The SEC's AP Docket: "A Well-Deserved Implosion Brought About By Hubris"

A well-deserved implosion brought about by hubris

Elsewhere on the SEC website, it still appears that the last time an SEC ALJ issued an initial decision on the merits of any case was nearly two years ago, on May 17, 2023. (See here: https://lnkd.in/emXxcTYz).

By comparison, as of March 31, 2016, there were 78 cases pending before the SEC’s ALJs, and they collectively cranked out an astonishing 95 initial decisions in just the six-month period between October 1, 2015 and March 31, 2016.

Then came the Supreme Court’s Lucia decision, and more recently the embarrassing “control deficiency” fiasco, followed by last year’s Jarkesy decision. And “POOF!” A well-deserved implosion brought about by hubris.

There’s still work to do in ridding ourselves of the remaining vestiges of this profoundly unconstitutional administrative prosecution monster, but I’m thrilled with the progress we’ve made over the past decade!

Arizona Governor Calls Crypto an ‘Untested Investment,’ Striking Bitcoin Reserve Bill

Arizona will not be investing in bitcoin (BTC), at least not this year.

Governor Katie Hobbs vetoed a bill on Friday that would have allowed the state to hold the digital asset as part of its official reserves.

The legislation, known as Senate Bill 1025, proposed using seized funds to invest in BTC and create a digital assets reserve managed by the state. After passing the state House in a narrow 31–25 vote, the bill reached Hobbs’ desk, where it was swiftly struck down.

“The Arizona State Retirement System is one of the strongest in the nation because it makes sound and informed investments. Arizonans’ retirement funds are not the place for the state to try untested investments like virtual currency,” Hobbs wrote in a statement.

Corporate and Securities Litigation Risk in the New DEI Environment

Even before the start of the new Trump administration, corporate DEI initiatives faced increasing scrutiny. With the new administration, DEI initiatives face even greater scrutiny. Following Trump’s January inauguration, the President and the Attorney General declared that the new administration intends to target what they have called “illegal DEI.” The administration’s approach creates regulatory and enforcement risks for companies and their executives with respect to DEI issues. And as detailed in a recent law firm memo, these developments could also give rise to increased corporate and securities litigation risks as well, as discussed below. The Winston and Strawn law firm’s April 28, 2025, memo entitled “Securities Litigation Risk in the Evolving DEI Landscape” can be found here.

Can You Blame the Chatbots?

“Everything is securities fraud” is a big theme around here, and I have mused in the past about how large language models might be securities fraud. One possibility is: You go to a chatbot, you type in “is XYZ a good company,” and the chatbot hallucinates an answer like “yes they just discovered a cure for cancer” or “no they are doing huge fraud.” You buy or sell the stock, relying on the chatbot’s answer, but it’s totally false and the stock moves in the wrong direction. You sue the chatbot’s maker for securities fraud.

There are various practical problems with that hypothetical lawsuit: Was it fraud in connection with the purchase and sale of a security? Was the chatbot’s maker profiting from the alleged fraud? Were you reasonable in relying on the chatbot’s output, despite a bunch of disclaimers attached to it?

But there is also a more philosophical problem about the chatbot’s state of mind. Ordinarily securities fraud requires some “intent to deceive, manipulate, or defraud,” or if not actual intent then at least recklessness with the truth….

US lawmakers urge SEC to delist Alibaba and Chinese companies

The heads of two Congressional panels have urged the Securities and Exchange Commission to delist Chinese groups, including Alibaba, that they say have military links that put US national security at risk.

John Moolenaar, the Republican chair of the House China committee, and Rick Scott, the Republican chair of the Senate committee on ageing, wrote to SEC chair Paul Atkins on Friday to ask his agency to take action against 25 Chinese groups listed on American exchanges.

The targets also include search engine Baidu, online retail platform JD. com and the popular social media platform Weibo.