I haven’t published one of these in a while. Here are a bunch of compliance-related stories that recently caught my attention.
In Silicon Valley, You Can Be Worth Billions and It’s Not Enough
by David Streitfeld in The New York Times
Twenty one years later, Mr. Bechtolsheim may have seized a different kind of opportunity. He got a phone call about the imminent sale of a tech company and allegedly traded on the confidential information, according to charges filed by the Securities and Exchange Commission. The profit for a few minutes of work: $415,726.
Two SEC Lawyers Resign After Agency Censured for Abuse of Power in Crypto Case
By Austin Weinstein in Bloomberg
But the asset freeze was reversed after Shelby found that the SEC may have made “materially false and misleading representations.” The judge would go on to sanction the SEC for “gross abuse of the power entrusted to it by Congress” and ordered the agency to pay some of DEBT Box’s attorney’s fees.
The Biden-Harris administration announced today that the U.S. Department of Labor has finalized its Retirement Security Rule to protect the millions of workers who are saving for retirement diligently and rely on advice from trusted professionals on how to invest their savings. This final rule will achieve this by updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.
The final rule and related amended prohibited transaction exemptions require trusted investment advice providers to give prudent, loyal, honest advice free from overcharges. These fiduciaries must adhere to high standards of care and loyalty when they recommend investments and avoid recommendations that favor the investment advice providers’ interests — financial or otherwise — at the retirement savers’ expense. Under the final rule and amended exemptions, financial institutions overseeing investment advice providers must have policies and procedures to manage conflicts of interest and ensure providers follow these guidelines.
Supreme Court Rejects Securities Lawsuit Based On “Pure Omission” From SEC Filings
By William M. Jay, Daniel Roeser, Douglas H. Flaum, Jesse Lempel
Goodwin Procter
In a narrow but potentially significant decision, the Supreme Court has held that securities-fraud plaintiffs cannot recover based on a “pure omission” from a company’s public statements under the most common legal basis for private securities lawsuits, the SEC’s Rule 10b-5(b). The Court’s unanimous April 12 decision in Macquarie Infrastructure Corp. v. Moab Partners L.P. wipes out precedent from the Second Circuit that potentially made any omission from the “Management’s Discussion & Analysis” (MD&A) section of periodic reports filed under the federal securities laws actionable.
