SEC Rejects Request to Rescind its "No Denial" Rule in Settlements

SEC Rejects Plea to End ‘Gag Rule’ for Settling Defendants

The Securities and Exchange Commission rejected a nonprofit’s request to rescind its policy that bars defendants from denying the agency’s allegations after a settlement, likely prompting legal action.

The SEC for decades has allowed parties to settle cases brought by the agency without admitting wrongdoing. But it also requires them to promise not to publicly deny the SEC’s allegations.

The agency wrote Tuesday to the nonprofit New Civil Liberties Alliance that the “no admit, no deny” policy—often referred to by critics as the “gag rule”— is reasonable and a proper exercise of its authority …

Elon Musk’s Tesla Pay Package Is Voided by Judge

Elon Musk, the chief executive of Tesla, suffered a stunning rebuke Tuesday when a Delaware judge voided the pay package that helped make him a billionaire many times over and the world’s wealthiest human being.

In a decision that cast a harsh light on the behavior of Mr. Musk and Tesla’s board of directors, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery said the chief executive had effectively overseen his own compensation plan — currently worth about $50 billion — with the help of compliant board members.

“The process leading to the approval of Musk’s compensation plan was deeply flawed,” the judge said. She ordered that the contract that gave Mr. Musk “the largest potential compensation plan in the history of public markets” be voided, and told parties in the case to work out how Mr. Musk would return excess pay.

UC Berkeley Graduate Students Use AI To Track Insider Trading By Congress

Fifth Year Master of Information and Data Science students Matthew Dodd, Aditya Shah, Jocelyn Thai, and Ethan Yen are the winners of the 5th Year MIDS Capstone Award for their project, PoliWatch.

Their project addresses a common issue in Congress: insider trading. Despite a fifth of trades by Congress being reported as problematic, little has been done to hold politicians accountable. To gather information on stock trades, the team built a dashboard tracking congressional members’ trading activities and contextualizes it with their committee assignments, attended hearings, and sponsored legislation.

How to prepare for (and manage) a dawn raid

Dawn raids are on the rise: the first three months of the new SFO director’s tenure saw two dawn raids, and the Financial Conduct Authority’s dawn raid activity during 2023 was significantly increased compared with 2022. Our global investigations team is seeing a similar trend in other jurisdictions.

We expect authorities across the globe to continue to utilize dawn raid powers in 2024, with new challenges arising for both authorities and organizations in dealing with emerging and multiplying data sources and hybrid working models.

Businesses should ensure that they are prepared for dawn raids by updating their dawn raid manuals in light of hybrid working and emerging data sources, ensuring they know where and how their data is stored, and conducting practical training for all relevant employees. Below, we summarize the approaches we are currently seeing from authorities in the UK and elsewhere around the globe, together with key practical steps to prepare for and manage a raid in the hybrid working world.

German Police Seize $2.1 Billion in Bitcoin From File Sharers

German prosecutors provisionally seized nearly 50,000 Bitcoin worth about $2.1 billion as part of an investigation into what they see as an illegal file-sharing platform.

It’s the largest amount of Bitcoin ever secured by law enforcement in Germany, Saxony prosecutors said Tuesday. Germany’s Federal Criminal Police Office and the US Federal Bureau of Investigation supported the investigation.

SEC’s SPAC Rules Set to Limit Rosy Projections That Fueled Mania

At the height of the SPAC boom, liberated startups capitalized on the ability to tout lofty goals about the years ahead without much of a risk of legal fallout.

Now, the US Securities and Exchange Commission’s new rules tightening SPACs’ disclosure requirements are set to clamp down on such forecasts when they come into force as soon as later this year. In hindsight, some companies that merged with blank-check vehicles during the pandemic-era boom may wish they hadn’t talked up their fortunes so optimistically.

Why People Still Think Bitcoin Will Die

If you’re looking for more proof of the gap of comprehension between “normies” and crypto fanatics, look no further than the results of a Deutsche Bank survey of 2,000 retail clients last week.

The most striking result wasn’t even that a third of respondents saw bitcoin below $20,000 by year end. That’s less than half its current price, and well shy of Anthony Scaramucci’s $170,000 price target, which, like other bullish predictions, sees ETF-spurred demand running up against thinner supply after the next “halving” this April.

No, what jumped out at me was the answer to a question about Bitcon’s survivability: more people said Bitcoin will disappear in the coming years than those who believed it would stick around.

Telling Investors that a Lawsuit is “Without Merit” Comes With Risks

When faced with a lawsuit, it’s common for a public company to argue in the court of public opinion that the claims asserted against it are “without merit.” However, as a recent U.S. District Court of the District of Massachusetts ruling in the case of City of Fort Lauderdale Police & Firefighters’ Retirement System v. Pegasystems Inc. demonstrates, such an approach is not without risk. The ruling illustrates the potential pitfalls of language such as “without merit” to describe litigation risks in SEC disclosures, particularly when internal evidence suggests a different story. In an environment where every corporate statement can be put under the judicial microscope, this case serves as a stark reminder of the need for careful, accurate communication when litigation is pending.