Today: SEC-Covington Privilege Dispute to be Argued in D.C. Federal Court

Covington and SEC Heading to Court Over Attorney-Client Privilege Battle

A U.S. District judge is scheduled to hear arguments on Wednesday in a closely watched case that is testing the bounds of attorney-client privilege against national security interests.

Judge Amit Mehta will weigh whether Washington, D.C.-headquartered firm Covington & Burling is required to turn over to the U.S. Securities and Exchange Commission the names of nearly 300 clients whose information may have been exposed in a 2020 cyberattack.

Covington has argued that it would breach client confidentiality and have chilling effects on the standards by which lawyers have to divulge sensitive information about clients.

Who is the $279mn whistleblower?

Last week the SEC awarded someone a record-smashing $279mn for blowing the whistle on some nefarious activity that “led to the successful enforcement of SEC and related actions”. But who, and for what?

That’s what Alphaville has been pondering over the weekend. That may sound beyond tragic, but from some of the texts we’ve been receiving on the subject we seem to be in good company. Well, curious company at least.

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However, FTAV’s low-confidence bet is that it’s tied to the WhatsApp probe. The size of the SEC’s $1.235bn of cumulative penalties against 17 investment banks and the wording of the statement seems to fit (roughly) with how the WhatsApp probe unfolded, and gradually expanded to in take hedge funds, asset managers and private equity as well.

Miami’s Love Affair With Crypto Is Souring as Bitcoin Faithful Flock to the City

A year ago, when the annual bitcoin conference opened in Miami, the city was arguably the country’s biggest booster of digital currencies. MiamiCoin traded on a global crypto exchange. The Miami Heat basketball team played at FTX Arena, and cryptocurrency exchange Blockchain.com was preparing to move its headquarters to a splashy office in the city’s Wynwood neighborhood.

Today, as Miami prepares to host Bitcoin 2023 on May 18, none of those things is true anymore.

Ex-Coinbase Manager Ishan Wahi Sentenced to 2 Years for Insider Trading

A former Coinbase Global Inc. manager was ordered to spend two years in federal prison for trading on confidential information about when the cryptocurrency exchange was going to list new tokens.

US District Judge Loretta Preska pointed to “a massive abuse of Mr. Wahi’s employer’s trust” over 10 months in sentencing him Tuesday in Manhattan. “It was not just a one-time event.”

Kraft Heinz Securities Litigation Settles for $450 Million

The parties in the Kraft Heinz Securities Group securities class action litigation have agreed to settle the case for $450 million, a massive settlement that makes the list of all-time largest settlements. The settlement is subject to court approval. A copy of the parties’ stipulation and agreement of settlement, which was filed with the court on May 5, 2023, can be found here.

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This settlement is large enough to make this list of all-time top settlements, but at the same time, as massive as this $450 million settlement it, it only qualifies as 41st largest settlement. (In making this statement, I am referring to the ISS Securities Class Action Services List of Top 100 Settlements, discussed here).

Judge nixes Block shareholder suit over online music deal

A Delaware judge has dismissed a shareholder lawsuit against financial technology company Block Inc. over its 2021 acquisition of majority ownership in Tidal, the music streaming service partly owned by rapper Jay-Z.

A pension fund shareholder alleged that Block founder and CEO Jack Dorsey and the company’s board of directors breached their fiduciary duties in agreeing to pay roughly $300 million to take control of Tidal as it was failing financially and the target of an ongoing criminal investigation.

U.S. prosecutors look at short selling in bank shares – source

Federal prosecutors in Washington are looking into short seller activity around the recent volatility in U.S. bank shares sparked by the failure of three regional lenders since March, a source familiar with the matter said.

Short sellers, traders that profit by betting shares will fall, have come under scrutiny over the past week as government efforts to steady the sector have faltered and investor fears over the health of regional lenders have deepened.