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Sarah Abrams

In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the question whether the SEC should adopt AI-specific disclosure guidelines with reference to two recent enforcement actions involving tech companies allegedly fraudulent claims about their technology. I would like to thank Sarah for allowing me to publish her article on this site. Here is Sarah’s article.Continue Reading Guest Post: Would Specific SEC Disclosure Guidelines Deter AI-Washing?

The Trump Administration has already shown that it intends to use the False Claims Act (FCA) as one of the primary tools in its arsenal to enforce its policy priorities. For example, as discussed in prior posts on this site (most recently here), the administration is actively using the FCA to enforce its tariff policies. In the latest demonstration that the FCA may now be the administration’s preferred enforcement tool, the administration appears to be actively gearing up to use the FCA as a primary weapon in its campaign against “illegal DEI,” in an apparent use of the FCA commentators agree would be, at a minimum, “novel.” The administration’s use of the FCA for these purposes could pose significant challenges for companies — and their insurers.Continue Reading The Trump Administration Use of the False Claims Act in Anti-DEI Campaign

It was no secret that the crypto enforcement approach was going to change under the Trump administration. Indeed, one of Trump’s first acts upon returning to the White House in January was to sign an executive order calculated to try to make the U.S. the “crypto capital of the world.” The SEC has likewise made it clear that under the new administration the agency will also be taking a new approach to crypto. The acting SEC leadership has already made a number of crypto-friendly moves – among other things,  the new leadership disbanded the agency’s Crypto Enforcement Task Force. The SEC has also dismissed pending cases against Binance (here) and Coinbase (here). As discussed below, the agency recently has taken even further crypto friendly actions – all of which has at least one observer to ask whether the SEC crypto pull back has gone too far?Continue Reading Sounding the Alarm on the SEC’s New Crypto Approach

When it became public a few weeks ago that the SEC had disbanded its Climate and ESG Task Force, the SEC emphasized that it was not taking its eye off of ESG-related issues. In the latest example of the SEC’s continuing ESG-related monitoring, late last week the ESG announced that it had settled charges against investment adviser Invesco Advisers. The agency alleged that the company had made misleading statements about the percentage of company-wide assets under management that integrated ESG factors in investment decisions. In settling the charges, the company agreed to pay a $17.5 million civil penalty. The SEC’s November 8, 2024, press release about the charges and the settlement can be found here. The SEC’s November 8, 2024, cease-and-desist order in the matter can be found here.Continue Reading SEC Charges Investment Adviser With ESG-Related Misleading Statements

Earlier this week, the SEC announced that it had filed settled charges against four companies for alleged misleading disclosures concerning cybersecurity incidents at the companies. The charges against the companies arose out of the SEC’s investigation of companies potentially affected by the compromise of SolarWinds’ Orion software. One of the four companies was additionally charged with disclosure controls and procedures violations. Without admitting or denying the SEC’s charges, each company agreed to the entry of a cease-and-desist order against them. The companies agreed to pay civil penalties ranging from $4 million to $990,000. The SEC’s October 22, 2024, press release about the charges against the four companies can be found here.Continue Reading SEC Charges Four Companies for “Downplaying” Cyber Incidents

With the news broke within the last few weeks that months earlier the SEC had quietly disbanded its Climate and ESG task force, the agency took pains to emphasize that the winding up of the Task Force did not mean that the agency was no longer policing ESG-related issues. At least one recent development underscores the fact that the agency is continuing to monitor ESG concerns, particularly “greenwashing”-type concerns. Earlier this week, the agency initiated entered an agreed cease-and-desist order against investment adviser WisdomTree Asset Management, based on alleged misstatements and compliance failures relating to the firm’s execution of its ESG investment strategy. Among other things, the agency alleged that the firm’s funds invested in the investment classes it had said it would avoid.Continue Reading SEC Charges Investment Adviser With Failing to Adhere to Stated ESG Investment Criteria

In recent months, the SEC Chair and other government officials have made it clear that they are closely watching for companies that try to catch the AI wave by making exaggerated or false claims about the AI capabilities of their products or services. In the latest example of the crack down on these kinds of AI-related misrepresentations, both the U.S. Attorney  for the Southern District of New York and the SEC have filed charges against the former CEO and Chairman of the tech company Kubient. The government alleges that the executive, Paul Roberts, inflated the company’s revenues and also lied about one of its signature products, an AI-powered tool that was supposed to detect ad fraud in the digital advertising industry. There are some interesting features of the charges against Roberts, as discussed below.Continue Reading Tech Exec Charged with AI-Related Misrepresentations and Fraudulent Revenue Recognition

In what the Wall Street Journal called a “milestone” in the SEC’s efforts to address public companies’ cybersecurity disclosures, the SEC has filed a civil enforcement action against software company SolarWinds and its Chief Information Security Officer, Timothy Brown. The agency alleges that the company repeatedly misled investors by understating the company’s cyber vulnerabilities and the ability of hackers to penetrate the company’s systems. According to statements from agency officials, the action is intended to send a message about cybersecurity disclosures and disclosure controls. A copy of the SEC’s complaint can be found here. A copy of the SEC’s October 30, 2023, press release about the action can be found here.Continue Reading SEC Files Cybersecurity Disclosure Suit Against SolarWinds and Exec

On June 30, 2023, 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. The agency sought Supreme Court consideration of a federal appellate court ruling that held the administrative courts to be unconstitutional. The case could significantly impact the way in which the agency enforces the federal securities laws. The court’s June 30, 2023 order in which the SEC’s petition for a writ of certiorari was granted can be found here.Continue Reading U.S. Supreme Court Takes Up Case Concerning the SEC’s Use of In-House Court