Why "Wall Street is Set for a Much Easier Ride" Under Incoming SEC Chair Atkins

Trump’s SEC pick likely to give Wall Street easier enforcement ride

But his enforcement dissents, which have not been previously reported in detail, and Reuters’ interviews with more than a dozen former SEC officials and academics, provide insight into how deep that skepticism was. They suggest Wall Street is set for a much easier ride after years of aggressive enforcement under Democratic Chair Gary Gensler, whose SEC levied over $20 billion in penalties and other charges.[…]

“He put us through our paces,” said former SEC assistant enforcement director Gregory Faragasso, who praised Atkins’ acumen and expertise. “He would want to get down into the weeds on certain issues … you’d have to really know your stuff.”

Two other former officials shared similar observations. One said Atkins would negotiate corporate penalties with staff, often pushing for a focus on fines for individuals over companies.[…]

The documents do not record Atkins’ reasoning but, in contemporaneous remarks, he argued that corporate fines only hurt shareholders who had already suffered from the original misconduct.

He also argued that enforcers often pursued minor infractions, suggesting in a 2008 speech that they did so to pad enforcement figures, and that enforcers were not transparent about the evidence they had on targets.

“Where there are serious violations, enforcement action is necessary, but the goal should be to work with firms to build their internal compliance,” he said.

US regulator warns of oversight ‘gap’ on cryptocurrencies

“You still have a large swath of the digital asset space unregulated in the US regulatory system and it’s important — given the adoption we’ve seen by some traditional financial institutions, the huge demand for these products by both the retail and institutional investors — that we fill this gap,” Behnam said.

He said the CFTC remained “well positioned to be a spot regulator for digital commodity assets”. The chair, who has close contacts and support in Congress, has vowed to use his influence to keep advocating for the agency to take that role.

The CFTC has traditionally focused on commodity derivatives, such as futures and options, rather than commodities themselves. But Behnam has argued that many digital tokens qualify as commodities and that regulating cash crypto markets would be a “natural fit” for the agency.

Brentwood Man Sentenced to 2 Years in Federal Prison for Insider Trading Scheme That Netted More Than $650,000 in Illegal Gains

A man from the Brentwood neighborhood of Los Angeles was sentenced today to 24 months in federal prison for his role in an insider trading scheme that netted more than $650,000 in illicit profits.

Shahriyar Bolandian, 36, was sentenced by United States District Judge Terry J. Hatter Jr. to 24 months in federal prison. A forfeiture order will be imposed at a later date.

At the conclusion of a five-day trial, a jury in April 2024 found Bolandian guilty of six counts of insider trading.[…]

In 2012 and 2013, Bolandian received material non-public information about two upcoming corporate acquisitions by publicly traded companies. Bolandian then used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce. com Inc.’s June 2013 acquisition of ExactTarget Inc.

As a result of his illegal trades, Bolandian’s personal share of the scheme’s illicit proceeds was $450,000, which he used, among other things, to cover previous trading losses and repay loans to family and friends.

The Vault

I just got a press release for a new thriller about the Depository Trust Co., and you’d better believe that if you write a thriller about DTC and send me the press release I’m going to mention it here. (It’s called The Vault, by Stuart Z. Goldstein.) DTC is the clearinghouse that, among other things, owns pretty much all of the stocks and bonds in America: If you buy stock at your brokerage, what you actually get is an entry on the books of your broker saying that you own the stock, and what the broker actually has is an entry on the books of DTC saying that it owns the stock (for you), and DTC actually owns the stock.[…]

“Little-known company that owns trillions of dollars of stocks and bonds on behalf of everyone else” is such an obviously good subject for a thriller that I assume there are already dozens of DTC thrillers. If you broke into that company, you could steal all the stocks! You’d be a trillionaire! Writes itself. I am not saying that this is literally true or that you should do it — probably if you tried to, like, fence stock certificates stolen from DTC, you’d have some problems — but it’s fine for a thriller. The premise of this one is apparently that, when DTC’s vaults flood during Hurricane Sandy (true), some disgruntled employees make off with “$100 million in bearer bonds,” sure, great, terrific.

The Top Ten D&O Stories of 2024

Trump 2.0 Set to Launch Early in the New Year

… One area on which the agency under Gensler focused that is likely to also be a priority under Atkins is with respect to cryptocurrency. A variety of high-profile crypto firms and crypto agencies previously hired Atkins’s consulting firm, and Atkins himself is not only well known to the crypto community but he has served, according to the Wall Street Journal (here), as its “trusted consigliere.” The crypto community, the Journal reports, “expects to see clearer guidelines that define digital assets as securities or commodities,” and they also expect that under Atkins the agency will “dismiss the dozens of lawsuits that the agency has filed against companies under the current chair, Gary Gensler.” […]

Atkins has, according to Politico, “sharply criticized what he considers heavy-handed policy making over the last few years.” One area in which he has a long track record is with respect to ESG. In its editorial about Atkins appointment, the Journal observed that Atkins “was an early critic of how asset managers and proxy advisers used environmental, social and governance (ESG) standards to bully public companies” and suggests that one of Atkins’s “top priorities” will be “rolling back Mr. Gensler’s 885-page climate-change disclosure rules.” As discussed here, other commentators have suggested that Atkins may also seek to withdraw or narrow the cybersecurity disclosure guidelines that went into effect in December 2023.  

Bitcoin’s Not a Nothing, But It’s Not a Something Either

In the case of the sun and the earth and which revolves around which, for example, it may seem to an earthbound observer that the star orbits the planet; a Martian, however, would swiftly ascertain the truth. A trader trying to work out the correct value of the 10-year Treasury can assay the US growth rate, its inflation outlook, the geopolitical outlook and the likely behavior of fellow investors — and a host of other factual influences — and decide whether to buy or sell at the current price. A crypto-watcher attempting the same exercise with Bitcoin, however, has to rely solely on the attitude of fellow participants to judge whether the digital unit will rise or decline in value; it is literally untethered (pun intended) from anything but market sentiment.