SEC Obtains TRO to Halt Ongoing Fraud Targeting Indian Americans

SEC Obtains Emergency Relief To Halt Nearly $130 Million Fraud Targeting Indian American Community

The Securities and Exchange Commission today announced that it obtained a temporary restraining order, asset freeze, and other emergency relief to halt an ongoing fraud targeting the Indian American community that has raised nearly $130 million since April 2021. The fraud is allegedly being conducted by Nanban Ventures LLC, its three founders Gopala Krishnan (aka GK), Manivannan Shanmugam, and Sakthivel Palani Gounder (collectively, Founders), and three other entities that the Founders control.

The SEC’s complaint, unsealed today in the U.S. District Court for the Eastern District of Texas, alleges that the defendants raised more than $89 million from more than 350 investors for investments in purported venture capital funds that the Founders managed through Nanban Ventures LLC and more than $39 million from 10 investors that invested directly in the three other entities controlled by the Founders. The SEC’s complaint alleges that the Founders overstated the profitability of the investments and paid investors at least $17.8 million in fake profits that were actually Ponzi payments. The SEC’s complaint further alleges that defendants misrepresented Krishnan’s expertise and success using his eponymous “GK Strategies” options trading method. According to the SEC’s complaint, Krishnan claimed in a YouTube video that he achieved returns of “more than a hundred percent,” and Nanban Ventures claimed in its venture capital funds’ private placement memorandums that Krishnan would manage the funds to generate returns that would “consistently overperform the S&P 500 Index.” The SEC’s complaint further alleges that the actual trading returns using GK Strategies were, with limited exceptions, lower than the returns of the S&P 500 index, lower than the percentage returns that Krishnan claimed in YouTube videos, and negative on numerous occasions.

Bitcoin 10% Jump to $30,000 Hints at Playbook for Spot ETFs

A brief 10% surge in Bitcoin gave traders a glimpse into the possible impact of a looming US Securities & Exchange Commission decision on whether to allow exchange-traded funds that invest directly in the cryptocurrency.

An erroneous report that BlackRock Inc. had won approval to launch a spot ETF rapidly sent the largest digital asset to $30,002 on Monday, the highest price since August. The move cooled after the world’s biggest money manager said its application remains under review, leaving Bitcoin 4.4% higher for Oct. 16. It was little changed at around $28,400 on Tuesday in New York.

Sam Bankman-Fried’s legal peril deepens as his defense comes up short

Government lawyers have marshaled damaging testimony from multiple insiders, backed by documentary evidence, depicting the former cryptocurrency mogul as the architect of a scheme to siphon billions of dollars in customer funds toward lavish personal expenses and risky investments. And Bankman-Fried’s legal team has so far failed to raise serious questions about the credibility of the prosecution’s witnesses or their accounts, these experts say.

“The case has turned out to be not only as strong as it was expected to be but, if anything, stronger,” said Samuel Buell, a former federal prosecutor and a law professor at Duke University. “Defense lawyers can’t make strong evidence go away. I don’t know where they go from here.”

SEC Drops ESG From List of Compliance Priorities in 2024

SEC examiners are downplaying environmental, social, and governance investing as a focus when inspecting firms for compliance with agency rules after years of listing ESG as a priority.

The Securities and Exchange Commission made no direct reference to ESG in its 2024 Division of Examinations priorities released Monday for investment advisers, brokers and other securities industry members. The SEC listed ESG as an examination focus in its reports for 2023, 2022 and 2021, when Democrats took control of the agency.

Boards Must Be Wise to the Risks of Text Messaging

Whether in the car, in the elevator, during meetings and meals, on planes and trains, even in the middle of a conversation, we’re constantly texting. And that’s something boards and directors need to start thinking about in a very different way.

The convenience, immediacy and intimacy of a text message has made texting central to everything — connecting with friends and family as well as coordinating with colleagues and clients. Cell phones are indispensable and ubiquitous; users in the United States send 2 trillion text messages a year. Set aside for now your suspicion that this portends the end of Western civilization. Let’s instead focus on the two key reasons this matters for businesses and boards: enforcement risks and cyber risks.

New York judge rejects Indiana ex-U.S. Rep. Steve Buyer’s request to remain free pending appeal

Former U.S. Rep. Steve Buyer cannot defer his surrender next month to serve a nearly two-year prison sentence resulting from his insider trading conviction because there was overwhelming evidence of his crimes, a federal judge said Monday.

Judge Richard M. Berman ruled there was no substantial question nor any close question of law to warrant letting the Indiana Republican remain free until his appeal is decided. He said prosecutors had presented “compelling testimony and documentary evidence” of Buyer’s crimes and “devastating evidence of an attempted cover-up.”

Where Is Crypto Policy Heading in a Post-FTX World?

Not if former Congressmen Tim Ryan, a Democrat, and David McIntosh, a Republican, have anything to say about it. “The technology itself has tremendous potential for economic growth and innovation,” says former Rep. McIntosh. “But what’s happened in the United States is that we have a regulatory system led by Gensler that is very anti-blockchain technology, so it’s pushing the innovation and the capital for this new technology overseas.”

So McIntosh and Ryan are spearheading the Blockchain Innovation Project, which has a goal of advancing bipartisanship, educating their colleagues, and ultimately enacting sensible crypto policy. They know it’s an uphill battle. Ryan acknowledges that Senator Warren “chalked the field” with her forceful anti-crypto message, and says that unfortunately the “extremes define the entire party.” This is why he thinks it’s so important to get more of the Left to appreciate the merits of blockchain technology, and thinks that “we seeing more and more Democrats come online.”

Guest Post: Carillion Directors’ Disqualification Proceedings: A Cautionary Tale for All Non-Executive Directors

Nearly six years after the collapse of Carillion in January 2018 with debts in the region of £7 billion, the trial of its five non-executive directors (and one executive director) under the Company Directors Disqualification Act (CDDA) in proceedings brought against them by the Insolvency Service was finally due to get underway today but was dropped by the Insolvency Service at the 11th hour on the basis that it would not have been in the public interest to continue. If the claim had succeeded, the individuals could have been disqualified from serving as directors for up to 15 years. They (and their executive colleagues) have already faced a series of enquiries and investigations. What was the nature of the case they were facing and to what extent were any liability protections which may have been in place prior to Carillion’s collapse apt to protect them? Finally, what lessons, if any, are there here for non-executive directors of other publicly listed UK companies?