"The Extraordinary State of the Market for SEC Enforcement and Other Government Attorneys"

Is 2025 the year of the $2 million director?

How much should a director at a publicly traded company get paid? Keep in mind that this is very much a part-time job, since the overwhelming majority of directors have full-time (and often very responsible jobs) doing other things, like, say running their own publicly traded company.

I thought about this because late on the Friday before many people disappeared, Microstrategy filed this 8-K announcing three new directors, all of whom already appear to have very full-time jobs, among them serving as the Chief Investment Officer of Brown University, whose endowment is over $7 billion.

In the filing, the company said that each new director would receive $2 million, equally distributed between stock options and restricted stock units. This is in addition to the regular director fees that Microstrategy directors receive. For 2023, that number was around $170K in either cash or bitcoin. Directors can also receive a lavish list of perks, which the company detailed in its most recent proxy….

Carvana shares tumble after short-seller claims ‘accounting grift for the ages’

Short seller Hindenburg Research on Thursday accused Carvana of running an “accounting grift for the ages” in a bombshell report — sending shares of the used-car retailer tumbling.

Hindenburg — whose report on companies run by Indian billionaire Gautam Adani led to a federal indictment of the mogul last year — said it took a short position on Carvana after extensive document review and nearly 50 interviews with industry experts.

Its report — titled “Carvana: A Father-Son Accounting Grift for the Ages” — accused the Tempe, Arizona-based company of insider trading and accounting manipulation.

“Our research uncovered $800 million in loan sales to a suspected undisclosed related party, along with details on how accounting manipulation and lax underwriting have fueled temporary reported income growth — all while insiders cash out billions in stock,” the short seller alleged.

Vinco Ventures Chief Charged With Securities Fraud Conspiracy

Vinco Ventures Inc. CEO Roderick “Rod” Vanderbilt has been charged with one count of conspiracy to commit securities fraud in connection with representations he made about the media-focused selective acquisition company’s operations and control.

The criminal information, filed in the US District Court for the Southern District of Florida on New Year’s Eve, accuses Vanderbilt of conspiring with former Helios & Matheson Analytics Inc. chairman Theodore Farnsworth to artificially inflate Vinco’s stock price, by—among other things—hiding Farnsworth’s involvement at the company.

SEC Expected to Focus on Fraud Enforcement Fundamentals in 2025

The SEC this year will turn away from more expansive or novel enforcement tools used in the Biden administration, and double down on bread-and-butter fraud cases, attorneys say.

“Expect less appetite for corporate penalties and lower penalty amounts,” said Jessica Magee a former SEC enforcement officer now with Holland & Knight LLP. That anticipated shift raises the question of how the Securities and Exchange Commission will create incentives for self-reporting and cooperation, she told Bloomberg Law.

Gregory Baker of Patterson Belknap Webb & Tyler LLP, who was at the SEC during the transition from the Obama administration to the first Trump administration, agreed. “If the past is any prologue, there’s definitely more of a focus on individual accountability rather than corporate accountability,” he said. Broadly speaking, the agency won’t bring cases in crypto and other “new hot-button areas,” he said.