Regulatory Enforcement

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Walker Newell
Theresa Milano

In Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court, in a June 2024 decision, overruled its 40-year-old precedent known as the “Chevron doctrine.” Under Chevron, federal courts were required to defer to administrative agencies when interpreting statutes that were ambiguous. In the following guest post, Walker Newell, Esq., Vice President at Woodruff Sawyer, and Teresa Milano, Esq., also a Vice President at Woodruff Sawyer, consider the Court’s decision and assess its implications. A version of this article previously was published on Woodruff Sawyer’s D&O Notebook. I would like to thank Walker and Teresa for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the author’s article.Continue Reading Guest Post: D&O Risk and Insurance in a Post-Chevron World

Investors and entrepreneurs everywhere are impressed with the potentially transformative promise of artificial intelligence. Unfortunately, AI’s seemingly unlimited promise has also attracted companies and other players who, in order to participate in the current AI wave, overstate their AI capabilities. These kinds of statements have already attracted the attention of plaintiffs’ lawyers and the SEC. Now the Federal Trade Commission (FTC) has gotten into the act. The agency has launched a “crackdown on deceptive AI claims and schemes” called Operation AI Comply. In a September 25, 2024, press release (here), the FTC announced five recent law enforcement actions the agency has launched against “operations that use AI hype or sell AI technology that can be used in deceptive and unfair ways.” The agency’s initiative highlights the regulatory scrutiny companies can face with respect to the AI-related operations and marketing.Continue Reading FTC Crackdown Highlights AI-Related Regulatory Risk

In recent months, many companies have found themselves under fire from conservative advocates for their stances on ESG-related issues. At the same time, other companies have found themselves facing litigation based on allegations that they have overstated their green credentials (a set of allegations sometimes called “greenwashing”). As two recent cases show, companies can face challenges and potential liability over their sustainability claims.Continue Reading Beverage Companies Face Scrutiny Over Their Green Claims

The SEC has been an active cop on the beat, as reflected in its recently released Enforcement Division statistics for the 2023 fiscal year, ended September 30, 2023. Both the total number of SEC enforcement actions and the number of “standalone” enforcement actions rose in FY 2023 compared to the prior year. The agency also filed the most enforcement actions against public companies since FY 2019. In addition, the SEC obtained the second highest annual amount of financial remedies in SEC history. Continue Reading SEC Stats Show the Agency is an Active Enforcement Cop

Greg Markel
Gershon Akerman

As I noted in a prior post (here), in June, the U.S. Supreme Court agreed to take up a case to consider the legality of the SEC’s use of in-house administrative tribunals, which the agency uses to enforce the federal securities laws. As discussed below in a guest post written by Greg Markel, a partner at the Seyfarth Shaw law firm, and Gershon Akerman, an associate at the firm, the case could have important implications for the SEC’s enforcement authority and could affect the agency’s other activities as well. This article previously was published as a Seyfarth client alert. I would like to thank Greg and Gershon for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: Sup. Ct. to Rule When Feds Must Provide Enforcement Action Jury Trial

In recent months, the SEC has released a series of proposed rules relating to several different topics, including most significantly its March 2022 release of proposed rules regarding climate change and greenhouse gas emissions disclosure. These various proposed rules are still in the public comment period and it remains to be seen whether the various proposed rules will be adopted and if so in what form. Even assuming some forms of the proposed rules are adopted, the rules almost certainly will be subject to court challenge by business groups and other constituencies. As a result of the U.S. Supreme Court’s landmark decision in the last days of June in the carbon emissions rulemaking case, groups challenging the SEC’s rules have a potentially potent new tool to use to try to block the rules.
Continue Reading Will the “Major Questions Principle” Block the SEC’s Proposed Climate Change Disclosure Rules?

It arguably is not news that the SEC is monitoring disclosure and related issues concerning ESG. After all, the agency’s enforcement division formed an ESG Task Force in March 2021. And as discussed here, the Task Force recently launched its first ESG disclosure-related enforcement action. Now, in the Task Force’s latest move, the agency charged an investment advisor with securities law violations related to the advisor’s claims that its fund investments had undergone ESG quality review, even though that was not always the case. BNY Mellon Investment Adviser, Inc., the investment adviser involved, agreed to pay a $1.5 million penalty to settle the charges. As discussed below, this latest Task Force action underscores the fact that the ESG cops are on the beat, and they are actively monitoring ESG-related disclosures. That could have important implications for future SEC enforcement activity.
Continue Reading Attention: The ESG Cops Are On The Beat

Nikola, the electric vehicle company that became a publicly traded company through a June 3, 2020 merger with a SPAC, has reached an agreement to pay $125 million to settle proceedings the SEC brought against the company relating to misrepresentations its former CEO Trevor Milton and the company made about the company’s EV production capabilities. In the settlement, the company neither admitted nor denied the SEC’s allegations. The SEC’s December 21, 2021 press release about the settlement can be found here. The SEC’s December 21, 2021 order instituting cease and desist proceedings against Nikola can be found here. The company’s December 21, 2021 press release about the settlement can be found here.
Continue Reading Nikola Settles SEC Proceedings for $125 Million

In a post last week, I noted that in FY 2021 the SEC had flied fewer enforcement actions against public companies compared to FY 2020. However, according to the SEC’s recently released fiscal year end enforcement activity report, the number of new enforcement actions overall (that is, inclusive of both public and private companies) increased by 7 percent in FY 2021. The SEC’s November 15, 2021 press release detailing the agency’s enforcement statistics can be found here. The enforcement action statistical breakdown for FY 2021 can be found here.
Continue Reading New SEC Enforcement Actions Overall Increased in FY 2021

According to the latest report from the NYU Pollack Center for Law & Business in conjunction with Cornerstone Research, SEC Enforcement Activity against publicly traded companies and their subsidiaries declined in fiscal year 2021 (which ended on September 30, 2021) relative to recent years as well as relative to fiscal year 2020. Monetary recoveries were in aggregate greater in FY 2021 relative to FY 2020. The report, entitled “SEC Enforcement Activity: Public Companies and Subsidiaries: Fiscal Year 2021 Update” can be found here. Cornerstone Research’s November 17, 2021 press release about the report can be found here.
Continue Reading Public Company SEC Enforcement Activity Declined in FY 2021