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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

In a post earlier this month, I summarized the three securities law cases that the U.S. Supreme Court will hear its current term. Among the three cases on the Court’s docket is Leidos, Inc. v. Indiana Public Retirement System. As discussed in greater detail here, in Leidos, the Court will address the question whether or not the alleged failure to make a disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. In an interesting September 26, 2017 article entitled “Ask Me No Questions and I Will Tell You No Lies: The Insignificance of Leidos Before the United States Supreme Court” (here), Stanford Law Professor Joseph Grundfest argues that the Leidos case is “not a big deal” and is a “nothing-burger,” because, he contends, regardless of which way the Court comes out in the case, the outcome will make little practical difference.
Continue Reading Supreme Court Docket: Is the Leidos Case a “Nothing Burger”?

For almost the entire time that there have even been federal securities laws, the U.S. Supreme Court only rarely and infrequently agreed to take up cases arising securities cases. Until recently, years would pass between the times that securities cases appeared on the Supreme Court’s docket. For some reason, beginning around the middle of the last decade, the Court has become increasingly willing to take up securities cases. The U.S. Supreme Court’s 2017-2018 term, which commences on Monday, is no exception to this recent trend. There are three important securities cases on the Court’s docket for the upcoming term, and these cases could have, both individually and collectively, a significant impact on many securities law cases and on securities litigation in general.
Continue Reading Three Key Securities Law Cases on Supreme Court’s Docket as Term Begins

One of the fundamental principles on which our system of securities regulation is based is the importance of disclosure. The system is built on the notion that companies must disclose certain basic information about their operations and performance so that investors can make informed investment decisions. While the disclosures required are a matter of regulation and statute, investors’ and regulators’ expectations about what must be disclosed changes over time. Signs are that disclosure expectations  — and as a result disclosure practices — are changing rapidly in two particular areas: cybersecurity and climate change.
Continue Reading Now Trending: Cybersecurity and Climate Change Disclosure Practices

daimlerFollowing the U.S. Supreme Court’s June 2010 decision in Morrison v. National Australia Bank (here), the lower federal courts have set about implementing the Morrison decision’s holding that the U.S. securities laws do not apply extraterritorially. One issue that the courts have wrestled with is whether or not the U.S. securities laws apply to over-the-counter (OTC) transactions in the U.S. of a foreign company’s American Depositary Receipts (ADRs). A series of recent cases suggest the courts are closer to having these issues sorted out. Most recently, a May 31, 2017 decision by Central District of California Judge James Otero held, consistently with other recent federal district court decisions, that the U.S. securities laws do apply to OTC transactions in Daimler, A.G.’s sponsored level 1 ADRs.  A copy of Judge Otero’s decision can be found here.
Continue Reading U.S. Securities Laws Apply to OTC Transactions in Daimler’s Sponsored ADRs