Securities Law Related Blogs

One of the significant trends over the last several years contributing to the overall total volume of securities class action lawsuit filings has been the relative prevalence of securities suits related to SPACs and post-SPAC merger companies. Even though it has now been a considerable amount of time since the SPAC IPO frenzy peaked in the first half of 2021, the lawsuits relating to SPACs and post-SPAC-merger companies continue to be filed. In the latest example of this phenomenon, last week a plaintiff shareholder filed a securities class action lawsuit against the vertical aviation company Archer Aviation and certain of its directors and officers. Archer became a publicly traded company through a September 2021 merger with a SPAC. As discussed below, the new lawsuit against Archer has certain features in common with many of the previously filed SPAC-related lawsuits. A copy of the complaint filed against Archer Aviation can be found here. Background Atlas Crest…

On 25 September 2023, the FCA published a speech by Sarah Pritchard, its Executive Director for Markets and Executive Director for International, delivered at the City and Financial Global: Future of UK Capital Markets Regulation event. In her speech, Ms Pritchard discusses the role of regulation in encouraging investment in the City. The speech includes the following key remarks: The FCA has signalled an intent to significantly reform the regulatory regime for the listed market, by changing and streamlining the UK listings rules to help attract a wider range of companies, encourage competition and improve choice for investors. These rule changes will be explained and confirmed by the FCA before the end of the year and it will seek to implement them speedily. Under the recently passed Financial Services and Markets Act, the FCA, together with the Bank of England (BoE), will in future have the ability to directly supervise third parties who provide critical services to financial…

SEC charges DWS with Anti-Money Laundering Violations and ESG Misstatements   According to a press announcement, the Securities and Exchange Commission (SEC) has recently taken action against DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank AG, in two distinct enforcement actions. The firm has reportedly agreed to the sanctions including a $25 million fine.  Failure to Develop an Anti-Money Laundering (AML) Program  The SEC’s first enforcement action involves DWS Investment’s alleged failure to establish a proper AML program for mutual funds it advised. This program is essential for ensuring compliance with the Bank Secrecy Act and relevant Financial Crimes Enforcement Network (FinCEN) regulations.  When investment advisers, like DIMA, fail to establish robust AML programs, it can lead to vulnerabilities in detecting and preventing money laundering activities and terrorism financing. This has broader implications for…

The Securities and Exchange Commission today charged Matthew Motil, host of the podcast, “The Cash Flow King,” for fraudulently raising approximately $11 million from more than 50 investors in a Ponzi scheme involving notes that were purportedly backed…Read the Full Press Release Have a securities law question? Call New York Securities Lawyers at 212-509-6544.

On 25 September 2023, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) published consultations setting out their proposals to introduce a new regulatory framework on diversity and inclusion (D&I) in the financial sector. The FCA’s consultation paper, CP23/20, is on D&I in the financial sector – ‘working together to drive change’, and the PRA’s consultation is CP18/23 on D&I in PRA-regulated firms. The FCA’s proposals in CP23/20 In CP23/20, the FCA proposes a framework which would establish minimum standards and give firms a better understanding of what is expected of them in relation to D&I from a regulatory standpoint. The proposed framework is also intended to help ensure greater consistency and transparency across the sector on firms’ approaches to D&I, and to support the objectives of the FCA’s Consumer Duty as well as its D&I priorities. CP23/20 sets out proposals to:…

W.P. Carey Plans Spin-Off, Selling Off Real Estate Assets  The White Law Group continues to investigate potential securities claims involving W.P. Carey, Inc. Our firm has represented numerous investors over the years in claims against their brokerage firms for unsuitable investments in W.P. Carey REIT Offerings.  According to reports, W.P. Carey (NYSE:WPC) shares took a hit on September 21st after management announced that the company will be ditching its entire office portfolio. Some of the assets will reportedly be spun off, while the rest will be sold.   As we have previously reported, in February 2022, WP Carey Inc. exited investment management, after acquiring Corporate Property Associates 18 Global Inc in a $2.7 billion cash-and-stock deal.  W. P. Carey listed its common stock on the NYSE in 2012 and closed mergers with affiliated Corporate Property Associates REITs — CPA 15 (October 2021), CPA 16 (January 2014), and CPA 17 (October…

In this Regulation Tomorrow Plus podcast, Jonathan Herbst, Hannah Meakin and Anita Edwards discuss the obligations that firms have under UK REMIT to record and retain communications relating to their trading in wholesale energy products, in light of a large fine issued to a firm last month by Ofgem, the energy regulator, for breaches of those obligations.

On 20 September 2023, the European Parliament Economic and Monetary Affairs (ECON) Committee held its first exchange of views on the European Commission’s (Commission) crisis management and deposit insurance (CMDI) legislative package. The legislative package contains amending proposals to the EU regime for the recovery and resolution of credit institutions. The legislative package consists of: Proposal for a Directive amending the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD). Proposal for a Regulation amending the Single Resolution Mechanism (SRM) Regulation ((EU) 806/2014). Proposal for a Directive amending the Deposit Guarantee Schemes Directive (2014/49/EU) (DGSD). The main aim of the Commission’s proposed amendments is to address a number of deficiencies that have been identified following a review of the framework and to improve the effectiveness of the resolution and deposit protection regimes for EU banks. A notable proposed…

On 25 September 2023, the Financial Stability Board (FSB) published a report: Stocktake of international data standards relevant to cross-border payments. The report looks at national and regional data frameworks relevant to the functioning, regulation and supervision of cross-border payment arrangements. Furthermore, the report takes forward one of the priority actions under the G20 Cross-border Payments Roadmap, to enhance the interaction between data frameworks and cross-border payments. The stocktake was conducted to identify issues relating to cross-border use of data by national authorities and by the private sector in cross-border payment arrangements. The report identified the following: Fragmentation among data framework requirements and their implementation, most notably across the data needed to accompany a cross-border payment transaction. Uncertainty among payment providers on how to balance the various obligations under different data frameworks. Challenges…

On 22 September 2023, the United Nations Environment Programme (UNEP) published the second biennial progress report on implementation of the UN Principles for responsible banking. The report highlights the key achievements of member banks in integrating sustainability considerations such as climate change mitigation into their strategies, transforming governance structures, understanding their impacts better, setting targets and developing innovative products and risk management approaches. The report provides the following key findings: Member banks have made considerable progress understanding and disclosing how their portfolios and businesses relate to key environmental and social impacts. The majority of banks have set targets to address their most significant portfolio impact, driving alignment and contributing to the UN Sustainable Development goals (SDG) and the goals of the Paris Agreement. Member banks have also integrated sustainability oversight into their governance…

The Securities and Exchange Commission today charged GTT Communications, Inc. with failing to disclose material information about unsupported adjustments the company made in several Commission filings, which increased GTT’s reported operating income by…Read the Full Press Release Have a securities law question? Call New York Securities Lawyers at 212-509-6544.

Last week, the California Department of Financial Protection & Innovation issued a warning about yet another fraudster's attempt to separate investors from their money: The California Department of Financial Protection and Innovation (DFPI) has received information that an entity “BitsCyber”, possibly claiming to operate out of California, is offering the service of retrieving lost Cryptocurrency funds, claiming that it is the DFPI.  BitsCyber has sent a fraudulent document entitled “Ownership Certificate Of Funds” to victims, claiming it is from the DFPI.  BitsCyber claims the document is needed for the retrieved funds to be wired to the client/victim.  The document contains DFPI’s Iconography and address, but seems to be edited heavily to reflect the scam’s language. As discussed in this post from October 2023, this is not the first time, thieves have stolen the DFPI's identity.  When I served as…

The Securities and Exchange Commission today charged registered investment adviser DWS Investment Management Americas Inc. (DIMA or DWS), a subsidiary of Deutsche Bank AG, in two separate enforcement actions, one addressing its failure to develop a…Read the Full Press Release Have a securities law question? Call New York Securities Lawyers at 212-509-6544.

By Suzanne CosgroveThe CFTC has disapproved KalshiEX LLC’s Congressional Control Contracts, prohibiting their listing, trading and clearing on its platform. Described as event contracts, they would have been cash-settled, binary (yes or no) contracts offered by the designated contract market based on the question: “Will (chamber of Congress) be controlled by (party) for (term)?”“The Commodity Exchange Act enumerates certain categories of commodities for which derivatives may be contrary to the public interest if listed on an exchange,” said CFTC Chairman Rostin Behnam in a statement. “These include contracts that involve gaming or activity that violates state or federal law. Kalshi’s Congressional control contracts fall into both of these categories. Betting or wagering on elections, as proposed by Kalshi, meets the definition of gaming,” he said.The Congressional Control Contracts involve “gaming,” because taking a…

I hope you were able to join us last week for our 2023 Virtual Conferences – the “2023 Practical ESG Conference,” the “2023 Proxy Disclosure Conference,” and the “20th Annual Executive Compensation Conference.” I would like to send a big shoutout to everyone at CCRcorp who made these great Conferences happen, as well as to all of the fantastic speakers that we had participating in the Conferences – we covered so much ground during those four days! If you missed any parts of the Conferences, archives of the sessions are available, and be on the lookout for our continuing coverage of key takeaways in an upcoming issue of The Corporate Executive. – Dave Lynn

With a looming government shutdown dominating the headlines, it is yet again time to go down that well-worn path of trying to plan for the worst in the event Congress is unable to get its act together. This shutdown talk always brings up bad memories for me, because I can remember starting my career in Corp Fin in the Fall of 1995 when, shortly after I began working in the Division, I was attending all-hands meetings with the Chairman talking about what would happen when the government shut down in the ensuing weeks. The partial government shutdown that ultimately happened, pitting President Bill Clinton against Republican Speaker of the House Newt Gingrich, only lasted for a few weeks. Fortunately, the SEC remained operational during that time using some appropriations that were apparently saved up in its piggy bank. While the crisis was averted, it was a good lesson for me in how a dysfunctional government could have a real impact on my life, as I was trying to figure out how…

John has been blogging about FinCEN’s rules for reporting of beneficial ownership information under the Corporate Transparency Act, which create new filing requirements applicable to a wide range of entities. FinCEN recently released a Small Entity Compliance Guide addressing these new requirements. In its announcement, FinCEN notes: Among other things, the Guide: – Describes each of the BOI reporting rule’s provisions in simple, easy-to-read language; – Answers key questions; and – Provides interactive checklists, infographics, and other tools to assist businesses in complying with the BOI reporting rule. The requirements become effective on January 1, 2024, and companies will be able to begin reporting beneficial ownership information to FinCEN at that time. FinCEN will provide additional guidance on how to submit beneficial ownership information soon. The new reporting requirement are quite far reaching – as John noted in this blog,…

On 9 December 2022, the Chancellor of the Exchequer, Jeremy Hunt MP, unveiled at an industry roundtable in Edinburgh over 30 regulatory reforms. These “Edinburgh Reforms” followed on from the 2022 Chancellor’s Autumn Statement in which he highlighted financial services as one of the UK’s five key growth sectors. The reforms themselves are intended to turbocharge UK growth and deliver a smarter and home-grown regulatory framework for the UK. Since the Chancellor’s announcement the Government has published various papers and the Financial Services and Markets Act 2023 which provides for the review, repeal, reform and replacement of EU-derived financial services legislation has been published. This Regulation Tomorrow blog highlights our blogs and podcasts covering many of the papers that have so far been published. General “Edinburgh Reforms” of UK financial services | Regulation Tomorrow The Edinburgh Reforms: What do they mean for…

Seyfarth Shaw recently published the ninth edition of its “Middle Market M&A SurveyBook,” which analyzes key contractual terms for 105 middle-market private target deals signed in 2022 and the first half of 2023. The survey focuses on deals with a purchase price of less than $1 billion. Here are excerpts with some highlights: – Over the […]

In a recent post on the Harvard Law School Forum on Corporate Governance, three partners at Skadden, Arps, Slate, Meagher & Flom LLP give practical advice to companies in preparing for and responding to a short attack.  With respect to litigation, they argue that “suing short sellers is not an effective response strategy, even though there will often be an understandable desire to bring claims for defamation, stock manipulation or other unlawful practices.” I disagree.  A board of director’s fiduciary duty to the company and its shareholders in the face of a fraudulent or manipulative short attack compels a careful cost-benefit evaluation of potential litigation.  Besides the strength of the evidence underlying a potential claim, boards should consider the extent to which the issuer raises ongoing capital by selling stock in secondary offerings, issuing convertible debt, or engaging in other forms of financing that depend on the share…