SEC Commission Michael Piwowar caused quite a stir last summer when he suggested that the SEC would favorably view submissions by IPO companies that included bylaw provisions requiring mandatory arbitration of securities claims. The idea of mandatory arbitration for shareholder claims has continued to circulate in the intervening months. In the past few days, several current and former SEC Commissioners and SEC representatives have weighed in on the issue, mostly to pour cold water on the idea. Because I believe this idea will continue to percolate, I survey the latest statements below. Even though the most recent statements strongly suggest a lack of support for the idea in many circles, I suspect we will continue to hear more about this issue.
Continue Reading The Latest on Proposed Mandatory Arbitration of Shareholder Claims

After a bit of last-minute drama, the SEC on Wednesday issued its guidance for public company cybersecurity disclosures. The Commission’s guidance document emphasizes companies’ disclosure obligations under existing law and requirements. The statement also underscores the Commission’s concerns about insider trading prohibitions and the obligation of reporting companies to refrain from making selective disclosures about nonpublic information. As discussed below, the Commission’s Democratic members criticized the statement for not going far enough. The Commission’s February 21, 2018 press release about the cybersecurity disclosure guidance can be found here. The Commission’s statement and guidance on cybersecurity disclosure can be found here. SEC Chair Jay Clayton’s statement about the Commission’s guidance can be found here.
Continue Reading SEC Releases Cybersecurity Disclosure Guidance

The U.S. Supreme Court ruled on February 21, 2018 that the Dodd-Frank Act’s anti-retaliation provisions protect only whistleblowers that make a report to the SEC, and do not apply to whistleblowers who report internally. The Court’s ruling, which resolved a circuit split on the question of who was entitled to the Act’s provisions, will significant limit the scope of the anti-retaliation protections. The Court’s February 21, 2018 opinion in Digital Realty Trust, Inc. v. Somers can be found here.
Continue Reading U.S. Supreme Court Adopts Narrow View of Who Can Rely on Dodd-Frank Act’s Anti-Retaliation Protections

John Reed Stark

As many readers undoubtedly are aware, the prices for bitcoin has plunged in recent days, from a peak of nearly $20,000 in December to approximately $8,300 more recently, representing a decline of nearly 60%. The prices for other cryptocurrencies have also fallen along the same order of magnitude. This dramatic decline certainly at least raises the question of whether or not the pricing bubble for cryptocurrencies that fueled the recent wave of initial coin offerings (ICOs) has burst – or at least, is about to burst. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, suggests that the bursting of the ICO bubble may be exactly what the financial marketplace needs for the long haul. I would like to thank John for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest for this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post.
Continue Reading Guest Post: The Benefit of an ICO Bubble Burst

Many readers may have noted SEC Jay Clayton’s January 22, 2018 speech about his agency’s scrutiny of cryptocurrencies, as well as the January 24, 2018 opinion piece Clayton wrote in the Wall Street Journal along with his counterpart from the CFTC, J. Christopher Giancarlo. In both statements, Clayton made in clear that the SEC intends to hold gatekeepers to account for their activities in connection with ICOs and cryptocurrencies. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at the SEC’s cryptocurrency related focus on gatekeeper liability. I would like to thank John for his willingness to publish his article as a guest post 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 John’s guest post.
Continue Reading Guest Post: Beware ICO Lawyers: As Regulatory Gatekeepers, You’re the Next SEC Target

According to the latest update on the Coinschedule website (here), there have been a total of 228 initial coin offerings so far this year through mid-October, raising a total of over $3.6 billion. At least five of this year’s ICOs have raised over $100 million. This burgeoning activity notwithstanding, ICOs are at the center of controversy. Among other things, China and South Korea have banned ICOs. The SEC has already shown its willingness to pursue enforcement actions against ICO sponsors, as discussed further here. And now a high-profile statement by one of the country’s leading securities regulation experts suggests even greater scrutiny may lie ahead. In the meantime, as discussed below, ICO and cryptocurrency-related litigation appears to be proliferating.
Continue Reading ICO Enforcement Actions Threatened, ICO Lawsuits Proliferate

On November 15, 2017, when the SEC Enforcement Division released its annual report detailing its enforcement activity during the preceding fiscal year, the report included a statement by the division’s co-directors detailing the division’s priorities for the coming year. As detailed below, the enforcement statistics in the report clearly reflect an agency in transition. The changes under the new administration are particularly apparent with regard to the agency’s enforcement activities involving publicly traded companies. The Enforcement Division’s annual report can be found here. The division’s November 15, 2017 press release about the report can be found here.
Continue Reading SEC Fiscal Year Enforcement Statistics Reflect an Agency in Transition

John Reed Stark

 As I noted in a recent post (here), the business pages these days are full of headlines about Initial Coin Offerings (ICOs). Among many issues swirling around ICOs one is the question of how the offerings fit within the overall legal and regulatory framework. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a detailed look at ICOs with a particular focus on securities regulation. A prior version of this article previously appeared on Securities Docket. I would like to thank John for his willingness to allow me to publish his article 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 John’s guest post.
Continue Reading Guest Post: The SEC and ICOs: Winter is Coming

As I noted at the beginning of the U.S. Supreme Court’s current term in my summary of securities cases on the Court’s docket, one of the three key securities cases the court was to consider this term was Leidos, Inc. v. Indiana Public Retirement Systems. As discussed in greater detail here, this case, which was to be argued on November 6, 2017, was to address the recurring question of whether the failure to make disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. However, as a result of developments in the case, the case is now in “abeyance,” oral argument in the case has taken off the calendar, and the case ultimately may be removed from the court’s docket altogether.
Continue Reading Item 303 Disclosure Duty Case Off Supreme Court’s Docket Due to Reported Settlement

Jay Knight
Will Lay

In March 2015, the SEC released its final rules implementing the provision of the JOBS Act to try to facilitate small companies’ access to capital and to provide new investors with new investment choices, in the form of Regulation A+. In the following guest post, Jay Knight and Will Lay of the Bass, Berry & Sims law firm provide an overview of Regulation A+, as well as the specifics of the kind of offerings that the regulation authorizes. I would like to thank Jay and Will for their willingness to allow 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Jay and Will’s guest post.
Continue Reading Guest Post: FAQs about Regulation A+ Securities Offerings