SEC Charges Former Tallgrass Board Member and Four Friends with Insider Trading

SEC Charges Tallgrass Energy’s Former Board Member Roy Cook and Four Others with Insider Trading in Advance of Blackstone Acquisition

The Securities and Exchange Commission today announced insider trading charges against Roy Cook, a former board member of Tallgrass Energy LP, and four of his friends for trading on material nonpublic information in advance of a public announcement that Blackstone Infrastructure Partners had offered to acquire Tallgrass and take it private. The SEC also charged Cook for failing to file required disclosure reports concerning securities transactions by family trusts. All five of the defendants agreed to settlements that, in aggregate, include more than $2.2 million in disgorgement, prejudgment interest, and civil penalties.

According to the SEC’s complaint, Cook learned in late July 2019 that Blackstone, which had acquired 44 percent of Tallgrass’s public shares earlier that year, was planning to make an offer to acquire the remainder of Tallgrass’s publicly traded shares. Within weeks of learning that information, Cook allegedly tipped his friends, Jeffrey Natrop, Peter Renner, James Rudolph, and Peter Williams, who all purchased Tallgrass securities prior to an August 27, 2019, public announcement of Blackstone’s offer.

Nigeria pushes Binance for user data in stand-off over naira speculation

Nigeria is pressing Binance for information on its top 100 users in the country, as well as all transaction history for the past six months, as its detention of two senior executives at the cryptocurrency exchange enters a third week.

The request is at the centre of negotiations between Binance and Nigeria, which sees the company as a crucial link undermining government efforts to stabilise its currency, the naira. The period under review is crucial because it tallies with the timeline of Nigeria’s devaluation of its currency.

2023 developments in SEC Rule 102(e) enforcement against auditors

In 2023, the Securities and Exchange Commission (SEC) continued its trend of bringing fewer enforcement actions against auditors than in recent years. The SEC brought 17 enforcement actions against auditors in 2023. As a point of comparison, the SEC brought 44 such actions in 2015, but only 11 in 2020, 12 in 2021, and 13 in 2023.

However, 2023 was significant in that we saw the SEC bring what appears to be the first enforcement actions against auditors in connection with SPACs (special purpose acquisition companies) as well as an auditor independence violation claim in a federal district court, rather than in an administrative proceeding.

Coinbase Pushes for Crypto Rules Amid ‘Oppressive’ SEC Actions

Coinbase Global Inc. took its opening swing in an effort to force the Securities and Exchange Commission to write new rules around trading digital assets, telling a federal court the agency refuses to create a workable framework for the $2 trillion industry.

Coinbase brought a case against the SEC at the US Court of Appeals for the Third Circuit after the agency in December denied the exchange’s request for rules clarifying legal standards for determining whether digital assets are securities.

New DOJ Whistleblower Rewards Policy Has Lawyers Gearing Up

Whistleblower attorneys said they’re considering presenting allegations that may not be covered by whistleblower programs run by the Securities and Exchange Commission, Treasury Department, and other agencies. Those are the types of gaps Deputy Attorney General Lisa Monaco said March 7 the initiative intends to fill when it goes live later this year.

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White-collar defense lawyers are starting to highlight for companies how DOJ’s offer to pay whistleblowers may present another motivating factor to self-disclose wrongdoing first. The new program will only reward whistleblowers who provide information previously unknown to the government.

Erika Kelton, a partner with whistleblower firm Phillips & Cohen, said she’s reviewing a client’s allegations of Foreign Corrupt Practices Act violations that appear to partly fall outside SEC authority. “This is a very significant corruption case, so you bet I am going to think about taking that to DOJ,” Kelton added.

For CFOs Tackling Weakened SEC Climate Rule, Cost Challenges Persist

“I don’t think anybody looked at the rule and said, ‘Oh thank goodness, this is going to be super easy,’” said Steve Soter, vice president and industry principal at business-reporting software provider Workiva. “I don’t think anybody’s saying that. But by comparison, it has gotten a little bit less effort-intensive.”

The most challenging part of the rule for companies will likely be obtaining a high level of assurance on their Scope 1 and 2 greenhouse-gas emissions, Soter said. Some companies’ sustainability teams aren’t used to the level of regulatory scrutiny that financial-reporting personnel are, but both teams will need to jointly own climate data under the new rules, Soter said. The requirements could prompt companies to invest more in technology and seek consultants’ help to facilitate the review and strengthen their controls, he said.

Bankrupt Terraform gets OK to hire law firm Dentons, with return of $48 mln from retainer

Terraform Labs received a U.S. bankruptcy judge’s permission on Tuesday to hire Dentons to defend the company from a U.S. Securities & Exchange Commission lawsuit, after the law firm agreed to return $48 million that Terraform had pre-paid for legal work.

U.S. Bankruptcy Judge Brendan Shannon approved the Dentons hire at a hearing in Wilmington, Delaware, bankruptcy court, finding that Terraform’s legal spending was a “necessary appropriate” use of the blockchain and software company’s limited resources.

Dentons’ large retainer had sparked objections from Terraform’s creditors, the SEC, and the Office of the U.S. Trustee, which is the U.S. Justice Department’s bankruptcy watchdog.

Those objectors argued that Terraform had funneled a large portion of its available cash out of the reach of its creditors and outside of bankruptcy court oversight, by sending Dentons a total of $166 million since the start of 2023. They also said that Dentons still held more than $70 million in advance legal fees.

Bitcoin Fog Operator Convicted of Money Laundering Conspiracy

A federal jury in Washington, D.C., convicted a dual Russian-Swedish national today for his operation of the longest-running bitcoin money laundering service on the darknet.

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According to court documents and evidence presented at trial, Roman Sterlingov, 35, was involved in operating Bitcoin Fog from 2011 through 2021. Bitcoin Fog was the longest-running cryptocurrency “mixer,” gaining notoriety as a go-to money laundering service for criminals seeking to hide their illicit proceeds from law enforcement. Over the course of its decade-long operation, Bitcoin Fog moved over 1.2 million bitcoin, which was valued at approximately $400 million at the time of the transactions. The bulk of this cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer crimes, identity theft, and child sexual abuse material.