PCAOB Says Its "Unique Experience and Expertise" Cannot "Simply Be Cut and Pasted" to the SEC

Financial Reporting Quality at Stake in Plan to Fold Audit Board

The US audit regulator on Monday said a House Republican plan to dismantle the agency and hand over its duties to the SEC would weaken a critical backstop that protects investors.

“The unique experience and expertise built up by the PCAOB over decades cannot simply be cut and pasted without significant risk to investors at a time when markets are already volatile,” Erica Williams, chair of the Public Company Accounting Oversight Board, said in a statement.

Shareholder adviser Glass Lewis is considering ending its recommendations in corporate ballots under political pressure

For years, two firms have dominated the business of telling investors how to vote in corporate elections. One wants out.

Glass Lewis, the scrappier and smaller rival of Institutional Shareholder Services (ISS), is discussing a dramatic shift to essentially scrap its “house view” on ballot measures ranging from takeover battles to complaints about gender balance, political donations, and carbon emissions, according to people familiar with the matter and an internal memo seen by Semafor. The move is partly in response to heightened conservative backlash, they said.

Instead, Glass Lewis would help investors develop their own custom voting policies, handle the paperwork and regulatory reporting, and provide data and research. The changes would be phased in over a few years, and the firm would likely continue to make explicit recommendations in the meantime.

PGI Global

I guess it was possible that the new SEC would not bring any crypto fraud enforcement actions: Crypto fraud might no longer be the SEC’s problem. (I guess it was possible that the new SEC would not bring any fraud enforcement actions at all; I wrote in January: “What if the US Securities and Exchange Commission never brings another enforcement case? What if it’s like ‘ahh, go ahead, do all the fraud you want’?”)

But in fact the new SEC has disclaimed this analysis: Despite concluding that crypto tokens might not be securities, it has nonetheless expressed interest in policing them for (securities) fraud. Somebody has to, so why not the SEC?

Nike May Be Facing a $5 Million Lawsuit for Shuttering Its NFT Platform

A proposal for a class action lawsuit is accusing Nike of engaging in a “rug pull” by shutting down operations for its RTFKT NFT platform.

The suit was filed Friday in a Brooklyn federal court with Australian resident Jadeep Cheema leading the group of aggrieved customers for Nike’s digital sneakers. It argues that the value of the RTFKT tokens was based entirely on Nike’s promotional efforts. Once the company pulled that support, investors were left “holding the bag.” […]

Amid a wider landscape of suits seeking to determine the legal status of NFTs, Cheema is joining the side arguing they should be considered as securities. “Plaintiff and others would never have purchased the Nike NFTs at the prices they did, or at all, had they known that the Nike NFTs were unregistered securities or that Nike would cause the rug to be pulled out from under them,” the filing said.

Complex and Divided Securities Enforcement Falling to States

The Trump administration is bringing significant personnel and policy changes across the federal government’s financial regulators. President Donald Trump has signed an executive order putting agencies and regulators—such as the Securities and Exchange Commission—under direct presidential oversight.

Cryptocurrency regulation is already undergoing a significant change in enforcement priorities. The Trump administration appears to have reversed the SEC’s course on aggressively pursuing crypto market participants as part of the president’s promise to make the US the “world capital” of crypto.

As firms and issuers contemplate adjustments in response to these and other anticipated changes in federal enforcement priorities, they should also prepare for the expansion of state enforcement activity. State and territorial law enforcement agencies retain significant power under blue sky laws to investigate and enforce their own securities statutes.

These powers are greatest when it comes to preventing and punishing securities fraud, giving state-level jurisdictions a formidable tool to respond to perceived changes in federal enforcement priorities—or to pursue even broader policy agendas.