Kalshi Announces First Enforcement Actions for Insider Trading

Kalshi Accuses a ‘MrBeast’ Employee of Insider Trading

Kalshi, the prediction-market platform, said it enforced its insider-trading rules after a user, who made a series of curiously accurate trades on the outcomes of the streaming show “MrBeast,” turned out to be one of the show’s employees.

In a novel step by the company, Kalshi announced on Wednesday that it had suspended the show employee from the platform for two years and fined him $20,000.

Kalshi also said that it had reported the employee, whom it identified as Artem Kaptur, to federal regulators.

“Our surveillance systems flagged his near-perfect trading success on markets with low odds, which were statistically anomalous,” Robert J. DeNault, Kalshi’s head of enforcement and legal counsel, wrote on LinkedIn.

A Long-Overdue Reform: The SEC’s New “Open Jacket” Disclosure Policy

For decades, SEC Enforcement staff operated without a written, uniform full-disclosure policy. Let that sink in.

This meant that before recommending a civil action to the Commissioners, the SEC staff had no formal obligation to share relevant evidence (including potentially exculpatory evidence) with the very individuals and entities facing charges. That has now changed.

Under Chair Paul Atkins, Section 2.3 of his new SEC Enforcement Manual now directs staff, subject to confidentiality constraints, to inform Wells notice recipients of “salient, probative evidence” that the staff “should have reason to believe may not be known to the recipient.” Staff are further instructed to be “forthcoming” about the contents of the investigative file and, on a case-by-case basis, to “make reasonable efforts” to allow recipients to review relevant portions.

This is a foundational shift — and one that is long overdue.

Wall Street Cop Jay Clayton Says Self-Reporting Firms Can Avoid Prosecution

Wall Street’s top prosecutor said companies that self-report fraud and financial misconduct affecting market integrity can avoid criminal charges under a new initiative.

Manhattan US Attorney Jay Clayton said Tuesday the new program establishes “clear guidelines and predictable treatment” for companies that voluntarily disclose certain kinds of criminal activity to his office.

Firms that report the violations, fully cooperate with law enforcement, commit to ongoing disclosure for three years and agree to mitigate harm caused by the activity won’t be prosecuted once they satisfy their obligations and repay victims.

“The self-reporting program rests on a simple principle: prompt corporate disclosure and cooperation in rooting out and remedying wrongdoing is in the best interest of victims, shareholders, employees, and our markets generally,” Clayton said in a statement. “When companies do the right thing — report quickly, cooperate fully, and remediate harm — they should know where they stand.”

The chief of the SEC is headlining an event sponsored by a crypto firm at war with it

U.S. Securities and Exchange Commission Chairman Atkins is a top speaker at the Digital Chamber’s DC Blockchain Summit next month, and the event’s chief sponsor — Unicoin — is in a legal fight with the agency, claiming the SEC’s chairman is being misled into perpetuating a legacy war on crypto.

The chief executive for Unicoin, which is the summit’s “platinum” sponsor, says his company is not allowed to speak with the SEC’s leaders due to the agency’s ongoing legal action against the crypto platform. In May last year, the SEC sued the company and its executives, including CEO Alexander Konanykhin, accusing them of raising $100 million for tokens that weren’t backed by real estate in the way the firm represented.

Konanykhin said that the legal clash is pursued by rogue agency enforcers (the “henchmen” of former SEC Chair Gary Gensler) that have misled current SEC Chairman Paul Atkins. (The case may have begun under Gensler’s tenure, but the resulting lawsuit was filed last year under then-Acting Chair Mark Uyeda.)

Former Lottery. com Execs Get Civil Penalties in SEC Fraud Case

Two former executives of Lottery. com Inc. who pleaded guilty to securities fraud will also have to contend with industry bans and other penalties in the SEC’s civil enforcement action alleging they falsely inflated the company’s revenue ahead of its near-collapse.

Ryan Dickinson, Lottery. com’s former chief financial officer, and Matthew Clemenson, its ex-chief revenue officer, will both be prohibited from serving again as the director or officer of a publicly traded company and may ultimately have to pay disgorgement and civil fines, according to orders Tuesday from Judge Colleen McMahon in the US District Court for the Southern District of New York ….
Source: