SEC Charges Three Registrants with Violating Whistleblower Protection Rule

SEC Charges Broker-Dealer Nationwide Planning and Two Affiliated Investment Advisers with Violating Whistleblower Protection Rule

The Securities and Exchange Commission today announced settled charges against three affiliated registrants, Commission-registered broker-dealer Nationwide Planning Associates, Inc. and investment adviser NPA Asset Management, LLC, and state-registered investment adviser Blue Point Strategic Wealth Management, LLC, for impeding brokerage customers and advisory clients from reporting securities law violations to the SEC. The firms agreed to pay combined civil penalties of $240,000 to settle the SEC’s charges.

According to the SEC’s order, from May 2021 through February 2024, Nationwide, NPA, and Blue Point collectively asked 11 retail clients to sign confidentiality agreements in connection with payments made by the entities to the clients’ investment accounts. The payments were intended to compensate the clients for losses caused by the firms’ alleged breaches of federal or state securities laws. The order finds that the agreements contained provisions that impeded clients from reporting potential securities law violations to the SEC by permitting communications only where the SEC first initiated an inquiry. As described in the order, some of the agreements further required the clients to represent that they had not reported the underlying dispute to the SEC or to another securities regulator and would forever refrain from such reporting.

SEC Ends Legal Push to Revive Hedge Fund Fee Disclosure Rule

The US Securities and Exchange Commission is ending a court fight over new hedge fund and private equity fee disclosures after a legal setback in Chair Gary Gensler’s push for more transparency.

Wall Street’s main regulator didn’t act by a Tuesday deadline to ask the Supreme Court to revive new disclosure requirements for the private funds industry over fees it charges, according to a person familiar with the matter, who asked not to be identified discussing the litigation. The SEC had said the new disclosures would benefit investors.

Cell Phones

One person with a fascinating job is whoever runs the US Securities and Exchange Commission’s Task Force for Fining Everyone for Texting About Work on Personal Cell Phones. In the beginning, that was a creative, risky job. When you first went to the chair of the SEC and said “I want to start fining everyone for texting about work on their personal cell phones,” there was a possibility that he would say “what, no, it’s not illegal to text about work on your personal cell phone.” Maybe that was not that big a risk — the SEC chair is Gary Gensler — but maybe other people would say that. Maybe you’d go to the big banks and say “we think you have employees who text about work on their personal phones” and the banks would say “yeah probably” and you’d say “okay we’re fining you a billion dollars for that” and they’d say “what, no, that’s not illegal, we’ll see you in court,” and you’d go to court and a judge would conclude that it’s not illegal to text about work on your personal cell phone. And then the whole Task Force for Fining Everyone for Texting About Work on Personal Cell Phones would shut down ignominiously without extracting any fines.

But that is in fact not what happened….

Several Wall Street Law Firms See Work From SEC’s Latest Enforcement Actions

At least five law firms, including several Wall Street firms, were brought in to defend credit rating agencies that were charged by the SEC for significant recordkeeping failures.

Sullivan & Cromwell; Bracewell; Davis Polk & Wardwell; Milbank; and Meeks, Butera & Israel were among the firms listed as defense counsel for the six charged agencies.

Robinhood’s Former Ban on Crypto Withdrawals Draws $3.9M Settlement in California

Robinhood’s crypto-trading subsidiary used to prevent customers from withdrawing the tokens they bought. Though Robinhood Crypto LLC abandoned that policy in 2022, on Wednesday its past practices earned a $3.9 million slap on the wrist from the state of California.

The California Department of Justice settled its investigation into what Robinhood’s chief lawyer called “historical practices” in the popular trading app’s crypto business from 2018 through 2022.

Fyre Festival II Is Happening. The Only Question Is Where. And When. And How

Billy McFarland is a little over a year into planning Fyre Festival II, and he still doesn’t know where it’s going to be. Or when. Or who’s performing. But he says it’s definitely happening. One hundred percent, absolutely for-sure happening.

After all, he’s already sold tickets.

“I shouldn’t talk in absolutes, but I will here,” McFarland says between sips of a matcha latte on a sweltering June day. “Fyre II has to work.”