(Possibly) Coming Soon: The SEC Public Company Advisory Committee

House committee advances bill to create SEC Public Company Advisory Committee

The House Financial Services Committee advanced a bill to create a Public Company Advisory Committee, sending the bill to the House for consideration.
Reps. Frank Lucas, R-Okla., and Brittany Pettersen, D-Colo., introduced the legislation earlier this month with the intention of allowing public companies to provide input on the SEC’s rules, regulations and policies. […]

Under the legislation, public companies would weigh in on the SEC’s “issues relating to the public reporting and corporate governance of public companies,” in addition to issues relating to the proxy process, trading of public companies’ securities and capital formation, according to the bill text. […]

The committee would consist of between 10 and 20 members appointed by the commission, with the requirement that at least half the members “are officers, directors, or senior officials of public companies registered with the Commission … except for those public companies that own asset management, fixed income, investment advisory, broker-dealer, or proxy services businesses,” according to the bill text.

Individuals “with senior managerial responsibility in business, professional, trade, and industry associations that represent the interests of such public companies,” and “professional advisers and service providers” for the companies would serve as the other committee members, the text states.

SEC clarifies rules for tokenized stocks, tightening scrutiny on synthetic equity

The Securities and Exchange Comission is pushing back against a growing market for “tokenized stocks” that look like equity, trade like equity, but do not actually confer ownership, releasing new guidance that puts third-party synthetic equity products squarely under traditional securities and derivatives rules.

In a joint statement, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets said tokenized securities fall into two clear categories: those issued or authorized by the underlying company, and those created by third parties without issuer involvement.

The latter category, the SEC warned, often amounts to synthetic exposure rather than real equity ownership, a distinction that became newly salient after OpenAI publicly disavowed tokenized “equity” linked to its shares offered through Robinhood in Europe.

Tokenization, the SEC said in its statement, does not alter the application of federal securities laws. Whether a security is recorded on a blockchain or in a traditional database, issuers retain control over ownership records, transfer approvals, and shareholder rights.

SEC Enforcement Action against Former Spero Executives: Individual Liability for Misleading FDA-Related Disclosures

This settled enforcement case is notable for multiple reasons. First, it reflects the current SEC’s continued commitment to material misrepresentation and omission cases involving public issuers. Although we have not seen many of these cases in recent months, and this case presumably predated Paul Atkin’s assumption of the Chairman role, it shows that the SEC Enforcement Division is continuing to bring cases in this space. Second, and perhaps more noteworthy, the case is significant for the absence of any charges against Spero, reflecting the current Commission’s tendency to seek individual accountability, rather than liability against the company that ultimately impacts already-harmed investors. Third, this case shows the current SEC’s seemingly “light” touch with respect to charges and sanctions. The SEC charged Mahadevia and Shukla with only non-scienter fraud violations, notwithstanding the seemingly damning allegations. Moreover, the monetary penalties are relatively modest, given the market impact of the misleading disclosures. Finally, and consistent with current SEC practices, this settled administrative proceeding was released on the SEC’s website with little fanfare, including no press release. The above suggests that, while SEC Enforcement will still pursue materially misleading public disclosures, it will be less severe in its approach.

Crypto’s political power supercharged with $193 million in Fairshake, thanks to new cash

With another $25 million from Ripple and $24 million from Andreessen Horowitz (a16z), the crypto industry’s chief campaign-finance fund, the Fairshake political action committee, is amassing unprecedented firepower for this year’s midterm congressional elections.

The crypto super PAC that exploded onto the scene in the last political cycle is set to report it has $193 million on-hand, according to a Wednesday statement. If it were to spend that money this year, it would likely stand among the top five PACs in the country, rivaling the 2024 tallies of the parties’ own top campaign-finance organizations. It was already ranked as the sixth biggest money-raiser among PACs in the previous cycle.

White House Summons Coinbase, Banks to Hash Out Crypto Bill

Lobbying groups and executives representing the banking and crypto industries are planning to meet at the White House on Monday as tempers flare over a contentious piece of digital-asset legislation.

The proposed meeting comes after Coinbase Global Inc.’s (COIN) Chief Executive Officer Brian Armstrong publicly withdrew his support for a key draft of a long-awaited bill that would reshape crypto market structure.

A compromise that would revive the proposal still hasn’t been hammered out despite nearly two weeks of subsequent negotiations, according to a person familiar with the discussions who asked not to be named sharing private conversations.

Next week’s meeting could be delayed if no agreement is reached by then, according to people familiar with the plans who were not authorized to speak on the record.