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On Tuesday, the SEC brought forth charges against an RIA and its president for failure to disclose loss of control over client crypto assets and multiple breaches of RIA regulatory requirements, resulting in a hefty $425,000 price tag in civil penalties. This recent enforcement action not only underscores the difficulties of digital asset compliance, but most importantly, that the SEC cares about what firms and its employees are doing within the crypto space. Indeed, as the digital asset landscape evolves, so too does regulatory oversight. The SEC is actively policing the intersection of crypto and RIA operations, and it expects RIAs to proactively align their compliance programs within both traditional RIA frameworks and the emerging digital asset space. The alternative, as this case demonstrates, can be costly. Read the Litigation Release here: https://lnkd.in/es6eUV5K #RIACompliance #CryptoRegulation #SECEnforcement

The decision by the Australian Securities and Investments Commission (ASIC) to appeal the latest Block Earner decision should give crypto asset providers some cause for concern. The regulator has signalled that, despite some recent court losses, it is prepared to continue its focus on the emerging industry in its pursuit of regulatory clarity. Edward Martin (Partner), Philip O'Brien (Senior Associate) and Jin Hong Lim (Lawyer) provide an insight on the latest ASIC appeal in this article: https://lnkd.in/gS352eD3 #auslaw #FSR #cryptoasset #AFSL If you found this insight article useful and you would like to subscribe to Gadens' updates, click here: https://lnkd.in/gwqNGne

The U.S. Securities and Exchange Commission ordered $8.2 billion in financial remedies in fiscal year 2024, the most in the agency’s history, the SEC announced Friday. The $8.2 billion figure includes $6.1 billion in disgorgement and prejudgment interest, also the highest amount on record, and $2.1 billion in civil penalties, the second-highest amount on record, the SEC stated in its report for the fiscal year, which ended Sept. 30. The commission’s 583 enforcement actions marked a 26% drop from fiscal year 2023, the agency added. More than $4.5 billion in remedies were ordered after a jury in the U.S. District Court for the Southern District of New York jury found cryptocurrency company Terraform Labs and its founder Do Kwon liable for civil fraud in April. That was the most money ever obtained by the SEC following a trial, the commission said. As part of Terraform’s bankruptcy agreement, the SEC will be paid only after Terraform covers losses claimed by its investors. An SEC spokesperson said the agency does not know how much of the $4.5 billion the agency will recover but “expect it to be substantial.” The SEC also said it distributed $345 million to harmed investors in fiscal year 2024 and obtained orders barring 124 people from serving as officers and directors of public companies, the second-highest amount in a decade. The highest was 133 people in fiscal year 2023. 𝗙𝘂𝗹𝗹 𝘀𝘁𝗼𝗿𝘆: https://lnkd.in/e-DmjK3f

House votes to overturn SEC guidance on crypto custody (via Axios): https://ow.ly/KpI550RQ9tH #sec #financialcompliance #financialcompliancenews #compliance #axios

WSJ: "The Securities and Exchange Commission said it collected $8.2 billion in monetary penalties for the fiscal year 2024, the highest amount for the fines in the regulator’s history. The record amount imposed in financial penalties—two-thirds more than the $4.9 billion collected in fiscal year 2023—caps the tenure of agency Chair Gary Gensler, who said he plans to step down in January once President-elect Donald Trump takes office. Just over half of the 2024 total came from a monetary judgment following the SEC’s jury trial win against cryptocurrency company Terraform Labs and its former Chief Executive Do Kwon, after being charged with one of the largest securities frauds in U.S. history.  As the agency’s head, Gensler took a tough stance toward crypto companies. The burgeoning industry has largely celebrated his expected departure from the agency once Trump takes office. The record penalty collection comes despite a decline in the number of cases by the SEC. The regulator took 583 enforcement actions during the year, a 26% decline from the previous year. The SEC also barred 124 individuals from serving as officers and directors of public companies, the second-highest number in a decade. The agency focused on record-keeping violations stemming from off-channel communications, bringing cases that netted more than $600 million in civil penalties against roughly 70 firms.  Another significant financial penalty came from a settlement with Morgan Stanley, which paid $249 million to resolve SEC charges involving the disclosure of confidential information about the sale of large quantities of stock." 

The U.S. Securities and Exchange Commission ordered $8.2 billion in financial remedies in fiscal year 2024, the most in the agency’s history, the SEC announced Friday. The $8.2 billion figure includes $6.1 billion in disgorgement and prejudgment interest, also the highest amount on record, and $2.1 billion in civil penalties, the second-highest amount on record, the SEC stated in its report for the fiscal year, which ended Sept. 30. The commission’s 583 enforcement actions marked a 26% drop from fiscal year 2023, the agency added. “The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” SEC Chair Gary Gensler in a statement. “As demonstrated by this year’s results, the division helps promote the integrity of our capital markets to benefit investors and issuers alike.” More than $4.5 billion in remedies were ordered after a jury in the U.S. District Court for the Southern District of New York jury found cryptocurrency company Terraform Labs and its founder Do Kwon liable for civil fraud in April. That was the most money ever obtained by the SEC following a trial, the commission said. As part of Terraform’s bankruptcy agreement, the SEC will be paid only after Terraform covers losses claimed by its investors. An SEC spokesperson said the agency does not know how much of the $4.5 billion the agency will recover but “expect it to be substantial.” 𝗙𝘂𝗹𝗹 𝘀𝘁𝗼𝗿𝘆: https://lnkd.in/gPKHPhcn

TDCI's Securities Division and the Tennessee Attorney General's Office recently won court approval to freeze the bank accounts and financial assets related to a group of Memphis-based individuals who allegedly engaged in fraudulent activity and acted as unregistered broker-dealers and investment advisers, in addition to allegedly committing other violations of state securities law and other Tennessee laws protecting consumers. Investor complaints spurred the investigation into three individual defendants, Ali Raza Galani, Misam Abidi, and Anisha Abidi as well as their various corporate entities, Star Credit Holdings, LLC, Satori Credit Solutions, LLC, NumisMe, LLC. Investors complained after they lost the majority of their investments through the STAR Investment Club and purchase of the NUME cryptocurrency token, which Galani and the Abidis fully owned and controlled. The complaint alleges Galani, the Abidis, and their companies violated state securities law by engaging in fraudulent activity, misleading investors, comingling and misusing investor funds, by not registering their securities offerings with TDCI’s Securities Division, and also by not registering as broker-dealers, broker-dealer agents, investment advisers, or investment adviser representatives. According to the complaint, investors in 17 states, including Tennessee, invested over $6.3 million in fraudulent investments. Wyoming investors lost the most with over $2.4 million followed by California investors who lost $1.14 million. Tennessee investors are believed to have lost over $250,000. As part of the ongoing court proceedings, TDCI’s Securities Division investigators are asking those who have invested with Galani, the Abidis, or their corporate entities to come forward and share information as it relates to their dealings with these individuals and corporations. To learn more and to file a complaint, visit: https://lnkd.in/e7yMeaVx #consumerprotection #tennessee #consumeralert #tnsecurities #investorprotection

SEC Tops $8.2 Billion From Enforcement Actions In 2024 Alone The United States Securities and Exchange Commission (SEC) has racked up $8.2 billion worth of financial remedies under Chair Gary Gensler in 2024. SEC Sees Multi-Billion Payout In Financial Remedies The whopping $8.2 billion received by the regulator, which includes… https://lnkd.in/gUdGuqJk #SEC #SecuritiesAndExchangeCommission #FinancialPenalties #EnforcementActions #GaryGensler #TerraformLabs #DoKwon #CryptocurrencyRegulation #FinancialRemedies #InvestorProtection #USRegulators #CryptoFraud #MarketIntegrity #CapitalMarkets #FinancialNews #Coinucation #BMIG

☢️ SEC Seeks to Dismiss Kraken’s Three Key Defenses in U.S. Lawsuit -- The Securities and Exchange Commission (SEC) has called Kraken’s defenses “legally untenable” and asked for them to be dismissed. -- The lawsuit against the exchange was filed in November 2023. The U.S. Securities and Exchange Commission (SEC) has asked the Northern District Court of California to dismiss three defenses raised by Kraken in response to allegations that the crypto exchange is engaging in illegal activity. In a motion filed on November 5, the regulator rejected Kraken’s claims regarding a lack of clarity about securities laws and how they apply to virtual assets, as well as allegations that the exchange was not properly notified that its actions constituted a violation of securities law. It also asks the court to reject Kraken’s “fundamental questions doctrine” defense. The doctrine is a legal principle established by the Supreme Court that states that agencies should not expand their regulatory powers without explicit authorization from Congress. The SEC sued Kraken in November 2023 for operating the platform as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC said it believed that since at least September 2018, Kraken had illegally earned hundreds of millions of dollars by facilitating the purchase and sale of crypto securities. Kraken filed a motion to dismiss, which was denied in August. “In denying Kraken’s motion to dismiss, the court rejected Kraken’s contention that the fundamental questions doctrine precludes this claim from proceeding and also held that the definition of an ‘investment contract’ under the Exchange Act of 1934 is well-established law,” the SEC said in its motion. According to the filing, Kraken “has now filed multiple requests for Histories, seeking voluminous sets of documents and lengthy admissions related to these legally unsound defenses.” “The court should reject these defenses in order to preserve the proper scope of the Histories, narrow the scope of summary judgment, conserve judicial and party resources, and prevent Kraken from attempting to re-litigate the same issues at every possible stage of this case.”

On September 18, the U.S. Securities and Exchange Commission (SEC) announced charges against two firms for violations of federal securities laws. First Horizon Advisors, Inc. was charged for failing to comply with Regulation Best Interest (Reg BI) regarding structured note recommendations, while Rari Capital, Inc., a DeFi platform, faced charges for misleading investors and engaging in unregistered broker activities. Key Highlights: - First Horizon Advisors, Inc.: The SEC found that First Horizon failed to enforce its Reg BI policies, resulting in a $325,000 civil penalty. The firm did not maintain accurate customer information, nor did it adequately review structured note recommendations, violating its compliance obligations. - Rari Capital, Inc.: The SEC charged Rari Capital and its co-founders for misleading investors about the profitability and features of their crypto investment products, as well as conducting unregistered securities offerings. The firm agreed to settlements involving penalties, disgorgement, and operational injunctions, subject to court approval. These cases underscore the SEC's commitment to holding financial and crypto firms accountable for compliance failures and deceptive practices. For more updates on financial regulations and enforcement actions, unlock cutting-edge legal intelligence with a free subscription to our platform — join us today. Visit https://lnkd.in/gZmkUPim to know more. #SEC #FinancialRegulations #CryptoRegulation #RegBI #DeFi #GRI