Law Firms That Have Nonpublic Data Stolen: Victims or to be Held Responsible?

‘Shot Across the Bow’: Insider Trading Scheme May Prompt Changes in Big Law

The scale and sophistication of the latest bust may change firms’ internal policies.
“Given the length of the conspiracy, the number of defendants and the fact that the scheme was carried out, according to the indictment, at six of the largest law firms and by a graduate of Yale Law School, it is clear the policies and procedures around preventing insider trading at law firms have to be reexamined, especially at firms with a large M&A practice,” said Boies Schiller Flexner partner Douglas Miller, a former supervisory trial counsel at the SEC’s Los Angeles regional office.

The CFTC is in talks with every major pro sports league to crack down on insider trading

Chairman Mike Selig of the U.S. Commodity Futures Trading Commission (CFTC) said his agency is in talks with all major U.S. professional sports leagues as federal regulators deepen oversight of sports-related prediction markets.

The regulator is seeking broader cooperation with leagues to monitor insider trading and market manipulation tied to event contracts, Selig said Tuesday at the annual FINRA conference in Washington D.C. on Tuesday, following an earlier CFTC announcement of a data-sharing agreement with Major League Baseball in March.

“We’ve entered into a memorandum of understanding with Major League Baseball, and we’re in talks with all the professional sports leagues,” Selig said at the event, hosted by the brokerage industry’s self-regulatory organization.

SEC Moves Toward Rescinding “No-Deny” Settlement Policy

A rescission of the no-deny policy would change the settlement calculus for nearly every SEC enforcement matter.

For respondents and defendants, the change would create room to settle without surrendering the ability to speak publicly about the case. That matters most in cases where reputational consequences are as important as monetary penalties. Individuals, investment advisers, broker-dealers, public companies, crypto firms, and executives often settle because litigation is costly, distracting, and risky. But under the current framework, settlement comes with a speech restriction that can leave the SEC’s version of events as the only permissible public account.

Commissioner Hester Peirce made that point in her January 2024 dissent from the Commission’s denial of a rulemaking petition seeking to amend Rule 202.5(e). She criticized the policy as a “so-called gag rule” and explained that the settlement language requires defendants not only to refrain from denying the allegations, but also to withdraw papers that deny them and risk reopening the case if they later breach the settlement condition.

The opposing view, reflected in then-Chair Gary Gensler’s January 2024 statement supporting the denial of that petition, is that the policy protects the integrity of SEC settlements. Gensler argued that allowing defendants to settle while publicly denying wrongdoing would undermine the value of the factual recitation in settled orders and reduce the deterrent message to the market.
The pending final rule appears to put that debate back on the table, this time with the Commission moving toward rescission rather than mere reconsideration.

The Crypto Industry Wants America to Become the Bahamas

… According to this narrative, FTX established itself in the Bahamas because the United States lacked a comprehensive regulatory framework for crypto. Had Congress acted sooner, proponents argue, FTX would have operated within the United States under proper supervision instead of relocating offshore to avoid regulatory uncertainty. […]

The problem with this narrative is that it is completely backwards. FTX did not collapse because the Bahamas lacked a bespoke crypto regulatory framework. FTX chose the Bahamas precisely because it had one.

The crypto industry’s “clarity” talking point is a form of Orwellian doublespeak deployed to advance a self-serving deregulatory agenda in Washington. The reality is that FTX and many other crypto firms deliberately avoided the United States because they did not want to register with the SEC and comply with the federal securities laws.

Private-Credit Blowup Leaves $1.7 Billion Missing, Six Ferraris Found

U.K. mortgage lender Market Financial Solutions left Barclays, HSBC and Apollo Global Management facing hundreds of millions of dollars in potential losses when it collapsed in February.

Now, bankruptcy administrators allege its owner, Paresh Raja, moved around $550 million of MFS-borrowed funds into personal bank accounts and then bought luxury cars including six Ferraris and three Rolls-Royces.

A spokeswoman for Raja said that he strongly denies the allegations and that there was no fraud or dishonesty. “Assets which the administrators characterize as missing were held through nominee structures for the benefit of MFS and its creditors,” the spokeswoman said, adding that the administrators had been given detailed information about those assets.

The U.K. commercial court where the bankruptcy is playing out applied a freeze on Raja’s worldwide assets in March.

Raja reported around $342 million in overseas assets to administrators as part of the March freezing order, according to the legal claim. The court-appointed administrators from Alix Partners said wealth on such a scale could only have come from misappropriation.

They alleged that Raja used company money to fund a lavish lifestyle and that his car purchases also included at least three Aston Martins and two Mercedes.