Tag:SEC
Robinhood Fined $65 Million for Misleading Customers
On December 17, 2020, the Securities and Exchange Commission (“SEC”) charged Robinhood Financial, LLC (“Robinhood”) with material misrepresentation and misleading its users about its revenue sources, specifically Robinhood’s receipt of payments from certain principal trading firms for routing its customer orders to them. The SEC charges against Robinhood also relate to certain statements about the execution quality Robinhood achieved for its customers’ orders and Robinhood’s failure to satisfy its duty of best execution. Robinhood agreed to pay $65 million to settle the charges.
Is Zoom Doomed?
There is no doubt that working from home has become a new normal for millions of employees worldwide, and for some, this may be the future of their employment. When the workforce made the shift to remote work and online meeting navigation, Zoom Video Communications, Inc. (“Zoom”) quickly became the frontrunning platform. Many companies flocked to Zoom because of its alleged higher levels of security and encryption capabilities. However, a recent lawsuit against Zoom, by nonprofit group Consumer Watchdog, reveals that Zoom may not actually be as safe for users as it once claimed to be. Other lawsuits allege privacy concerns including Zoom sending user data to Facebook. Most recently, the FTC filed a suit against Zoom on November 9th for allegations of unfair, deceptive, or abusive acts or practices (“UDAAP”) related to encryption, cloud storage, third-party safeguards, and failure to disclose information to users. Though various privacy concerns arise, the platform’s popularity continues to increase given its newfound necessity.
The Death of Neutral Corporations
The current social and political climate, as well as our planet’s environmental climate, have shown the new role that corporations play in society. The pandemic and the current social upheaval seen worldwide have increased the need for real and meaningful corporate commitment to social responsibility.
Lawmakers and Regulators Call for Action After Archegos Meltdown
Last week, the finance industry watched one of the biggest implosions of an investment firm since the 2008 financial crisis. Archegos Capital Management rocked the industry when it was forced to liquidate huge positions in blue-chip companies after some risky investment strategies went south. The financial instruments used in this risky investment strategy are called total return swaps. The Archegos meltdown has lead lawmakers and regulators to call for increased scrutiny of the swaps.
The SPAC Faces Its First Regulatory Obstacle
As Coronavirus (Covid-19) has slowed the global economy, business owners have been forced to adapt to volatile market conditions and use creativity to raise capital. Investors and financial industry professionals have turned their attention to Special Purpose Acquisition Companies (SPACs), which have already raised nearly $100 billion in 2021 compared to $83.4 billion during the previous year. A SPAC is a publicly-traded shell company formed by industry professionals such as institutional investors, private equity firms, and hedge funds. Then, SPAC sponsors will seek to complete a merger or acquisition with another private company, which enables the private company to become publicly traded and bypass the initial public offering (IPO) stage. SPACs usually are allowed two years from the IPO date to formalize an acquisition or return the funds to investors.
An Update on the Gamestop Frenzy: Calls for Regulation and a Congressional Hearing
Cora Leeuwenburg Associate Editor Loyola University of Chicago School of Law, JD 2022 The controversy surrounding the unprecedented movement by retail investors and Gamestop has not died down in the last month following the stock’s meteoric rise in price and dramatic fall. The wildly volatile stock has lost hedge funds millions and resulted in …
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Securities and Exchange Commission Issues Statement Regarding Climate Change Disclosures
One of President Joe Biden’s promises to America if elected President of the United States was to be more proactive to fix the increasing issue of climate change. Previously, during his tenure as Vice President, in 2010 disclosures were mandated by the Securities and Exchange Commission (SEC) that ordered publicly traded companies disclose their climate change related data in their filings to help investors make more informed decisions. More than ten years later, and only a month after President Biden’s inauguration, the SEC released a statement regarding their intentions to revise these disclosure requirements and bring a greater focus to investment decision regarding climate change issues.
U.S. Regulators are Employing New Strategies to Crack Down on Historically Challenging Insider Trading Cases
In the past, insider trading cases have been considered difficult to prove and prosecute. These cases usually require extensive evidence-gathering coupled with a high burden of proof. However, the Securities and Exchange Commission (SEC) and Justice Department are now turning to new developments in technology and regulatory efforts that have led to an increased focus on investigating and prosecuting insider trading cases. Why were these cases hard to prove in the past and what exactly are these new technologies?
Federal Response to the Collapse of Silicon Valley
The collapse of Silicon Valley Bank (SVB), the 16th-largest bank in the United States, in early March of this year is considered the biggest bank failure since the fall of Washington Mutual during the 2008 global financial crisis. After 40 years of success, the bank collapsed swiftly and unexpectedly. The collapse has ricocheted through the industry, provoking bank closures, rattling the global markets, and threatening the livelihood of startups. The Federal government has not only intervened and taken over the bank, but prosecutors and regulators from the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have initiated preliminary investigations. Inevitably the collapse will cause regulators to revise the current banking rules and pursue stricter regulation in order to prevent the demise of other banks and a financial crisis.
Growing Banking Crisis: Silicon Valley Bank Failure
Founded in 1983, Silicon Valley Bank (SVB) is a midsize California-based lender that shook the foundation of the entire global financial system. Regulators closed SVB on March 10, making it the largest bank failure since the 2008 financial crisis and the second largest in U.S. history. While SVB offered various services from standard checking accounts to loans, it was primarily home to venture capitalists in the tech industry. Therefore, the majority of the corporate deposits were larger than the Federal Deposit Insurance Corporation’s (FDIC) $250,000 insurance limit, leaving over $150 billion in uninsured deposits at the end of 2022. The sudden collapse caused a frenzy leaving companies and investors vulnerable having already experienced mass layoffs in the tech industry.