The SEC’s “Emergency” Case Against Srinivas Koneru

The SEC’s “Emergency” Case Against Srinivas Koneru

Think about the priorities this reveals. Against a mammoth SEC reorg and regulatory retreat, the SEC decided this case – involving a retired executive, a now-private company, and conduct from half a decade ago where investors have apparently already been recompensed – was urgent enough to violate federal law during a government shutdown.

Koneru fired back with a highly unusual complaint seeking a declaratory judgment and injunctive relief. His case may prove defining: just how far does the Antideficiency Act’s “emergency” exception actually stretch? And can SEC staff effectively manufacture crises of their own making?

BTW, since filing this so-called emergency action, the SEC has filed exactly zero emergency motions.

Their sole filing? A motion for a two-week extension to respond to the complaint, citing that counsel “was out of the office at times during the holidays and New Year period” and has “an active caseload with a variety of matters.”
Read that again. They had five years to investigate. They claimed it was an emergency. And now they need more time because of. . . . vacation.

The SEC’s response deadline is February 17th.

Elon Musk Merges SpaceX With His A.I. Start-Up xAI

SpaceX, the rocket and satellite maker led by Elon Musk, said on Monday it had acquired xAI, the artificial intelligence company controlled by Mr. Musk, a sweeping move to consolidate his business empire as it faces questions about the cost of its A.I. ambitions.

The exact financial details of the deal were not disclosed, but the acquisition cements SpaceX’s standing as the most valuable private company in the world, and creates a company worth more than $1 trillion.

The combined company, with a portfolio including rockets, an A.I. chatbot and the social media platform X, will probably move forward with an initial public offering around June, said two people familiar with the plan who spoke on the condition of anonymity because the details weren’t public. Mr. Musk hopes to raise about $50 billion with the offering, they added.

‘Back to Basics’ Enforcement May Not be Limited to Overt Misconduct

Continuing on the enforcement theme, there was more to share from the “SEC Enforcement and Investigations” panel at SRI. Goodwin’s Jonathan Hecht stressed during the panel that, while SEC leadership has focused on overt misconduct in speeches and statements, there are factors that keep less egregious disclosure cases in the SEC’s crosshairs (even when negligence is involved rather than knowing or reckless fraud). Specifically:

– The SEC is focused on individual accountability and measurable investor harm, both of which are implicated in disclosure cases. Senior executives are directly involved. They speak on earnings calls and have to certify SEC filings, so the risk of individual accountability and liability is high.
– The SEC perceives investor harm as acute when disclosures are at issue because they can point to the market reaction when corrective disclosures are made. That gives measurable materiality of the investor harm (that could be addressed by a fair fund) from the misstatement or omission.

Family offices shun crypto despite hype, with 89% holding no digital assets: JPMorgan Private Bank

The vast majority of global family offices do not hold cryptocurrency in their portfolios, according to JPMorgan Private Bank’s 2026 Global Family Office Report. […]

“Despite the headlines and hype around crypto and other digital assets, the vast majority of family offices (89%) remain on the sidelines,” the report said. “This could reflect a debate that we are also having within JPMorgan: What role should cryptocurrency and other digital assets play in a portfolio, and, perhaps more importantly, how much should a portfolio own, given their elevated volatility and inconsistent correlation with other assets?”