SEC Charges Husband of Corporate Insider With Insider Trading

SEC Charges Husband of Energy Company Manager with Insider Trading

The Securities and Exchange Commission today charged Tyler Loudon of Houston, Texas, with insider trading ahead of a February 2023 announcement that London-based oil and gas company BP p.l.c. agreed to acquire TravelCenters of America Inc., a full-service truck stop and travel center company headquartered in Ohio. Loudon allegedly made $1.76 million in illegal profits from his trading.

According to the SEC’s complaint, Loudon allegedly misappropriated material, nonpublic information about the proposed acquisition from his wife, a BP mergers and acquisitions manager who worked on the planned deal. The SEC alleges that Loudon overheard several of his wife’s work-related conversations about the merger while she was working remotely. Without his wife’s knowledge, Loudon purchased 46,450 shares of TravelCenters stock before the merger was announced on February 16, 2023. As a result of the announcement, TravelCenters stock rose nearly 71 percent. Loudon allegedly immediately sold all of his TravelCenters shares for a profit of $1.76 million.

First AI-Related Securities Suit Filed

In any discussion these days of emerging directors’ and officers’ risks, the conversation inevitably turns to the topic of Artificial Intelligence (AI). There is a general perception that while AI presents significant opportunities, it also involves significant liability risks. The contours of the risk that AI represents have yet to develop, largely because the claims have yet to emerge. That is, until now.

Earlier this week, a plaintiff shareholder filed a securities class action lawsuit against the AI-enabled software platform company, Innodata. The plaintiff claims the company misrepresented the extent to which the company’s products and services actually employ AI technology and also the extent of the company’s investment in AI. As discussed further below, as far as I know, this case represents the first AI-related securities class action lawsuit to be filed. A copy of the plaintiff’s February 21, 2024, complaint can be found here.

ETF approval for bitcoin – the naked emperor’s new clothes

On 10 January, the US Securities and Exchange Commission (SEC) approved spot exchange-traded funds (ETFs) for Bitcoin. For disciples, the formal approval confirms that Bitcoin investments are safe and the preceding rally is proof of an unstoppable triumph. We disagree with both claims and reiterate that the fair value of Bitcoin is still zero. For society, a renewed boom-bust cycle of Bitcoin is a dire perspective. And the collateral damage will be massive, including the environmental damage and the ultimate redistribution of wealth at the expense of the less sophisticated.

Has Gensler’s SEC pushed Wall Street too far?

Undeterred, Gensler is pushing ahead with the biggest regulatory blitz since the financial crisis, setting the stage for the latest in a long line of battles between Wall Street and its main regulator.

The question now is whether he can see through his ambitious agenda in the face of an industry fightback, sceptical judges and the possibility of a new administration in the White House after the 2024 presidential elections.

His legacy “will be determined in the next few months”, says Elizabeth Warren, a Democratic senator who is critical of Wall Street’s excesses and supportive of Gensler’s reform agenda. She says that he should continue pushing for strong rules on climate-related disclosure and private funds as well as misconduct in the crypto sector.

“That will determine how he is known forever.”

US DOJ unit’s penalties fall in 2023 as trial backlog bites, data shows

The U.S. Justice Department team tasked with rooting out corporate crime secured $690 million in penalties in 2023, its lowest tally in at least eight years, according to new DOJ data released Thursday.

The department’s Washington D.C. Fraud Section, which focuses on corporate wrongdoing related to healthcare, securities, and foreign bribery, last year brought eight resolutions to settle probes into companies, working with other overseas regulators.

While that was one more settlement than in 2022, total fines plunged 68%, falling below $1 billion for the first time since at least 2015, according to a Reuters analysis of data from the agency’s annual report.

The fall was partly due to a pandemic trial backlog that has diverted resources from settlement negotiations, while the bribery unit, historically a driver of record fines, brought fewer large cases, according to officials.

Earnings Gaffes Pile Up a Week After Lyft Typo Roiled Shares

At least three companies — Planet Fitness Inc., Mister Car Wash Inc. and Rivian Automotive Inc. — had to correct parts of their earnings released in the past day. All three cited a “clerical error” in filings Thursday with the US Securities and Exchange Commission.

The mistakes come about a week after Lyft Inc. had to correct its earnings release because of a typo that inflated its outlook and spurred a short-lived surge in the shares, driving home how even seemingly small corporate gaffes can have an outsized market impact. That’s especially the case with earnings reports, arguably the four most important releases that firms put out each year.

Everything is seating charts

And there are very fine-grained forms of jealousy here. If you are the co-head of some important business, and you are not on a committee, and the other co-head of that business is on that committee, that is a mortal insult. The Financial Times reports:

“Two of Goldman Sachs’ top investment bankers have threatened to quit after being excluded from a new operating committee established under chief executive David Solomon, according to people familiar with the matter.”

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Spectacular stuff, the most Goldman of all stories. Disclosure: I used to work at Goldman, and while I was very very far from being committee material, this story resonates with me. If you work at Goldman and you turn to your colleague and say “my rival was just put on committee and I was not, I think I have to quit,” your colleague will nod solemnly and say “yes of course, we’ll miss you, but you’ve got to have principles.”

Singapore Resident Pleads Guilty In Manhattan Federal Court To Soliciting Millions Of Dollars In Pre-IPO Stock Scheme

Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea today of SHAMOON RAFIQ, a/k/a “Shamoon Omer Rafiq,” a/k/a “Omar Rafiq,” a/k/a “Omer Rafiq,” a resident of Singapore, for engaging in a scheme in which RAFIQ solicited millions of dollars of investors’ money by falsely representing that he was offering investments in shares of stock in privately held companies that had not yet conducted an initial public offering (“pre-IPO stock”), even though in fact he did not actually have those shares to offer, by impersonating senior officials of a reputable family office investment firm, and by engaging in other acts of deception.