House Oversight Committee Threatens to Subpoena SEC Over "Stonewall"

House Republican Comer Demands SEC Turn Over Documents on ESG, EU

A top House Republican is threatening to subpoena the Securities and Exchange Commission for any documents about US involvement in crafting European Union environmental, social and governance regulations that GOP lawmakers say harm American businesses.

House Oversight Committee Chairman James Comer expressed concern to SEC Chairman Gary Gensler in a letter Thursday that the agency is trying to “stonewall” the Republican panel’s investigation into whether the US cooperated with the EU on its climate directives.

50 state regulators tell court to throw the book at Coinbase

An association of state securities regulators has filed an amicus brief in support of the U.S. Securities and Exchange Commission’s (SEC) case against Coinbase (NASDAQ: COIN), accusing the exchange of attempting to “narrow and misapply the established legal framework in order to avoid being subject to the same regulatory obligations as all other participants in the Nation’s securities markets.”

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This time is different, however. The brief was filed by the North American Securities Administrators Association (NASAA), which comprises the securities regulators from all 50 states as well as regulators in D.C., Puerto Rico, the U.S. Virgin Islands, and Guam. They say that contrary to bleating from Coinbase and the other digital asset companies in the SEC dock, the SEC’s position (that Coinbase’s staking program and at least thirteen of its listed digital assets are securities) is neither ‘novel’ nor ‘extraordinary’ under U.S. securities laws.

FTX Had Many Bad Spreadsheets

If you prepare a balance sheet for a lender and your boss says “why don’t we present this information in a different way,” you probably need a lawyer. If you prepare SEVEN BALANCE SHEETS and your boss is like “let’s go with Alternative 7” then one of you is going to prison absolutely forever. Caroline Ellison smartly decided it wasn’t going to be her.

California Democrats Push SEC to Adopt State’s Climate Rules

House Democrats from California are urging the SEC to make their state’s corporate climate reporting rules the national standard as the agency looks to require greenhouse gas emissions disclosures.

The Securities and Exchange Commission needs strong disclosure requirements for emissions, including those from supply chains and other indirect sources, Reps. Juan Vargas, Adam Schiff and 24 other California Democrats said in a letter to SEC Chair Gary Gensler.

SEC announces new “sweep” of enforcement actions aimed at failures to make timely Section 16 reports

On September 27, 2023, the SEC announced a new “sweep” of enforcement actions against six insiders for failing to timely file multiple reports under Section 16 of the Securities Exchange Act of 1934 (Exchange Act) (and, for three of the insiders, also under Section 13 of the Exchange Act), and against five companies for negligence in contributing to their insiders’ reporting failures and/or for failing to properly disclose such reporting delinquencies in their annual proxy statement under Item 405 of Regulation S-K. The penalties associated with these actions against the insiders ranged from $120,000 to $150,000 and against the companies ranged from $115,000 to $200,000.

This sweep of actions is part of an ongoing enforcement initiative by the SEC that commenced in 2014 and demonstrates the SEC’s continued focus on enforcing Section 16 reporting requirements, particularly against repeated delinquent filers.

Can Corrupt Political Activities Support Securities Fraud Allegations?

On September 28, 2023, the SEC announced that it had filed charges against and entered into a settlement agreement with the Illinois electric utility Commonwealth Edison (ComEd) and its corporate parent Exelon Corporation in connection with an alleged scheme to influence the then-speaker of the Illinois House of Representatives, Michael Madigan. The SEC separately filed a complaint against ComEd’s former CEO in connection with the same allegations. In an October 12, 2023 post on the Cooley law firm’s PubCo blog (here) Cydney Posner wrote about the SEC enforcement actions and raised the interesting question of whether Political Corruption is Securities Fraud? It is a question well worth asking. However, as I discuss below, there is a long-standing connection between corruption and bribery allegations and securities class action lawsuits and other types of claims.

SEC Judges Shouldn’t Decide Securities Fraud Suits, Adviser Says

Administrative law judges appointed by regulators are unfit to preside over securities fraud actions that seek penalties from defendants, which require a jury trial under the Constitution, a hedge fund manager said to the US Supreme Court.

Allowing the Securities and Exchange Commission to use administrative tribunals instead of giving defendants an opportunity to face fraud allegations in federal court is unconstitutional, respondent George Jarkesy argued in a brief filed Wednesday.

SBF Trial: Defense Counsel’s Cross-Examination of Caroline Ellison Meandered

Early on, Sam Bankman-Fried’s defense attorney hinted that his questioning of star prosecution witness Caroline Ellison would deflect blame from his client toward her, but he never seemed to quite hit that actual note before finishing his cross-examination Thursday afternoon.

Attorney Mark Cohen walked Ellison through a number of topics pertaining to last year’s collapse of FTX and her role in running sister company Alameda. She seemed to become quite comfortable on the stand, correcting Cohen and answering far more than what he actually asked on multiple occasions. The defense attorney wrapped up with her without actually trying to assign her blame for her culpability in the FTX catastrophe.

Congressional stock trading plunges as legislative heat looms

Congressional stock trading has fallen off sharply this year, according to an analysis by a popular financial news site — and some insiders believe it’s because US lawmakers are feeling heat from a possible legislative clampdown.

The volume of stock trades made by members of Congress tumbled more than 75% in the nine months of this year – to just 1,800 trades versus 8,000 a year earlier, according to data from Unusual Whales.