Everything Everywhere All at Once

Plus we are still looking for white smoke in the SEC Chair search.

Author

Bruce Carton
December 04, 2024

Good morning! Here’s what’s up—basically everything, everywhere, all at once. Here’s a live look at me trying to write today’s newsletter:

People

Kevin O'Connor, former U.S. attorney for Connecticut (and former counsel in the SEC’s Division of Enforcement, as well as chief legal officer at Carrier and Point72) is joining Lockheed Martin as senior vice president, general counsel and corporate secretary.

👉 Mr. O’Connor will be a panelist at the upcoming Securities Enforcement Forum New York:

Mark Sylvester has been named Co-Chief of the SEC Division of Enforcement’s Crypto Assets and Cyber Unit.

👉 Mr. Sylvester will be a panelist at the upcoming Securities Enforcement Forum New York:

Laura D'Allaird has been named Co-Chief of the SEC Division of Enforcement’s Crypto Assets and Cyber Unit.

Clips ✂️

SEC Charges Kiromic BioPharma and Two Former C-Suite Executives with Misleading Investors about Status of FDA Reviews

The Securities and Exchange Commission today filed settled charges against Houston-based biotherapeutics company Kiromic BioPharma, Inc., its former CEO, Maurizio Chiriva-Internati, and its former chief financial officer, Tony Tontat, for failing to disclose material information about Kiromic’s two cancer fighting drug candidates before, during, and after a July 2021 follow-on public offering that raised $40 million. Kiromic and Tontat have agreed to settle the SEC’s charges in separate administrative proceedings and Chiriva has agreed to settle the charges in federal district court. Kiromic was not ordered to pay a civil penalty in light of its self-reporting, cooperation, and remediation, and Chiriva and Tontat agreed to pay civil penalties of $125,000 and $20,000, respectively, to settle the SEC’s charges.

***

According to the SEC’s order against Kiromic, the company raised $40 million in a public offering on July 2, 2021, for the purpose of funding the prospective clinical trials for its two cancer fighting drug candidates, the ALEXIS-PRO-1 and the ALEXIS-ISO-1. However, the SEC’s order found that two weeks before the public offering, the Food and Drug Administration (FDA) notified Kiromic that it had placed the drug candidates on clinical hold—an FDA order to delay the proposed clinical investigations. The SEC’s order also found that Kiromic did not disclose the FDA clinical holds in its SEC filings, investor roadshow calls, or during due diligence calls leading up to the offering, despite the fact that Kiromic disclosed the hypothetical risk of a clinical hold and the potential negative consequences on Kiromic’s business….

by SEC Press Release

👉 The SEC Orders are here (Kiromic), here (Tontat) and here (Chiriva-Internati).

Trump’s Top SEC Chair Pick Paul Atkins Reluctant to Take Job: Source

A lot of stars would need to align for Paul Atkins, reportedly president-elect Donald Trump’s top candidate to chair the U.S. Securities and Exchange Commission, to take the job.

It is an unattractive role for him because of the amount of work needed to turn around the bloated agency he believes was mismanaged by outgoing SEC chair Gary Gensler, a person familiar with Atkins’ thinking said.

Reluctance to clean up Gensler’s “mess” has been shared by former Commodity Futures Trading Commission chair Chris Giancarlo, who has advocated for Atkins to take the SEC job and was once considered a candidate himself.

Atkins, a former SEC commissioner, was spotted at Trump’s Mar-A-Lago resort this week, one industry source said. He was scheduled to interview for the SEC chair role Sunday and Monday, said another person with knowledge of the meetings.

by CoinDesk

Elon Musk blasts ruling denying him $100 billion pay package

McCormick’s ruling elicited backlash not just from Musk but from Tesla bulls as well as business figures who accused her of overstepping her bounds.

“Judge McCormick is an activist judge at its worst,” Cathie Wood, founder and CEO of ARK Invest and a major Tesla shareholder, wrote on X.

“No judge has the right to determine CEO compensation. Shareholders voted twice, overwhelmingly each time, to ratify @elonmusk’s 2018 performance-based pay package. She will lose this fight in Supreme Court.”

Paul Graham, co-founder of the venture capital firm Y Combinator, wrote on X: “It used to be automatic for startups to incorporate in Delaware. That will stop being the case if activist judges start overruling shareholders.”

Graham added in a follow-up post that he was told by the CEO of a public company that “all startups should reincorporate in Nevada.”

by NY Post

👉 As discussed in this post by Kevin LaCroix on The D&O Diary, “a recent law review article by Yale Law Professor Jonathan R. Macey addresses the question whether, in light of the recent case law developments in the state’s courts, Delaware corporations will now be ‘Leaving for Las Vegas.’”

Top Audit Regulator ‘Proud’ of Record as Agency Shakeup Looms

The US audit board’s chair heralded her record holding auditors accountable even as she’s at risk of losing her job soon amid an expected shakeup of the Enron-era regulator.

Erica Williams, chair of the Public Company Accounting Oversight Board, touted a near record number of rule-writing projects, expanded inspection reports, and more costly penalties for violations. She also reprised her concerns that an inspection violation rate of 46% is unacceptable and urged auditors to not be “complacent” as they launch into year-end financial reporting season.

by Bloomberg Law

👉 According to this FT article, some critics of the PCAOB view the change in Administration as a chance to close down the PCAOB altogether. This would involve “giving the agency’s work to the SEC to save roughly $64mn a year.”

Coinbase CEO Threatens Law Firms Over Government Hires

Coinbase Global Inc. is warning its law firms not to hire any anti-crypto government lawyers or risk losing the company’s work in what could be a sign of things to come for Biden administration attorneys.

Coinbase CEO Brian Armstrong wrote in a post on X on Dec. 2 that “we’ve let all the law firms we work with know, that if they hire anyone who committed these bad deeds in the (soon to be) prior administration, we will no longer be a client of theirs.”

Armstrong then singled out Milbank LLP’s hire of Gurbir Grewal in October, who was the former enforcement director of the US Securities and Exchange Commission, saying the firm “messed up” while noting that “we don’t work with them now (and never will while he works there).”

by Bloomberg Law

👉 Bloomberg reports that at a New York City Bar Association panel yesterday, Grewal said “the thing to make clear here is none of our work here was motivated by an animus toward an industry or to pick winners or losers…. We took a certain approach and there’s been a tremendous amount of frustration with that approach.”

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Ex-Celsius CEO Alex Mashinsky to Plead Guilty in US Fraud Case

Alex Mashinsky, the charismatic co-founder of crypto lender Celsius Network, pleaded guilty to two counts of fraud in one of the last cases stemming from the widespread upheaval that shook digital currencies two years ago.

Mashinsky, 59, was charged last year with artificially inflating the price of his platform’s CEL token in a bid to attract customers, generating $42 million in personal profits. He changed his plea to guilty at a hearing in Manhattan Tuesday.

Source: Ex-Celsius CEO Alex Mashinsky to Plead Guilty in US Fraud Case – Bloomberg

by Bloomberg

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