Judge Revokes Bankman-Fried's Bail, Sends Him to Brooklyn Jail Until Trial

FTX Co-Founder Sam Bankman-Fried’s Bail to Be Revoked by US Judge

FTX co-founder Sam Bankman-Fried was taken into custody after a federal judge revoked his bail less than two months before his scheduled fraud trial.

US District Judge Lewis A. Kaplan made the order at a hearing in Manhattan Friday afternoon. Bankman-Fried took off his jacket and tie, and was immediately placed in handcuffs as marshals escorted him out of the courtroom. His mother, who was also present, cried in the public gallery.

SEC’s Coinbase Lawsuit Should Be Dismissed, U.S. Senator Lummis, Crypto Lobby Orgs Say

U.S. Senator Cynthia Lummis (R-Wy.), a number of crypto lobbying organizations and a group of professors called on a federal court to dismiss a Securities and Exchange Commission (SEC) lawsuit against crypto exchange Coinbase Friday.

Filing amicus – or friend of the court – briefs, the organizations and lawmaker alleged the SEC was trying to exceed its authority in bringing a lawsuit alleging crypto trading platforms like Coinbase are simultaneously unregistered securities exchanges, brokers and clearinghouses trading similarly unregistered securities in the form of crypto assets. The SEC brought lawsuits against Coinbase and fellow exchange Binance (and the latter’s U.S. arm, Binance. US) in June this year.

SEC’s Whistleblower Chief Manages Growing Pains as Program Gains Popularity

Nicole Creola Kelly has worked at the Securities and Exchange Commission for a quarter-century in a variety of roles. Now, as head of the agency’s whistleblower award program, she is facing perhaps her biggest challenge: critics who say the program favors those with connections to the regulator.

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Kelly faces the challenge of managing the increasing popularity of the whistleblower program with her office’s current staffing resources, industry participants said. At the same time, she is under pressure to address calls for transparency in the program’s processes and the need to protect the identities of whistleblowers.

“I’ve been here for 25 years. I’ve seen many chairs, and as a longtime civil servant…it sounds cliché but we call the balls and strikes,” Kelly, who goes by “Cree,” said in a recent interview. “At no point have I ever considered who the counsel is on a recommendation. It doesn’t factor into our analysis.”

Conservative Starbucks investor loses diversity challenge

A U.S. judge on Friday dismissed as frivolous a conservative activist investor’s lawsuit against Starbucks’ (SBUX.O) board for the coffee chain’s diversity, equity and inclusion policies.

The National Center for Public Policy Research (NCPPR) sued in August 2022 over Starbucks’ setting hiring goals for Black and other people of color, awarding contracts to “diverse” suppliers and advertisers, and tying executive pay to diversity.

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Chief U.S. District Judge Stanley Bastian in Spokane, Washington, rejected the allegations at a hearing in the case on Friday, saying the lawsuit centered on public policy questions that are for lawmakers and corporations, not courts, to decide.

Goldman Sachs appellate ruling is boon for securities class action defendants

“If a stock price decline follows a back-end, highly detailed corrective disclosure — containing, for example, “hard … incriminatory” evidence regarding the company’s wrongdoing — courts must be skeptical whether the more generic, front-end statement propped up the price to the same extent,” the 2nd Circuit majority said. “Ultimately, a court must determine not just whether the defendant spoke on topics generally important to investment decision-making, but instead whether the defendant’s generic statements on that topic were important in that regard.”

You can see why that will be helpful to other defendants. Imagine, for instance, a pharmaceutical company that is hit with a securities fraud suit after its shares drop in the wake of a recall of a particular drug or medical device.

If shareholders allege that the company lied about its testing or production safety protocols, that’s probably a sufficient match under the 2nd Circuit’s Goldman framework. But if the alleged misrepresentation is based only on generic safety assurances, the company can argue that, under the Goldman framework, it’s too big an inferential jump to attribute the share price decline to investors’ lost faith in general statements about safety.

More Bitcoin ETF Decisions Are Already Looming After SEC Passes on Ruling

Bitcoin ETF candidates got another dose of disappointment when US regulators on Friday punted on making a decision on such a product. But the next time they hear from them might be just a few weeks away.

The US Securities and Exchange Commission needs to come to a conclusion on the Bitwise Bitcoin ETP Trust by Sept. 1, according to a Bloomberg Intelligence tally. Regulators can reject, approve or delay. Decisions for applications from BlackRock, VanEck, WisdomTree and Invesco are due just a day later, with others following closely behind.

Cyberattack Rule Raises Insurance Risks for Corporate Officers

A new SEC cyberattack reporting rule has left public companies and insurers exposed to potential regulatory probes and shareholder class actions alleging senior executives failed to supervise their businesses’ cybersecurity practices.

The US Securities and Exchange Commission recently issued rules that formally outlined directors’ responsibilities in cybersecurity governance for the first time, laying the groundwork for potential enforcement actions.

The rule also set a road map for investors to bring derivative claims alleging a company’s senior executives breached their fiduciary duty by failing to manage cyber risks. And it put insurers on alert that they could find themselves exposed to underlying claims, insurance attorneys say.

New SEC Cybersecurity Disclosures

On July 26, 2023, the SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents on Form 8-K and detailed information regarding their cybersecurity risk management and governance on an annual basis on Form 10-K.

Foreign private issuers (FPIs) will need to disclose in their Form 20-Fs the same information about cybersecurity risk management and governance as U.S. domestic companies, but FPIs will only be required to report material cybersecurity incidents on Form 6-K when they decide to publicly report those incidents or are required to do so under home country rules.

In this client alert, we summarize the new cybersecurity disclosures required by the final rules and highlight where there are meaningful changes from the SEC’s proposed rules from March 2022. We also offer some suggestions for what companies can do to prepare for compliance with the new requirements

A Crypto Mystery: Who Controls This Fast-Growing Stablecoin?

A $3 billion mystery is gripping the crypto market.

TrueUSD is one of the fastest-growing stablecoins—cryptocurrencies pegged to real-world money such as the U.S. dollar that investors use to trade in and out of the digital-currency market. Its market value has more than doubled to about $3 billion since March, making it the fifth-largest stablecoin, according to CoinGecko data. Its share of stablecoin volume on centralized crypto exchanges has climbed to 20% from less than 1% at the start of the year, according to the data provider Kaiko.

No one is sure who controls it.