Terraform Agrees to $4.47 Billion Settlement of SEC Case

Terraform Lab Agrees to Pay $4.47 Billion Penalty in SEC Civil Case

The SEC on Wednesday asked a federal judge in New York to approve the settlement. The deal was reached after a jury in April found Terrform and co-founder Do Kwon liable for fraud following a two-week civil trial. Kwon still faces a criminal case over the sale of the firm’s UST stablecoin.

Terraform will pay about $3.59 billion plus interest and a $420 million penalty, while Kwon will pay $204.3 million, including $110 million in disgorgement, interest and an $80 million penalty, a court filing showed. Kwon also must transfer at least $204.3 million to the Terraform bankruptcy estate for distribution to investors, and will be barred from serving as an officer or director of a public company, according to the settlement.

SEC Charges JAG Capital Advisors and its Founder Joshua Goltry with Defrauding Investors

The Securities and Exchange Commission today charged Joshua Goltry and his investment management firm, JAG Capital Advisors LLC (JAG Advisors), in connection with a three-year scheme to defraud investors of at least $3 million.

According to the SEC’s complaint, from 2020 to 2023, Goltry, the founder and Chief Investment Officer of a purported equity fund called JAG Cap, LLC, and JAG Advisors, the purported equity fund’s investment manager, raised at least $3 million from approximately nine investors by lying about nearly every aspect of the fund, including its performance, investment activity, and investment risks. Goltry is the principal of JAG Advisors. As alleged, of the funds raised, Goltry and JAG Advisors used at least $1.1 million on personal expenses, including travel and jewelry, and lost more than $1.7 million through high-risk trading and speculative investments. The complaint further alleges that Goltry and JAG Advisors falsified documents, including expense invoices, to conceal the trading losses from investors.

When Lawmakers Demand SEC Lawlessness

Last week more than three dozen federal lawmakers—11 senators and 27 house members—sent an extraordinary letter to U.S. Securities and Exchange Commission Chairman Gary Gensler.

In it, the lawmakers demanded “robust enforcement” of the SEC’s informal climate-disclosure “guidance”—even as the agency fights an uphill court battle to salvage its recent climate-disclosure formal rule.

These lawmakers need a refresher course in constitutional and administrative law. They might learn (or relearn) that agency guidance is not binding, and therefore not enforceable. Unless and until an agency formally adopts a legally binding rule—usually through the public notice and comment process required by the Administrative Procedure Act—private citizens and businesses are free to ignore the agency’s informal suggestions and finger wags.

A €20 Million Inside-Trader Case Kept Alive as Privacy Bid Flops

A French investigation into two traders suspected of making €20 million ($21.6 million) from insider tips was kept alive by a Paris court as their long-running privacy bid collapsed.

The investigation — France’s biggest insider-dealing case — had been hanging on a thread ever since traders Alexis Kuperfis and Lucien Selce won a key European Union ruling that threatened to undermine the validity of crucial evidence.

But in a non-public judgment, the Paris court of appeals has decided not to throw out the evidence — which was used to tap the burner phone of an ex-Societe Generale SA …

SEC Obtains Court Order to Enforce Investigative Subpoena to Issuer of Purported Crypto Asset

On May 23, 2024, the U.S. District Court for the Southern District of Florida granted the Securities and Exchange Commission’s application to enforce a subpoena for the production of documents to James L. Koutoulas (“Koutoulas ”), and denied Koutoulas’s petition to quash that subpoena.

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According to the SEC’s filing, the SEC is investigating whether Koutoulas or entities he controlled violated the federal securities laws in connection with the offer and sale of the “Let’s Go Brandon” Coin (“LGBCoin”). As part of the investigation, the SEC issued an administrative subpoena to Koutoulas seeking documents and communications relevant to determining whether LGBCoin was offered and sold as a security. Rather than complying with the subpoena, Koutoulas filed a petition to quash, arguing that the SEC lacked jurisdiction because LGBCoin is not a security. The SEC opposed the petition and cross petitioned for an order compelling obedience with the subpoena.

On May 23, 2024, the Court denied Koutoulas’s petition, and ordered him to comply with the subpoena….