SEC Charges View Inc. for Failure to Disclose $28 Million in Projected Warranty-Related Liabilities

SEC Charges “Smart” Window Manufacturer, View Inc., with Failing to Disclose $28 Million Liability

The Securities and Exchange Commission today announced settled charges against a California-based manufacturer of “smart” windows, View Inc., for failing to disclose $28 million in projected warranty-related liabilities to address a particular defect in its windows. The SEC decided not to impose civil penalties against View because the company self-reported the misconduct to the SEC, promptly undertook remedial measures, and cooperated with the staff’s investigation. The SEC also announced charges against View’s former CFO, Vidul Prakash, for his failure to ensure that the warranty-related liabilities were disclosed.

According to the SEC order, in a series of reports and statements filed with the SEC from December 2020 to May 2021, View disclosed warranty liabilities of $22 million to $25 million, consisting largely of projected costs to manufacture replacements for certain defective windows. However, View failed to include in its disclosures the additional cost to ship and install the new windows, which View had decided to cover and which therefore should have been disclosed under generally accepted accounting principles in the United States. Including those costs, View should have disclosed total warranty liabilities of $48-$53 million. As a result, the SEC order finds, View materially misstated its warranty liability for fiscal years 2019 and 2020 and the first quarter of 2021.

Supreme Court Agrees to Hear Challenge to SEC’s Power

The Supreme Court agreed to consider the legality of the Securities and Exchange Commission’s use of in-house tribunals, setting up a decision next term that could alter how U.S. securities laws are enforced.

In an order list on Friday, the high court said it would hear the Biden administration’s appeal of a May 2022 lower-court ruling that found it unconstitutional for the SEC to bring enforcement actions seeking financial penalties through its in-house courts.

The Supreme Court’s eventual decision could restrict the SEC’s use of its in-house courts. Such proceedings are heard by administrative law judges who are employees of the SEC but are supposed to exercise independent judicial powers.

Crypto Spot Bitcoin ETFs Re-Filed After SEC Expresses Caution

In a flurry of Friday afternoon activity, Fidelity Investments led a handful of firms that filed a fresh set of applications for a spot-Bitcoin exchange-traded fund to add new details after the US Securities and Exchange Commission indicated that the initial filings were insufficient.

The companies — which also include Invesco, VanEck, 21Shares and WisdomTree — are among eight that are seeking to launch what would be an initial crop of US spot Bitcoin ETFs. BlackRock Inc. set off the wave with its surprise filing for such a fund in mid-June.

All of the five that refiled Friday indicated that Coinbase Global Inc. will provide market surveillance in support of their funds, a fact that wasn’t included in previous iterations.

Insider Trading – Why Do They Do It?

I observe that there appears to be a common misconception among individuals charged with insider trading that their various efforts to hide their misconduct and their trading through faceless markets will somehow prevent detection. Unfortunately for them, nothing could be further from the truth. The SEC and the SROs dedicate substantial resources toward market surveillance, and inevitably they will detect trading anomalies and connections that allow them to investigate potential insider trading cases. With constant advances in data science and computing, these market surveillance efforts just get bigger and better, making the chances of conducting an undetected insider trading ring much smaller. Perhaps this is a point that we should all emphasize more in our insider trading training sessions, because I would hope that if people realized just how sophisticated the surveillance effort is, they might think twice about misappropriating the company’s material nonpublic information and trading or tipping.

Gemini Escalates Its Battle With The SEC

I am not making this up. Gemini, a company that the SEC accuses of swindling $900M from 340,000 investors with its EARN product, now blames the SEC for depriving investors of the right to be subjected to crypto-related grift and chicanery.

This is like Lee Harvey Oswald blaming the U.S. Secret Service for depriving people of the right to get a close look at the President.

This is like Jim Jones blaming the U.S. Food and Drug Administration for depriving people of the right to drink cyanide-laced Kool-Aid….