The Hybrid "No Deny Only" SEC Settlement

Second Circuit Reverses Dismissal of Securities Claim Alleging Failure to Disclose SEC Investigation

The Noto decision could affect disclosure assessments where issuers disclose an underlying accounting problem or other deficiency but are debating whether they must also disclose a pending SEC or other governmental investigation related to that specific problem. Depending on the facts and circumstances of the particular situation, a court might hold that failure to disclose the governmental investigation makes the disclosure of the underlying problem materially misleading because nondisclosure of the investigation could cause reasonable investors to make “an overly optimistic assessment of the risk” posed by the underlying problem.

 The Crypto Security Debate Goes to Court

Investors are asking the courts to decide an existential question for the cryptocurrency industry: whether digital tokens are, for legal purposes, more similar to stocks or to gold.Attorneys for cryptocurrency-trading platform Coinbase Global Inc. filed a motion this month to dismiss a class-action lawsuit arguing that 79 of the tokens listed on the firm’s platform are unregistered securities.

SEC Targets ESG Funds With Pair of Proposals

It also means there’s an opportunity for ESG-focused companies that are seeking capital. There may be a big rush to ESG assets if funds are faced with the choice between compliance or a name change. The ESG investment fund space may also shrink, which is what happened in the EU when regulators realized that so-called ESG funds were not actually performing screens. As I noted in my book, Killing Sustainability (available to PracticalESG.com members on our “Guidebooks” page):

“The EU Commission passed the Sustainable Finance Disclosure Regulation (SFDR), which became effective March 2021. in anticipation of the effective date, however, ESG-tagged investments in Europe shrank by $2 trillion from $14 trillion in 2018 as funds deleted references to ESG, responsible or green in their names/descriptions.”

Who Pays the SEC’s Bill on Crypto? (Hint: Not Crypto)

To be clear, [Security Traders Association] has no opinion on whether Chair Gensler’s $2.149 billion request is too much, or too little. We simply ask: why should the equities market bear the entire burden of funding a regulator charged with overseeing multiple asset classes? It’s a question we asked in 2014, and we have yet to see a logical answer.

The rise of digital assets compounds this problem. With the level of intricacy and innovation that exists in the crypto space, regulating it will be a mammoth task, forcing the equities market to foot a much larger bill while being subject to the same level of oversight. Having equities underwrite crypto regulation isn’t just unfair, it could easily result in a large mismatch between the resources available and the resources needed.

SEC’s Hester Peirce: U.S. dropped the ball on crypto regulation

“There’s a lot of fraud in this space, because it’s the hot area of the moment,” Peirce told CNBC on the sidelines of the DC Blockchain Summit this week. “The other piece that does concern me is the way that we’ve sort of dropped the regulatory ball.”

She continued, “We’re not allowing innovation to develop and experimentation to happen in a healthy way, and there are long-term consequences of that failure.”