberg Partners LP London headquarters were searched this week as part of a German insider trading investigation.

The investment bank was searched by officials on Jan. 25. Frankfurt prosecutors are looking into allegations that a London-based employee at the bank disclosed information on planned takeovers and other suspects traded on that, according to people familiar with the matter. Perella Weinberg suspended the employee, they said.

Sam Bankman-Fried’s dog can attack on command using secret word

Disgraced former cryptocurrency mogul Sam Bankman-Fried has reportedly enlisted the services of a 75-pound dog who is trained to attack on command using a secret code word.

The family of the fallen FTX founder recently purchased Sandor, a German shepherd who is described by Forbes magazine as “welcoming, but trained to attack with the utterance of a secret word.”

Sandor is the last line of defense for Bankman-Fried, who is under house arrest at the $4 million Palo Alto, Calif. home of his parents, Stanford law professors Joseph Bankman and Barbara Fried.