The "Shift in the SEC’s Enforcement Playbook"

Major shift in the SEC’s enforcement playbook

Key takeaways

The SEC’s enforcement program is prioritizing traditional areas such as insider trading, fraud, and conduct causing harm to retail investors. The SEC has also dismissed aggressive enforcement actions filed under prior administrations.

The Commission has also signaled a more open and collaborative posture toward defense counsel and a willingness to credit meaningful remediation and cooperation with reduced — or even no — enforcement action. These changes are a welcomed development, as the current SEC appears to disfavor pursuing novel legal theories and technical violations.

At the same time, these changes reflect a shift in enforcement priorities rather than changes to the underlying law. Without those changes, future SEC leadership could readily return to a more expansive enforcement approach. But changes may be forthcoming. For example, Chairman Atkins has voiced concerns about the future, recently noting that regulators “must craft a framework that future proofs the crypto markets against regulatory mischief.”

Regardless of the enforcement priorities, public companies and regulated entities benefit from continuing to promote strong internal controls and proactive compliance programs. Identifying and addressing potential issues before they attract SEC scrutiny will better position organizations to navigate an enforcement matter in any environment.

How Ponzi Scheme Charges Crashed Tai Lopez’s YouTube Empire

When the pandemic leveled the retail market months later, there was an opportunity to scoop up distressed or bankrupt assets. Dress Barn, Linens ’N Things, Modell’s Sporting Goods, Pier 1, RadioShack, and Stein Mart were soon under REV’s umbrella. It was a challenging business model from the start. “A lot of the manufacturers don’t need another third-party online retailer,” says Mitchell Modell, the former CEO of the defunct chain that bore his family’s name. “It’s a tough marketplace.”

But REV investors who poured in tens of millions of dollars were enticed by the near-impossible promise of up to 25 percent annualized returns…. […]

Authorities now claim that Lopez, Mehr, and Burkenroad had more to be cagey about than just the losses. Last month, the Securities and Exchange Commission charged Lopez and Mehr with several fraud counts for “misappropriating investor money and operating a Ponzi scheme” from 2020 to 2022 with $122 million of investors’ funds. In meetings, they say Lopez and Mehr discussed the “triage” of payments — using new investors’ money to pay back those who had already put into the pot. The books were allegedly a mess, with the company co-mingling funds from each of its brands to make them look as if they all were performing well. Lopez had allegedly lied to investors for years. Though he told his team in February 2022 that Dress Barn was performing well, the company actually lost $13.7 million the year before.

Typo-Doomed $1 Million Crypto Transfer Tests Commercial Law

A typo-flawed $1 million cryptocurrency transfer prompted a US appeals panel in Boston to struggle with the virtue of applying commercial laws governing the replacement of paper stock certificates to digital currencies sent to the wrong blockchain wallet.

The US Court of Appeals for the First Circuit panel posed tough questions to both sides of Celacare Technologies’ attempt to revive its bid to have Circle Internet Financial, a cryptocurrency issuer, replace the $1 million in USDC stablecoins that its chief executive lost when mistakenly transcribing a “B” in the wallet address as the number ”8”.

Williams & Connolly Targeted by Hackers

In one of the latest law firm hacking events, the computer systems of Washington, D.C.-based firm Williams & Connolly were breached by hackers, the firm confirmed Wednesday.

The firm says it recently discovered the cybersecurity incident, in which a “small number” of attorney email accounts were accessed in what it referred to as a zero-day attack.

A so-called zero-day attack is when hackers exploit a security hole before the release of an official patch or update to fix the vulnerability. But the firm said there was “no evidence” that confidential client data was extracted.