Twitter Litigation Stay: Three Weeks to Stop Punching Each Other in the Face

Elon Musk Has Three Weeks to Change His MindThe deep point of the stay in this case is to make the litigators go away. They have been punching each other in the face for months, because that is their job and because they enjoy it, but now they have to stop, so the deal lawyers can come back and actually close the deal. If you leave the litigators in charge of the closing, they will litigate everything. “We really punched them in the face over this closing memo,” they will say as they high-five each other. And then it will never get done.

Transparency for Thee, but Not for the SEC

But based on my experience in a half-dozen currently active lawsuits involving records requests to federal agencies, including the SEC, political appointees and other federal regulators regularly engage in the same sort of practices. Regulators are bound by requirements similar to those covering banks and traders, thanks to laws such as the Freedom of Information Act and the Federal Records Act. My FOIA clients seek particular “non-email electronic communications,” which is what the SEC calls messages on non-email platforms, including texts, encrypted messages on Signal or WhatsApp, or even logs of typed chats in Teams or Zoom.

Based on my FOIA cases, it appears that officials in the Biden White House, SEC and Federal Energy Regulatory Commission use chats extensively, arguably as an alternative to “.gov” email accounts. Evidence strongly suggests these are going unsearched in response to many requests for correspondence—unless the requester knows to seek them specifically. The same is true for the use of private phones and encrypted apps. Unless they’re specifically listed in a request, it seems that they often won’t be included.

SPAC-Merged Real Estate Platform Hit with Securities Suit

In the latest lawsuit to emerge in the aftermath of the recent SPAC frenzy, a plaintiff shareholder has filed a securities class action suit against Opendoor Technologies, a residential real estate digital platform, which merged into a publicly traded SPAC in December 2020. The SPAC involved was one of the many financial vehicles launched by the so-called “King of SPACS,” Chamath Palihapitiya, while the SPAC craze was picking up steam. A copy of the October 7, 2022 complaint can be found here.

Elon Musk Sued by Investor Over Manipulate Twitter Stock Price

Elon Musk was sued by a Twitter Inc. investor who says the world’s richest person’s on-again off-again purchase of the social-media platform and his public attacks on the company were designed to manipulate its stock price.

Giuseppe Pampena says that when Musk agreed last week to go ahead with his purchase of Twitter, at the originally agreed upon price, he “essentially acknowledged that he had been bluffing all along” about backing out of the deal.

The flip-flops and Musk’s accusations about Twitter sunk its stock price, hurting investors while all the while improving Musk’s bargaining position, according to the securities class-action complaint filed Monday in federal court in San Francisco.

Is there really such a thing as crypto addiction?

I’ve long thought that buying crypto is less like an investment, which is how it is usually touted, and more akin to gambling. There’s the get-rich-quick promises, the gamified trading platforms and the sheer unpredictability of the markets.

It wasn’t until I hosted the latest series of the FT’s Tech Tonic podcast that I realised quite how deep and disturbing the parallels are. “A Sceptic’s Guide to Crypto” took me on a wild ride, from monomaniacal tech billionaires in Virginia to no-nonsense cattle farmers in Wyoming. But it was in the Scottish Borders, about 20 miles south of Edinburgh, that I came across Castle Craig, an imposing 18th-century manor that has been used as a rehabilitation centre for more than three decades.

Castle Craig treats all kinds of addictions, from alcoholism to compulsive gambling, but, in 2016, it became the first rehab clinic to diagnose and treat crypto addiction. Since then, it has worked with almost 250 patients, and the numbers are growing every year.

SEC Climate Regulation Burdensome, Crypto Rules Unclear

Besides the legitimate question of whether the SEC has the authority to impose these disclosure obligations, and the hurdle crystallized in the Supreme Court’s West Virginia v. EPA ruling, Gensler steadfastly refuses to consider the evidence that these disclosure obligations risk burdening companies and their shareholders with high regulatory costs while providing little information of value for investors. As Senator Bill Haggerty (R., Tenn.) pointed out, such new regulatory requirements add to the “already crippling cost” of being a public company. This regulation would act as a powerful disincentive to going public, which will decrease the number of companies available to investors. At least there’s still hope that the SEC’s review of the more-than-14,000 comment letters it received will result in a reconsideration of these onerous disclosure rules.

The SEC, under Gensler’s leadership, should heed the increasingly louder calls (including those coming from the White House) for much-needed clarity on crypto regulation, and it should revisit proposed climate-risk disclosures to ensure that investors do not lose out on unrealized opportunities stifled by unclear or burdensome regulation. Consistency is often an admirable quality in a regulator, but the consistent failure to consider new evidence is not.

GOP treasurers withdraw $1B from BlackRock over ESG investmentsThe world’s largest asset manager is facing $1 billion in withdrawals from Republican state treasurers because of the financial giant’s investment priorities, according to published reports.

BlackRock, which manages $8.5 trillion, has come under fire for its aggressive push on so-called ESG investments that promote environmental, social and governance issues.

The outrage has led multiple GOP treasurers to announce they are planning to withdraw — or have already withdrawn — state funds from Larry Fink’s company.

Crypto’s Evolution as an Asset Class Needs Better Accounting

But after last year’s initial hype, the corporate balance sheet clamor for bitcoin has slowed to a crawl, likely due in part to complex accounting rules. For observers and investors in public companies holding bitcoin, disclosure rules are also vague and deter transparency. Tesla recently left a mystery in its wake as it sold 75% of its initial $1.5 billion bitcoin stake, leaving questions about its initial cost basis and disposition unanswered. To be fair, such transparency is by no means required under current accounting rules.

According to today’s accounting standards, bitcoin, which is considered an “intangible asset,” is disclosed in a markedly different way than typical investments such as cash, stocks, or bonds. Publicly traded firms are required to incur impairment charges against their bitcoin purchases whenever prices dip below the initial cost basis. In other words, and especially for volatile assets like bitcoin and other cryptocurrencies, impairment ends up harming the bottom line of public earnings reports and requires companies to hold these assets on their balance sheets at their lowest valuation since the point of purchase.