SPONSORED BY
Good morning! Here’s what’s up.
People
Eric I. Bustillo, former Director of the SEC’s Miami Regional Office, has joined Fridman Fels & Soto as a partner.
Daniel Collins and Levi Giovanetto have joined Sheppard Mullin as partners in the form’s Chicago office.
Clips ✂️
On July 20, 2026, the Securities and Exchange Commission filed partially settled charges against Zan Shaikh, a Florida resident, and his company Mining Automatic alleging that they misappropriated and misused investor funds after raising approximately $22 million from more than 380 investors in connection with a fraudulent scheme involving purported crypto asset mining.
According to the SEC’s complaint, between approximately June 2023 and May 2025, Shaikh and Mining Automatic promised investors guaranteed monthly returns from investing in a purported crypto asset mining operation that was insufficient to generate the promised returns. As alleged, crypto asset “miners” are participants in a crypto network who provide computational resources to validate transactions on the network (“mining”), for which the miners may be rewarded with crypto assets. Shaikh and Mining Automatic allegedly made misrepresentations, including about their experience, expertise, and track record in crypto asset mining; the uses of investors’ money; the status of the crypto asset mining operations; and the purported reasons why they could not make monthly payments to investors when they were due. The complaint alleges that, despite their representations that they would use investors’ funds to engage in crypto asset mining, Shaikh and Mining Automatic used only about 13% of investors’ funds on expenses relating to purported crypto asset mining. According to the complaint, Shaikh and Mining Automatic took in at least $20 million more in investments than they have repaid to investors and used investors’ funds largely for marketing to solicit new investors and to pay for Shaikh’s personal and unrelated business expenses.
👉 The SEC Complaint is here. The Litigation Release adds that “the investigation was supervised by Laura D’Allaird of the Cyber and Emerging Technologies Unit.”
Even as Congress and regulators attempt to provide market participants with greater clarity regarding regulatory oversight and compliance obligations, the recent NERA report indicates that cryptocurrency-related securities claims against digital asset issuers and market participants continue to increase.
From a D&O coverage perspective, the distinction between regulatory enforcement and private securities litigation is important. While SEC proceedings may present threshold coverage issues, securities claims may expose a D&O underwriter to substantial defense expenses, settlements, and long-tail litigation. A decline in regulatory enforcement does not necessarily translate into a reduction in D&O exposure. […]
Viewed in the context of the current securities litigation environment, the NERA report’s findings suggest that the nature of cryptocurrency-related D&O risk may be changing, but not necessarily diminishing. Securities class action filing activity through the first half of 2026 remains elevated despite fluctuations in specific categories of litigation. While regulatory activity against cryptocurrency companies may be declining, the underlying drivers of securities litigation remain. For D&O insurers with cryptocurrency-related exposures, the NERA report may suggest that risk is increasingly tied to disclosure, governance, and oversight issues rather than regulatory enforcement alone.
👉 Post by Sara Abrams. The NERA article by Simona Mola discussed in the article is here.
Like: Obviously it is bad for public companies to report twice a year. All the comments say that it’s bad because it is. But most companies won’t switch to semiannual reporting just because that’s allowed. And the SEC’s point is not that it’s good. The point is that smallish shady-ish companies can choose to go public or not. If they don’t go public, they have to report financial results zero times a year; if they do, four times (currently) or twice (under the new proposed rules). There is some margin where some smallish shady-ish companies will go public under a twice-a-year rule but not under a four-times-a-year rule. Two is more than zero. As I wrote a few months ago: “this SEC proposal is intended to get retail investors more information, on the theory that two reports a year is better than none, and optional semiannual reporting will get more companies to go public.”
On the other hand, do you want more smallish shady-ish companies to go public? I don’t have a strong view on that, but I gather that the SEC does!
In early February, Caden Booth, a 21-year-old TikToker, flew from Cincinnati to San Francisco and headed for the stadium where Super Bowl LX was taking place. He waited 12 hours, until he heard rehearsals for the national anthem begin. Stopwatch in hand, he timed how long each version took. Then he used that data to bet more than $50,000 on Polymarket that the anthem’s length would be under 117 seconds on game day — and scored a massive win when it turned out to be 104.
After Booth turned the episode into a viral video, accusations of “insider trading” started piling up. He didn’t appear to have broken any rules: He’d simply researched when rehearsals typically take place and listened from a public sidewalk. “People were saying, ‘Is this illegal? How is this allowed?’’’ Booth recalls. “A lot of people took it as, ‘Does this hurt the integrity of prediction markets, because this kid can just easily go time the anthem?’”
Accounting irregularities at Berenberg were designed to flatter profits and its regulatory capital, a forensic investigation into Germany’s oldest private bank has concluded.
Auditors at Deloitte finally signed off on Berenberg’s delayed 2025 accounts on Monday after German financial watchdogs intervened last month to suspend three managing partners and appoint two special representatives to run the bank amid “possible corporate governance breaches”.
Berenberg said on Tuesday that forensic investigators had discovered inconsistencies “primarily intended to influence the bank’s regulatory capital and own funds position” and, in some cases, “generate, smooth or accelerate the recognition of accounting profits”.
Congress has passed foolish financial legislation before. It has repealed safeguards it later rebuilt in shame. But in ninety-two years, it has never enacted a statute deliberately engineered to dismantle investor protection for the precise market that needs it most — until the CLARITY Act, which passed the House 294-134 and has cleared the Senate Banking Committee, with a floor vote looming.
And the loudest cheerleader for this demolition is the one official sworn to prevent it: SEC Chairman Paul Atkins, who urges Congress at every stop of his endless crypto road show to send the Act to the President's desk — delivering exactly what Big Crypto's lobbyists ordered.
I spent nearly 20 years in the SEC's Division of Enforcement. Here are a dozen reasons this statute should alarm every American with a retirement account.
👉 If you thought John Stark was going to be a fan of the CLARITY Act, I regret to inform you that you were mistaken.
SPONSORED BY
Securities Enforcement Forum Central 2026 is set for Thursday, October 1, 2026 at the Ritz-Carlton Chicago! Join us in person or tune in virtually to hear from 35+ luminaries in the securities enforcement field—including numerous in-house counsel from major corporations, and lawyers and consultants from the best firms in the world.
👉 Until August 6, Daily Update readers can register here with a 25% early-bird discount by using one of these codes. See you October 1 in Chicago!!!
In-Person: UPDATE808C25
Virtual: UPDATE808V25
