Hedge Funds Become Latest Focus in SEC's WhatsApp Probe

WhatsApp Probe Hits Big Hedge Funds as SEC Asks for Phone Review

Major hedge funds have been asked by US regulators to review certain employees’ personal mobile phones as part of a mushrooming probe into Wall Street’s use of unofficial messaging platforms like WhatsApp to conduct business.

The Securities and Exchange Commission recently asked Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel and several other firms to search through the devices for evidence of business dealings on unapproved channels, according to people familiar with the matter who asked not to be identified discussing the private requests. The SEC is also probing the practices of brokerages, money managers and private equity firms.

Shadow ETF trading

But another question you might have is: Does shadow trading happen a lot? Are there a ton of corporate insiders and deal advisers who are regularly making shadow trades in order to profit from inside information? Some casual empirical data:

--Very few people get caught shadow trading; I can only really think of the one enforcement action. This could mean that it is very rare, or conversely it could mean that it happens all the time but the SEC is not in fact looking for it.

--Readers do keep suggesting it to me! I don’t know what that tells you.

Silvergate Faces US Fraud Probe Over FTX, Alameda Crypto Dealings

US prosecutors in the Justice Department’s fraud unit are looking into Silvergate Capital Corp.’s dealings with fallen crypto giants FTX and Alameda Research, according to people familiar with the matter.

The criminal investigation is examining Silvergate’s hosting of accounts tied to Sam Bankman-Fried’s businesses, said the people who asked not to be identified to discuss the confidential probe. The review adds to mounting scrutiny of the La Jolla, California-based bank, which has also drawn the attention of lawmakers.

SEC Considers Easing Climate-Disclosure Rules After Investor PushbackThe Securities and Exchange Commission is considering a softening of planned rules requiring companies to disclose the effects of extreme weather and other costs related to global warming when the regulator completes its climate-change proposals, people close to the agency said.

The Wall Street regulator is looking again at the financial reporting aspect of the climate-disclosure plan it issued last year, following pushback from investors, companies and lawmakers, the people said.

The final version of the SEC rules, expected this year, will likely still mandate some climate disclosures in financial statements, according to the people close to the agency. But the commission is weighing making the requirements less onerous than originally proposed, the people said, such as by raising the threshold at which companies must report climate costs.

Founder of Purported Cryptocurrency Company Sentenced to More Than Eight Years in Prison for Multi-Million-Dollar Fraud Scheme

The founder of “My Big Coin,” a purported cryptocurrency and virtual payment services company headquartered in Las Vegas, Nev., was sentenced today in federal court in Boston for marketing and selling fraudulent virtual currency and operating an unlicensed virtual currency exchange.

Randall Crater, 52, of Lake Mary, Fla., was sentenced by U.S. District Court Judge Denise J. Casper to 100 months in prison and three years of supervised release. Crater was also ordered to pay forfeiture of $7,668,317 and restitution in an amount that will be determined at a later date. In July 2022, Crater was convicted by a federal jury of four counts of wire fraud, three counts of unlawful monetary transactions and one count of operating an unlicensed money transmitting business.

FTX Founder Bankman-Fried Wins Texas Crypto Ruling as States Go After Lost Funds

Embattled FTX founder Sam Bankman-Fried has staved off a case alleging he broke Texas securities laws, after a judge ruled that the state regulator lacks jurisdiction to act against him.

The ruling came in a case brought by the Texas State Securities Board claiming Bankman-Fried offered unregistered securities through FTX’s yield-bearing cryptocurrency accounts and that he now owes refunds to Texas investors.

McDonald’s Ruling Shifts Oversight Liability Focus to Corporate Officers

A judge’s decision to allow a shareholder lawsuit against a former McDonald’s Corp. human resources chief has put corporate executives on alert that they can be held personally liable for failing to oversee the biggest risks confronted by their companies.

The ruling follows a series of Delaware Court of Chancery decisions that have set off alarm bells in corporate boardrooms by making clear that directors can be sued for serious compliance failures. The latest decision by Vice Chancellor J. Travis Laster clarifies that the legal scrutiny doesn’t stop with the board. Corporate officers can also be held to account for failing to do their part, the judge ruled.

Cornerstone Research: Securities Suit Filings Declined in 2022

According to the latest report from Cornerstone Research, the number of securities class action lawsuit filings declined slightly in 2022 relative to 2021, although the number of “core” securities suit filings increased slightly compared to 2021. The report, which is entitled “Securities Class Action Filings: 2022 Year in Review,” and which was published in conjunction with the Stanford Law School Securities Class Action Clearinghouse, notes that the number of new lawsuits involving Section 11 allegations rose 2022, likely due to the surge in IPOs during 2021….