SEC Announces Sweep Against Investment Advisers for Improperly Advertising Hypothetical Performance

SEC Sweep into Marketing Rule Violations Results in Charges Against Nine Investment Advisers

The Securities and Exchange Commission today announced charges against nine registered investment advisers for advertising hypothetical performance to the general public on their websites without adopting and/or implementing policies and procedures required by the Marketing Rule. All nine firms have agreed to settle the SEC’s charges and to pay $850,000 in combined penalties.

The firms are:

— Banorte Asset Management Inc.

— BTS Asset Management Inc.

— Elm Partners Management LLC

— Hansen and Associates Financial Group Inc

— Linden Thomas Advisory Services LLC

— Macroclimate LLC McElhenny Sheffield Capital Management LLC

— MRA Advisory Group

— Trowbridge Capital Partners LLC

Defiant Gensler to Revisit Crypto Grievances in Senate, Despite XRP, Grayscale Setbacks

After decisions in the Ripple case that energized crypto advocates and the even more pronounced failure of the SEC’s Grayscale bitcoin ETF dispute, Gensler is holding the line on warning about the sector flaunting securities laws, according to written testimony set for delivery to the Senate Banking Committee on Tuesday.

“Given this industry’s wide-ranging noncompliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets,” Gensler said in the remarks released Monday, on the eve of the routine SEC oversight hearing.

Gensler will return to a frequent talking point at the hearing:

“The vast majority of crypto tokens likely meet the investment contract test,” according to his testimony. “Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well.”

FTX 2.0: What’s Next for SBF’s Crypto Exchange Reboot

A plan to reboot a new version of defunct crypto exchange FTX Group may emerge as soon as next year, potentially injecting a jolt of activity back into a market that’s been largely subdued since the platform’s collapse.

More than 75 bidders have been contacted by the FTX estate since May to gauge industry interest in backing a relaunch of the exchange, according to a presentation filed in a Delaware court. Several parties have submitted bids that are now undergoing due diligence and information sharing, managers of the estate said, with a deadline for any new bids set for Sept. 24.

Binance Says SEC’s Request for Depositions is ‘Overbroad’ and ‘Unduly Burdensome’

Binance.US (BAM) in a redacted response to the Securities and Exchange Commission (SEC), has called the commission’s motion for depositions by the exchange’s executives and further discovery “unduly burdensome” and “freewheeling” as it has yet to be presented with evidence that customer funds were wrongfully diverted.

“Even after all of the discovery already produced by BAM during the expedited discovery period, the SEC still has no evidence to support its unsubstantiated allegations that imply investor assets have been somehow diverted,” the exchange wrote. “All the evidence in this matter—including documents, declarations, and sworn deposition testimony—supports BAM’s position that it has custody and control of its digital assets.”

Beauty and stock market participation

This paper investigates whether beauty, an important natural endowment, affects investment decisions. Using data from the Wisconsin Longitudinal Survey (WLS), which provides a photo-based measure of facial beauty, we find that better-looking individuals are more likely to own stocks and invest a larger share of wealth in stocks. We consider a wide range of potential mediators that may drive this relationship between beauty and stock market participation. We find that income and sociability explain a large portion of the beauty effect. For both males and females, beauty has a significant positive impact on stock market participation. Using another dataset that includes the interviewer’s rating of the respondent’s physical attractiveness, we find similar results. Our study contributes to a better understanding of the economic returns to beauty and the source of heterogeneity in household portfolio choice.

US CFTC official pushes for national financial fraud database

A top U.S. regulator on Monday proposed the creation of a federal registry to make it easier for investors and law enforcement to dig up information on past financial fraud convictions and civil fines.

Christy Goldsmith Romero, a commissioner of the Commodity Futures Trading Commission (CFTC), said in remarks at a conference that she is pushing for U.S. regulators to create a searchable, centralized database of financial misconduct that could make it easier for the public to arm themselves against fraudsters.

Expertized

To what extent can plaintiffs commission an expert report based on public information and rely on it in their complaint to adequately plead securities fraud? The Ninth Circuit recently addressed this issue in E. Ohman J:or Fonder AB v. NVIDIA Corp., 2023 WL 5496507 (9th Cir. Aug. 25, 2023). A majority of the panel (Judge Fletcher and Judge Wallace) found that the expert report was credible and could be relied upon, even though it did not reference any internal corporate data or witness statements.