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Over the last several weeks, federal regulators and prosecutors have sent a strong signal to company executives that they will be using every tool in their arsenal to combat insider trading.
V&E SEC Update
On March 3, 2023, the Department of Justice (“DOJ”) issued long-awaited guidelines on how it will evaluate whether companies have implemented appropriate guidance and controls on the use of personal devices and third-party and ephemeral messaging platforms.
V&E White Collar Update
On February 22, 2023, the Securities and Exchange Commission (“SEC”) issued a cease-and-desist order (the “Order”) charging African Gold Acquisition Corp. (“African Gold”) with multiple violations of the Securities Exchange Act of 1934 (the “Exchange Act”) related to African Gold’s failure to maintain a sufficient system of internal controls.1
On February 7, 2023, the Securities and Exchange Commission’s Division of Examination (the “Division”) announced its 2023 examination priorities to “provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.”
On February 3, 2023, the SEC announced that Activision Blizzard Inc. — the publicly traded video game developer and publisher of such well-known videogames as “Candy Crush” and “World of Warcraft” — “agreed to pay $35 million to settle charges that it failed to maintain disclosure controls and procedures to ensure that the company could assess whether its disclosures pertaining to its workforce were adequate” and “violated an SEC whistleblower protection rule” by impeding employees “from communicating directly with the Commission staff about a possible securities law violation.”
V&E SEC Update
On January 9, 2023, the Securities and Exchange Commission (“SEC”) issued a cease-and-desist order (the “Order”) charging McDonald’s Corporation (“McDonald’s”) and its ex-CEO, Stephen Easterbrook, with multiple disclosure violations related to Easterbrook’s departure from McDonald’s following his inappropriate relationships with McDonald’s employees.
On December 14, 2022, the Securities and Exchange Commission (“SEC” or the “Commission”) announced charges against eight social media influencers in a $100 million securities fraud scheme, alleging that they manipulated the market through an arrangement of coordinated misrepresentations to their thousands of followers on Twitter and Discord (an instant-messaging social platform).
On November 15, 2022, the Securities and Exchange Commission (“SEC”) announced its 2022 enforcement statistics.
The SEC has been busy under the Biden administration. From rulemaking to enforcement, the agency is pushing boundaries and expanding its reach into new and active areas of the market.
The crypto token asset class has grown substantially in the last couple of years, drawing the watchful eyes of regulators. While the emerging world of crypto has created more questions than answers, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) remains clear that investor protection remains at the forefront of its mission and that mission extends to where money is to be made in connection with the offer or sale of securities. To this end, the Commission has increased its regulation of crypto asset tokens, and crypto industry participants at all levels of engagement with this market should pay attention.
Deputy Attorney General Lisa A. Monaco’s September 15, 2022 memorandum (the “Memo”) clarified a series of Department of Justice (“DOJ”) objectives regarding corporate and individual responsibility that parallel recent statements from leaders in the Division of Enforcement at the Securities and Exchange Commission (“SEC”).