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Sarah Aberg is special counsel in the White Collar Defense and Corporate Investigations Group in the firm's New York office.

In April, we continued to see a steady pace in the seriousness and frequency of crypto enforcement actions by state and federal law enforcement.  (See our March 2022 Crypto Enforcement Actions Roundup blog here where we discuss the regulatory guidance and jurisdiction of federal and state agencies to enforce these matters.)
Continue Reading April 2022 Crypto Enforcement Actions And Regulatory Guidance Roundup

In the wake of President Biden’s March 9, 2022, executive order outlining his Administration’s desire to establish a comprehensive federal approach to crypto policy and regulation,[1] federal agencies are continuing to focus on enforcement of crypto under existing regulations. Although NFTs and cryptocurrencies are novel technologies, they still fall squarely within the jurisdiction of various federal agencies’ current jurisdictions, as illustrated by three recent enforcement actions by the CFTC, the SEC, and the DOJ.[2]
Continue Reading March 2022 Crypto Enforcement Actions Roundup

On March 30, 2022 the U.S. Securities and Exchange Commission (“SEC”) announced its 2022 examination priorities. Among the “significant focus areas” is Environmental, Social, and Governance (“ESG”) investing. SEC examiners will be scrutinizing disclosures by registered investment advisors (“RIA”) that advertise ESG strategies or claim to incorporate certain ESG criteria, to ensure disclosures regarding portfolio management practices do not involve materially false and misleading statements or omissions.
Continue Reading SEC Announces 2022 Examination Priorities, Includes ESG

The U.S. Securities and Exchange Commission (SEC) recently issued proposed amendments to the Securities Exchange Act [1] (the “Exchange Act”) that would significantly broaden the definition of “exchange” for purposes of regulation under the Exchange Act (“Proposed Rule”).[2] Designed to address a “regulatory gap,”[3] the Proposed Rule would cover “platforms for all kinds of asset classes that bring together buyers and sellers.”[4]  Under the Proposed Rule, communication protocol systems—trading systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers of securities—would have to register with the SEC as an exchange unless otherwise exempt.[5]  As we previously reported, this amendment, if passed, likely would have a significant impact on the decentralized finance (“defi”) industry.
Continue Reading SEC Proposed Amendments Could Significantly Impact DeFi Companies

FinCEN has issued a notice of proposed rulemaking (NPRM) regarding how the agency is planning to implement the Corporate Transparency Act (CTA).  The NPRM came out on December 8, 2021, accompanied by an explanatory factsheet.  Congress passed the CTA on January 1, 2021 in order to require U.S. companies to disclose beneficial ownership information.
Continue Reading FinCEN Issues Notice of Proposed Rulemaking for Corporate Transparency Act

On August 6, 2021, the Securities and Exchange Commission (“SEC”) approved Nasdaq’s Board Diversity Rule (Nasdaq Stock Market LLC Rules 5605(f) and 5606), which requires listed companies to have at least two diverse board members or to explain their failure to meet the requirement, with some exceptions.  The Board Diversity Rule also requires companies to publish statistics on the diversity of their board members.  The rule is intended to increase transparency into the diversity of corporate boards, giving investors more information to consider when deciding which companies are worthy of investment.  As investors have increasingly voiced concern over enhanced diversity in corporate leadership, the Board Diversity Rule may not only increase board transparency, but also cause Nasdaq-listed companies to increase board diversity.
Continue Reading SEC Approves Nasdaq Diversity Rule

In Van Buren v. United States, No. 19-783, 2021 WL 2229206 (U.S. June 3, 2021), the United States Supreme Court issued an opinion drastically limiting the application of the Computer Fraud and Abuse Act (CFAA) (18 U.S.C. § 1030 et seq.), holding that the “exceeds authorized access” clause of the Act applies only to those who obtain information from particular areas in the computer—such as files, folders, or databases—to which the individual is not authorized to access under any circumstances. However, the Supreme Court excluded application of the clause to individuals who misuse their access to obtain information otherwise available to them for an unauthorized purpose. The Court’s Van Buren decision resolves a long-standing circuit split over the meaning of this key phase of the CFAA, and simultaneously creates new challenges for employers seeking to hold liable employees who misuse company information to the employer’s detriment.
Continue Reading Supreme Court Resolves Circuit Split Over CFAA

During a May 19, 2021 webcast at the Financial Industry Regulatory Authority’s (“FINRA”) annual conference, Amy Sochard, FINRA’s Vice President of Advertising Regulation, indicated that the organization will seek public feedback on gamification practices utilized by some stock trading platforms to attract investors with a view toward issuing new rules or guidance.  “Gamification” refers to the application of typical elements of game playing, such as point scoring, competition with others, and rules of play, by trading platforms, online retailers or vendors to encourage engagement with a product or service.
Continue Reading Game On: FINRA Hints at Upcoming Gamification Sweep

During a March 9, 2021 industry conference, one of the four current U.S. Securities and Exchange (“SEC”) commissioners floated a new approach to calculating penalties for corporate misconduct.  Caroline A. Crenshaw, who was tapped by President Donald Trump last June to fill one of the Democratic slots on the Commission, told attendees at the Council of Institutional Investors virtual conference that the SEC needed to revisit its approach to assessing corporate penalties, and implement a new approach that tailored penalties to the “egregiousness of the actual misconduct,” accounted for all benefits of the misconduct that accrued to the corporation, and eliminated consideration of potential adverse impacts on shareholders.  If ultimately accepted by the Commission, Crenshaw’s proposed approach would likely result in materially greater penalties for corporate misconduct.
Continue Reading SEC Commissioner Calls for a Brave New Approach to Corporate Penalties