SEC Charges Entergy Corp. With Failing to Maintain Internal Accounting Controls

SEC Charges Utility Company Entergy Corp. with Internal Accounting Controls Violations

The Securities and Exchange Commission today announced that Entergy Corporation, a Louisiana-based utility company, agreed to pay a $12 million civil penalty to settle charges that it failed to maintain internal accounting controls to ensure that its surplus materials and supplies were accurately recorded in its books and financial statements in accordance with generally accepted accounting principles (GAAP).

According to the SEC’s complaint, filed in the U.S. District Court for the District of Columbia, from at least mid-2018 to the present, Entergy included materials and supplies at their average cost as an asset on its balance sheets. However, during this time, Entergy had allegedly been informed by its employees and management consultants that this asset included a substantial amount of potential surplus, including aged materials and supplies in excess of Entergy’s anticipated future use or exceeding the maximum stocking levels deemed necessary by its business units. According to the complaint, Entergy failed to establish a comprehensive process to review these materials and supplies to identify surplus, remeasure it, and record any differences between its average cost and remeasured cost as an expense, in accordance with GAAP.

Government Attorneys Are Flooding the Job Market, But Is There Room in Big Law?

Government attorneys have been inundating the job market in Washington, D.C., even before the election results were in. However, the overcrowded market is forcing some attorneys to take a pause on their search for the moment.

Resumes of President Joe Biden’s political appointees who will be out of a job in January and high-level officials coming out of that administration will be at the top of the candidate pile at law firms, while midlevel and career attorneys are more likely to float to the back, according to several D.C. area legal recruiters.

“Law firms are prioritizing the political appointees and the very senior officials, the division heads, the chairs, folks with really significant titles, and [those senior candidates] probably will demand quite an investment of money to afford,” said D.C.-based recruiter Rachel Nonaka at Macrae….

Tai Mo Shan to Pay $123 Million for Negligently Misleading Investors About Stability of Terra USD

The Securities and Exchange Commission today charged Tai Mo Shan Limited with misleading investors about the stability of Terra USD (UST), a purported “algorithmic stablecoin” issued by Terraform Labs PTE Ltd. (Terraform), when UST dropped from its purportedly fixed exchange rate of 1 UST to $1, known as a peg. The Commission further charged Tai Mo Shan with offering and selling securities in unregistered transactions by acting as a statutory underwriter with respect to certain of its offers and sales of LUNA, a crypto asset issued by Terraform and offered and sold as a security. Tai Mo Shan is a wholly-owned subsidiary of Jump Crypto Holdings LLC.

Terraform and its founder, Do Kwon, were found liable for fraud and unregistered securities offerings by a federal district court in April 2024 and agreed to pay $4.5 billion to harmed investors. The SEC’s order finds that, when UST devalued from its $1 peg in May 2021, Tai Mo Shan and Terraform entered into an agreement that incentivized Tai Mo Shan to purchase UST in exchange for Terraform “vesting” Tai Mo Shan’s existing option to purchase LUNA at a discount to its then-prevailing market price. On that day and subsequent days, Tai Mo Shan tried to restore UST toward its $1 peg, including by purchasing more than $20 million UST. In light of prior statements by Terraform that its algorithmic mechanism would maintain UST’s $1 peg, Tai Mo Shan acted negligently by trading UST in a manner that deceived the market into believing that Terraform’s algorithmic mechanism was working to stabilize UST, when in reality the price was being stabilized, at least in part, by Tai Mo Shan’s large purchases of UST, which were incentivized by Terraform.

A Looming Threat to Bitcoin: The Risk of a Quantum Hack

Bitcoin’s rally faces a risk that isn’t on the radar of most crypto investors: quantum computing.

The nascent technology, which drew attention this month after Google claimed a breakthrough with its new Willow quantum-computing chip, could one day enable hackers to break the encryption that keeps bitcoin secure. Such a hack could torpedo bitcoin’s price, by allowing thieves to swipe coins out of supposedly secure digital wallets.

Researchers say a quantum device powerful enough to crack bitcoin is likely a decade or more away. Still, advances in the technology pose a long-term risk, unless bitcoin’s fractious community of developers beef up its technology in a time-consuming upgrade.

SEC Charges Silver Point Capital with Policy Failures Regarding Receipt of Material Nonpublic Information About Bonds Issued by Puerto Rico

The Securities and Exchange Commission today charged registered investment adviser Silver Point Capital L.P. with failing to establish, implement, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information (MNPI) relating to its participation on creditors’ committees. According to the SEC’s complaint, one of Silver Point’s core strategies was to invest in distressed companies. As part of this strategy, and because of the nature of its business, a long-time Silver Point consultant, a now-deceased lawyer, participated on creditors’ committees of those distressed companies on Silver Point’s behalf. However, the SEC alleges, the firm failed to enforce policies and procedures that were reasonably designed to address the specific risks associated with the consultant’s receipt of MNPI as a result of his participation on creditors’ committees.