On October 11, 2019, the Commodity Futures Trading Commission (the “CFTC”), the Financial Crimes Enforcement Network (“FinCen”) of the U.S. Treasury and the Securities and Exchange Commission (the “SEC”) issued a joint statement reminding “persons engaged in activities involving digital assets of their anti-money laundering and countering of financing of terrorism (“AML/CFT”) obligations under the… Read more »
Posts Categorized: Securities
Second Circuit Find Private Right of Action to Rescind Contracts Under Investment Company Act
The Second Circuit has created a split with the Third and Ninth Circuits by finding that Section 47(b) of the Investment Company Act provides plaintiffs an implied private right of action with regard to contracts, and the plaintiffs in that case could therefore seek rescission of the contracts in the form of junior notes. This… Read more »
SEC Issues Concept Release on Private Placements
On June 18, 2019, the Securities and Exchange Commission (the “SEC”) issued a more than 200-page concept release about ways to simplify, improve and harmonize exempt offerings, including private placements, Regulation Crowdfunding and others. The SEC raises numerous issues for comment, such as, for example, whether and how the “accredited investor” definition should be changed,… Read more »
SEC Adopts New Broker-Dealer Rules on Standard of Behavior
On June 5, 2019, the Securities and Exchange Commission (the “SEC”) adopted new rules, including: (i) Regulation Best Interest, raising the requirement for broker-dealers recommending securities to retail clients from determining that the securities are suitable to acting in the best interests of clients, and requiring certain specified disclosure, care in carrying out transactions, written… Read more »
SEC Issues Cease and Desist Against Prosper for Overstating “Annualized Net Returns”
On April 19, 2019, the Securities and Exchange Commission (the “SEC”) issued a Cease and Desist Order against Prosper Funding, LLC (“Prosper”), for overstating “Annualized Net Returns” to its investors for nearly two years. Prosper is an on-line lender which raises funds by selling securities linked to the performance of consumer loans and related rights. … Read more »
SEC Framework for Analysis of Digital Assets; No-Action Relief for Certain Tokens
On April 3, 2019, the Securities and Exchange Commission (the “SEC”) staff released a “Framework for ‘Investment Contract’ Analysis of Digital Assets” setting forth its current approach to determining when a digital asset is a security and when it is not. The Framework does not add significantly to the SEC’s prior actions and statements in… Read more »
SEC Acts Against Cryptocurrency Companies
On October 11, 2018, Securities and Exchange Commission (the “SEC”), the SEC issued a press release announcing that it had obtained an emergency court order to stop an Initial Coin Offering (an “ICO”) by Blockvest LLC and its founder, Reginald Buddy Ringgold, III. Among other things, the company claimed that the ICO had been approved by the… Read more »
SEC Increases Thresholds for “Smaller Reporting Company”
On June 28, the Securities and Exchange Commission increased the thresholds for “smaller reporting companies” (“SRCs”) and made certain other amendments designed to enlarge the category. See here. “SRCs” are the lowest category of reporting companies (large accelerated filers, accelerated filers, non-accelerated filers and SRCs). They need file only two years of audited financial statements,… Read more »
Supreme Court Raises Many Issues With Ruling on SEC Administrative Law Judges
On June 21, 2018, the Supreme Court decided Lucia v. Securities and Exchange Commission, in which it said by a 6-3 majority that the Securities and Exchange Commission’s (the “SEC”) Administrative Law Judges (the “ALJs”) must be chosen under the Appointments Clause of the Constitution by “Heads of Departments”, i.e., the SEC Commissioners. The court… Read more »
SEC Reinforces Ban on Testimonial Marketing for Investment Advisers
In March 2014 the Securities and Exchange Commission (the “SEC”) issued guidance on the use by investment advisers and investment advisory representatives (together, “IAs”) in their marketing of testimonials (but not objective third-party articles) posted on social media. Under Section 206(4) of the Investment Advisers Act (prohibiting fraudulent, deceptive or manipulative acts) and Rule 206(4)-1(a)(1) (finding testimonials… Read more »