SEC Charges Aon Investments with Misleading Pension Fund About Investment Return

SEC Charges Chicago-based Aon Investments and Former Partner with Misleading Pennsylvania Public Employees’ Pension Fund

The SEC’s orders find that Aon was responsible for calculating PSERS’s investment returns for “risk share,” a provision under Pennsylvania law that requires public school employees to contribute more to their pensions if the retirement fund does not meet certain investment return rates. If PSERS’s investment return rate for the nine-year period ending June 30, 2020 was lower than 6.36 percent, it would trigger risk share, requiring an increase in public-school employees’ contributions.

According to the SEC’s orders, in June 2020, Aon provided PSERS its quarterly returns for the purpose of estimating PSERS’s investment return rate. The orders find that some of the quarterly returns Aon provided to PSERS in 2020 did not match the historical returns that Aon previously provided PSERS for the same periods. According to the SEC’s orders, PSERS repeatedly questioned Aon’s calculations of the investment returns and asked Aon to investigate a discrepancy between the returns. The SEC finds that, in response to these inquiries, Aon and Shaughnessy, who led the PSERS engagement, failed to adequately investigate that discrepancy, instead providing PSERS with two reasons for the discrepancy that Aon had previously ruled out. The orders further find that Shaughnessy misrepresented to PSERS that the discrepancy was not due to errors when, in fact, she did not know the reason for the discrepancy. According to the orders, in December 2020, Aon and Shaughnessy reported to PSERS that the risk share return rate for that period was 6.38 percent – just high enough to avoid triggering risk share. Ultimately, the discrepancy turned out to be due to errors in the underlying data, and, when the rate was recalculated, the corrected return rate was 6.34 percent – triggering risk share and requiring additional employee contributions.

SEC Charges Northern Star SPAC for Material Misrepresentations in its IPO-Related Disclosures

The Securities and Exchange Commission today announced that Northern Star Investment Corp. II, a special purpose acquisition company (SPAC), agreed to settle charges that it made misleading statements in forms filed with the SEC as part of its January 2021 initial public offering (IPO).

According to the SEC’s order, Northern Star stated in its SEC filings that neither the company, nor anyone acting on its behalf, had initiated any substantive discussions with any potential target companies prior to the IPO. However, the SEC’s order finds that Northern Star had engaged in discussions with a target company and that company’s controlling shareholder in connection with a potential SPAC business combination dating back to December 2020 and continuing for several weeks. Furthermore, according to the SEC’s order, after announcing a merger agreement with the target company, Northern Star did not adequately disclose its interactions with the target company in its Form S-4 filings.

Gary Gensler crafts SEC into a mighty sandcastle

It took more than 10 years for the U.S. securities watchdog to finally approve a bitcoin exchange-traded fund. Yet overall, Securities and Exchange Commission chief Gary Gensler has a notable penchant for speed. Less than three years into his term, he has notched big wins, set ambitious goals and embedded an intense work ethic. Gensler’s main challenge isn’t inaction, but the risk that his achievements, like an impressive sandcastle, get washed away.

***

So far, the SEC chief has been undeniably active, outrunning his predecessors with fast-paced proposals and a vigor that has at times ruffled feathers amongst his own resource-constrained, opens new tab staff. Even critics who spoke with Breakingviews concede he is a hard worker. But how effective have his efforts been thus far? There are three good measures with which to size Gensler up: the rules he’s put forth, the penalties he has exacted from miscreants, and the way he has shaped the SEC’s purpose.

Big Donors Back New Group to Fight ‘Deep State’ at Supreme Court

A little-known legal group that’s quickly emerged as a top US Supreme Court litigator is helping steer a broad high court challenge to government agency power.

The New Civil Liberties Alliance identifies as nonpartisan. But it’s backed by groups tied to powerful sources of conservative funding, including billionaire Charles Koch and entities linked to legal activist Leonard Leo, who’s had direct influence over the court’s conservative makeup.

***

Last term, NCLA represented a woman in her fight to challenge the Securities and Exchange Commission’s administrative proceedings in federal court and won. The Supreme Court consolidated NCLA’s case with another against the Federal Trade Commission and ruled that people facing FTC and SEC enforcement actions can go straight to federal court with some constitutional challenges to the agencies’ structure.

Bitcoin ETF: Crypto Is Going Mainstream, Which Means It’s Over

Two big things have happened in the crypto world this month: a public validation and a semi-private snub. Both of them bode poorly for its future.

The official validation came in the form of the SEC approval of a Bitcoin ETF, which will make it easier for speculators to invest in Bitcoin. The slight came at this year’s World Economic Forum, which I attended, and where Bitcoin — or any cryptocurrency, really — was clearly on the outs. Last year crypto was everywhere in Davos. This year, the star of the show was AI. Crypto, like me, didn’t even know about all the really good parties, much less get an invitation.

***

To be fair, crypto has defied expectations thus far. Its price soared even though it was never clear what its value was. As Eugene Fama, the father of modern finance, recently said: “Unless it becomes a widely used medium of exchange, bitcoin should eventually implode. The alternative is that all I learned from monetary theory about how currencies acquire value is meaningless.”

DOJ and SEC investigate self-driving car company Cruise

The Department of Justice and the Securities and Exchange Commission have opened an investigation into General Motors-owned autonomous car company Cruise, following an October incident here where one of its cars hit a jaywalking pedestrian and dragged her about 20 feet.

Confirmation of the federal probe comes months after the California Department of Motor Vehicles suspended the company’s permits following the October crash. Cruise said in a Thursday blog post that it “failed to live up to the justifiable expectations of regulators and the communities we serve” and that it is “fully cooperating” with the state and federal investigators.

Is Cryptocurrency Like Stocks and Bonds? Courts Move Closer to an Answer

In recent years, regulators have seized on that legal precedent to argue that cryptocurrencies are just another security, like shares of Apple or General Motors. The crypto industry has fought back, leaving it in a legal gray zone with an uncertain future in the United States.

Now the long-running dispute is edging closer to a resolution, as federal judges begin weighing in on a series of lawsuits by the nation’s top securities regulator against some of the largest crypto firms. This month, judges held hearings in two of the most consequential cases, which could dictate whether the multitrillion-dollar crypto industry can continue growing in the United States.

The legal battles are “an existential issue for crypto,” said Hilary Allen, a professor at American University who specializes in financial regulation.

Hedge Fund Chatham Demands $100M From Compliance Team After SEC Probe

Wall Street firms usually grumble in private after getting punished by regulators. Anthony Melchiorre’s Chatham Asset Management is dragging its advisers into a public legal battle for $100 million.

The $6 billion hedge fund is demanding that Adviser Compliance Associates not only cover Chatham’s costs for settling a US probe last year, but also damage to its business. In an unusual lawsuit, Chatham claims the outside consultant, founded by former regulators, failed to prevent trading practices that ran afoul of authorities.

Robinhood Investors Fail to Save Suit Alleging IPO Deceptions

Robinhood Markets Inc. shed a proposed investor class action over allegedly misleading statements in its initial public offering documents.

US District Judge Edward M. Chen granted Robinhood’s motion to dismiss the plaintiffs’ second amended complaint, without giving the plaintiffs a chance to change it. The investors didn’t adequately allege claims under Sections 11, 12, and 15 of the Securities Act of 1933, Chen said.

Lead plaintiffs Vinod and Amee Sodha alleged that Robinhood misled them by not disclosing slowing revenue growth by the release of its July 2021 offering documents….