SEC Settlement Gives Rise to New Wall Street Compliance Role: The "WhatsApp Cop"

SEC Charges 16 Wall Street Firms with Widespread Recordkeeping Failures

The Securities and Exchange Commission today announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.

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The SEC staff’s investigation uncovered pervasive off-channel communications. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. These personnel included senior and junior investment bankers and debt and equity traders.

From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws….

WNN Exclusive: FOIA Documents Discredit Articles Attacking SEC Whistleblower Program

In response to a Freedom of Information Act (FOIA) request filed by Whistleblower Network News and the National Whistleblower Center (NWC), the U.S. Securities and Exchange Commission (SEC) has released the 1034 pages of documents that served as the basis for recent articles attacking the SEC Whistleblower Program.

In July and August, Bloomberg Law and University of Kansas Professor Alexander Platt published separate articles critiquing the SEC’s highly successful whistleblower award program. Bloomberg and Platt claimed that the documents released by the SEC in response to their FOIA requests revealed that the program is shrouded in secrecy and favors a small group of law firms with connections to the agency.

WNN’s investigation into the FOIA documents reveals that these allegations unfairly criticize the Commission’s whistleblower program.

SEC Charges Former Executives At Moviepass and Its Parent Company for Making False Statements to Investors and Falsifying Books and Records

According to the complaint, between August 2017 and at least March 2019, Farnsworth and Lowe intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press that MoviePass could be profitable at its new, $9.95 per month subscription price; about HMNY’s purported data analytics capabilities; and concerning HMNY’s ability to fund MoviePass’s operations. As further alleged in the complaint, Farnsworth and Lowe also devised fraudulent tactics to prevent MoviePass’s subscribers from using the service. In addition, the complaint alleges that, between January and April 2018, Farnsworth and Lowe knowingly approved false invoices that Itum submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity Itum controlled.

Carson Block Betrayed Partner to Steal SEC Award, Filing Says

The court fight over a $14 million SEC whistleblower award to short seller Carson Block escalated Monday, with his collaborator alleging Block deceived him while also acknowledging that neither man may have deserved the money.

Kevin Barnes argued in a new federal filing that Block worked behind the scenes to convince Securities and Exchange Commission investigators to cut him out of the bounty, which stemmed from a 2011 report the men authored that eventually led to SEC enforcement action against a Chinese company. Barnes made similar arguments in a New York state court filing earlier this year, but the new filing in the Southern District of New York provides greater detail.

The Crypto World Is on Edge After a String of Hacks

These loosely regulated ventures allow people to borrow, lend and conduct other transactions without banks or brokers, relying instead on a system governed by code. Using DeFi software, investors can take out loans without revealing their identities or even undergoing a credit check. As the market surged last year, the emerging sector was hailed as the future of finance, a democratic alternative to Wall Street that would give amateur traders access to more capital. Crypto users entrusted roughly $100 billion in virtual currency to hundreds of DeFi projects.

But some of the software was built on faulty code. This year, $2.2 billion in cryptocurrency has been stolen from DeFi projects, according to the crypto tracking firm Chainalysis, putting the overall industry on pace for its worst year of hacking losses.

ESG Threat Goes Beyond BlackRock

This process is already happening in Europe and the U.K. The Securities and Exchange Commission is following suit by proposing new rules that would require public companies to provide detailed reporting of their climate-related risks, emissions and net-zero transition plans. This is the tomorrow war that the ESG opposition needs to start waging today, rather than picking a personal and political fight with Mr. Fink and BlackRock.

In addition to more legal pushback on the regulatory front, there needs to be greater scrutiny of the undue influence that sustainability-focused nongovernmental organizations such as PRI exert on the financial markets. Specifically, how is it that PRI, a nonprofit registered in England and Wales, is able to dispense ESG-related investment and legal advice in the U.S. and lobby government officials over sustainable-finance regulations?

House Democrats Unveil Bill to Restrict Trading by Lawmakers, Presidents

Senior House Democrats on Tuesday night released their proposal to restrict stock ownership and trading by members of Congress, the president and vice president, Supreme Court justices and other high-ranking government officials.

The bill, titled the “Combatting Financial Conflicts of Interest in Government Act,” could be introduced on Wednesday, when the House is in session. But when, or if, the bill will head to the floor for a vote was unclear, as potential action this week become muddled earlier on Tuesday amid ongoing differences within the Democratic ranks.