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Finance executives are bracing for higher costs and unintended consequences from new federal disclosure requirements on share repurchases, the latest in a series of moves by lawmakers and regulators to curb the popularity of stock buybacks, the Wall Street Journal reported. The Securities and Exchange Commission on Wednesday approved a rule requiring most companies to provide daily buyback amounts at the end of each quarter, rather than the monthly amounts that they have to supply now. In addition, companies will have to check a box if their officers and directors purchased or sold shares within four business days of announcing a buyback program. Also under the rule, which is set to go into effect in October, companies have to explain rationales for buybacks and share with investors any policies they have to limit insider transactions during such a program. Currently, U.S. public companies are required to present in their quarterly reports the number of shares they repurchased, the amount of money spent on buybacks and the average share price. The rule change comes months after a new 1% excise tax on share repurchases went into effect, a levy that President Biden in February proposed quadrupling. A group of Senate Democrats later that month followed up with a bill similarly seeking to increase the tax on certain buybacks to 4%, a proposal that faces hurdles to passage in the divided Congress.

The U.S. Securities and Exchange Commission will decide on Wednesday whether to adopt new rules for advisors to hedge funds and private-equity funds aimed at increasing transparency, competition and efficiency in the $25 trillion marketplace, Reuters reported. The SEC will vote on a proposal to update so-called Form PF, which was put in place following the financial crisis of 2008-2009 to monitor risks in the private-fund sector, to boost the quality of disclosures by large funds about their investment strategies and leverage. "Since the SEC put in place Form PF 12 years ago, a lot has changed," SEC Chair Gary Gensler said at a conference held by the Managed Funds Association on Tuesday. "The proposal's new transparency would relate to fees, expenses, performance, and side letters," he said. The rule changes would require private-fund advisers, such as private-equity firms and hedge funds, to disclose quarterly details about their fees and expenses, in a bid to shed light on the rapidly growing market sector.

The U.S. Securities and Exchange Commission has fined Seattle-based Coinme and related defendants nearly $4 million for conducting an unregistered and misleading offering of a crypto asset called UpToken, Reuters reported. Friday's settlement resolves claims that Coinme's Up Global unit and Neil Bergquist, who led both entities, misled investors in a late 2017 initial coin offering for UpToken, which was issued on the Ethereum blockchain. The SEC said investors were led to believe Up Global would limit the supply of UpToken, while Coinme would create constant demand for UpToken to fund a bitcoin automated teller machine rewards program, helping boost UpToken's price. According to the regulator, the claims were misleading because Up Global had quietly conducted transactions that reduced Coinme's need for UpToken. It also said Up Global and Bergquist falsely told investors that the offering raised $10 million to $18.9 million despite knowing that it actually raised much less, $3.65 million. 

Coinbase Global Inc. said yesterday that it would fight the Securities and Exchange Commission over the agency’s claim that much of its business is illegal and try to convince a court that Wall Street regulators lack the authority to oversee cryptocurrency markets, the Wall Street Journal reported. The company outlined its legal strategy in a memorandum that formally responded to the SEC’s earlier notice of a potential enforcement action against the company. The memo, made public by Coinbase along with a video featuring its chief executive, underscores the company’s effort to generate political backing and public support for its confrontation with the SEC. An SEC lawsuit against Coinbase would threaten the unregulated business model of crypto exchanges, which contributed to their early profitability and rapid growth. If Coinbase loses, it could be forced to register parts of its business with regulators or delist many crypto tokens that regulators say are securities that should have to comply with investor-protection rules. Gary Gensler, the SEC’s chairman, told House lawmakers last month that crypto exchanges are largely noncompliant with laws they are supposed to follow. They may need to delist many tokens they offer and restructure their operations to fit within SEC rules designed to limit conflicts of interest and other risks to investors, he said.

Gary Gensler brushed off criticism from Republican lawmakers over the Securities and Exchange Commission’s aggressive stance on crypto markets and said more resources are needed to clamp down further, Bloomberg News reported. Appearing for the first time before the GOP-controlled House Financial Services Committee, the SEC chair defended the agency’s approach. The regulator has recently brought a series of high-profile enforcement actions, and Gensler has said many crypto tokens are really just unregistered securities. “We could use more resources,” he said during a hearing on Tuesday. “There are more things to look at and investigate than we have people on the staff to do.” Ahead of the hearing, the Republicans on the panel released a letter Gensler that blasted the SEC’s digital-asset regulation. The lawmakers took particular issue with Gensler’s repeated calls for crypto trading platforms to come in and register with the agency.

The U.S. Securities and Exchange Commission yesterday charged cryptocurrency exchange Bittrex Inc. and its former CEO William Shihara with operating an unregistered national securities exchange, broker and clearing agency, Reuters reported. The SEC alleged in its complaint, which was filed in a U.S. district court in Washington, that Shihara coordinated with crypto asset issuers seeking to make their tokens available for trading on Bittrex's platform to delete public statements that Shihara believed would lead regulators to investigate those token offerings as securities. The SEC also charged Bittrex's foreign affiliate, Bittrex Global GmbH, for failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex.

The head of the U.S. Securities and Exchange Commission (SEC) plans to defend its rulemaking and policing of market misconduct at a hearing today led by Republican lawmakers who have accused it of overstepping its authority, Reuters reported. Having won control of the House of Representatives last year, Republicans now have a pulpit to try to constrain President Joe Biden's administrative oversight of key financial issues. Some in the finance industry have joined in the criticism, saying the SEC is going too far in its reforms and not taking time for industry feedback. But SEC Chair Gary Gensler, who has helmed the agency since April 2021, underscored the agency's rulemaking work as "grounded in legal authorities granted by Congress" in testimony prepared for Tuesday's House Financial Services Committee hearing. The SEC has proposed a stock market overhaul and laid out plans to require companies to disclose climate-related risks, among numerous other reforms. "Forsaking investor protection puts real people's life savings at risk. The goal is to protect our 'clients': U.S. investors," he said in the prepared remarks.

Credit Suisse and the U.S. Securities and Exchange Commission (SEC) engaged in a months-long debate over the severity of reporting deficiencies that led the Swiss bank to delay its annual report last month, Reuters reported. Credit Suisse said in March it had postponed the annual filing after a "late call" with the regulator which raised questions about earlier financial statements. Correspondence published in the SEC's online database on Tuesday show that agency staff first raised questions with Credit Suisse officials in July 2022. At issue were changes Credit Suisse made to how it booked a series of cash flows, including share-based compensation and foreign exchange hedges, and if control deficiencies needed to be disclosed to its audit committee or escalated to investors. "Management believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments received," Credit Suisse said at the time of the delay on March 9.

The U.S. Securities and Exchange Commission (SEC) charged crypto firm Beaxy.com and several executives for registration failures yesterday, expanding regulators' push to rein in the industry, Reuters reported. The SEC accused a Chicago-based firm behind Beaxy and some affiliates of serving in various roles such as an exchange, broker and clearing agency without registering with the SEC. That structure, which is common throughout the crypto industry, is one that the SEC's chair has criticized for conflicts of interest and risks to investors. Yesterday's civil charges came one day after Beaxy said it would immediately suspend services, saying that "due to the uncertain regulatory environment surrounding our business, we have made the difficult decision to cease operations." It also charged founder Artak Hamazaspyan with raising $8 million in an unregistered offering of the token BXY and misappropriating at least $900,000 for gambling and other personal use. Read more.

Don't miss the "Issues Impacting Unsecured Creditors in Crypto Bankruptcies" session at the Annual Spring Meeting in April. Are you registered?

The Securities and Exchange Commission has told Coinbase Global Inc. that it plans to take enforcement action against the company, escalating its crackdown on digital-currency firms by targeting the biggest U.S. crypto exchange, Coinbase said yesterday, the Wall Street Journal reported. Coinbase said that it had received a letter from the SEC known as a Wells notice, in which regulators say they believe companies or individuals violated investor-protection laws. The notices aren’t final because the agency’s commissioners must authorize any lawsuits or enforcement settlements. By warning Coinbase about a potential lawsuit, the SEC is setting its sights on one of the biggest names in crypto, a publicly traded company that has helped bring tens of millions of customers into the digital-currency markets since it was founded in 2012.