These are some of the compliance-related stories that recently caught my attention.
The 2020 U.S. Election is Here: How is Your Firm Monitoring Political Contributions and Government Relationships?
by Elaine Vincent
ACA Compliance
While the SEC certainly has plenty of responsibilities on its plate, based on precedent it is likely that the regulator will step up enforcement and investigation of potential play-to-play situations in an election year. And even if your firm makes it through the election cycle without a knock on the door from the SEC, this doesn’t mean you’re in the clear. The SEC will be on the lookout for violations during lookback periods after 2020.
https://www.acacompliancegroup.com/blog/2020-us-election-here-how-your-firm-monitoring-political-contributions-and-government
The Basis for ISS’ Lawsuit Against the SEC
by Steven Friedman, Institutional Shareholder Services, Inc
If allowed to stand, the August interpretation and guidance would effectively treat the advice proxy advisers provide to their clients in the same way that the SEC regulates proxy solicitations (meaning the communications, most typically made by the boards and management of public companies, advocating that shareholders vote to support the position favored by the person doing the solicitation). In contrast, proxy advice is a specialized form of investment advice rendered at the direction, and in the best interest, of our institutional investor clients. As such, proxy advice is the antithesis of a “solicitation” under the securities laws.
https://corpgov.law.harvard.edu/2019/11/05/the-basis-for-iss-lawsuit-against-the-sec/
Kokesh Redux: SCOTUS to Hear Challenge to SEC Disgorgement Authority
by John Jenkins
The CorporateCounsel.net
Whether the SEC actually has the ability to seek disgorgement is an issue that the Kokesh Court specifically raised in footnote 3 of Justice Sotomayor’s opinion:
https://www.thecorporatecounsel.net/blog/2019/11/kokesh-redux-scotus-to-hear-challenge-to-sec-disgorgement-authority.html
“Nothing in this opinion should be interpreted as an opinion on whether courts possess authority to order disgorgement in SEC enforcement proceedings or on whether courts have properly applied disgorgement principles in this context. The sole question presented in this case is whether disgorgement, as applied in SEC enforcement actions, is subject to § 2462’s limitations period. “
Majority of bitcoin trading is a hoax, new study finds
by Kate Rooney
The analysis showed that “substantially all of the volume” reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it’s not real.
https://www.cnbc.com/2019/03/22/majority-of-bitcoin-trading-is-a-hoax-new-study-finds.html
SEC Division of Enforcement Publishes Annual Report for Fiscal Year 2019
In fiscal year 2019, the SEC brought a diverse mix of 862 enforcement actions, including 526 standalone actions. These actions addressed a broad range of significant issues, including issuer disclosure/accounting violations; auditor misconduct; investment advisory issues; securities offerings; market manipulation; insider trading; and broker-dealer misconduct. Through these actions, the SEC obtained judgments and orders totaling more than $4.3 billion in disgorgement and penalties. Importantly, the SEC also returned roughly $1.2 billion to harmed investors as a result of enforcement actions.
