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The Securities and Exchange Commission sued insurance magnate Greg Lindberg, alleging that he and a lieutenant defrauded insurers out of more than $75 million through a series of undisclosed related-party transactions and advisory fees paid to a Malta entity, WSJ Pro Bankruptcy reported. “We allege a massive fraudulent scheme, involving unique financial structures and various complex investments,” said Osman Nawaz, chief of the SEC Division of Enforcement’s Complex Financial Instruments Unit, in a news release on Tuesday accompanying the complaint. The SEC’s civil action is the first government allegation of fraud against Mr. Lindberg, a North Carolina entrepreneur who bought several insurers and proceeded to loan at least $2 billion of their assets to entities he controlled. Four North Carolina insurers have since been placed into rehabilitation, a type of receivership akin to reorganization under federal bankruptcy law, by that state’s regulators while another in Bermuda is in liquidation. Mr. Lindberg in July was released from federal prison after an appeals court overturned his 2020 conviction on a separate, criminal matter, ruling that the district court judge erred in his jury instructions. That case, in which Mr. Lindberg was accused of attempting to bribe North Carolina’s insurance commissioner to obtain more favorable regulatory treatment, is tentatively scheduled for retrial in March 2023. Mr. Lindberg has denied wrongdoing in the criminal case. Referring to the SEC civil action, Susan Estrich, a spokeswoman for Mr. Lindberg, called it “piling on,” saying it was evidence of a “weak case,” in a statement Tuesday.

Investor Ryan Cohen might have run afoul of disclosure guidelines in his surprise sale of Bed Bath & Beyond Inc. stock this month, securities lawyers said, but regulatory action against him appears unlikely, the Wall Street Journal reported. Cohen sold his entire stake in the home-goods retailer on Aug. 16 and 17, just months after he took a significant position in the company and pledged to force changes there. Shares tumbled after news of his sales came out on the afternoon of the 17th, but meanwhile Cohen benefited from a huge surge in volume that enabled him to sell millions of shares while prices rose. An ownership disclosure that Cohen filed on the morning he began selling included a trivial update about the size of his holdings and said he hadn’t done any trading in Bed Bath & Beyond during the prior 60 days. The SEC requires activist investors to file the ownership disclosure, known as a 13D, when they acquire at least 5% of a company’s shares and plan to influence or control the company. SEC rules dictate that investors must promptly update the form to reflect any material changes to what they first disclosed, such as new plans to buy or sell shares. Within minutes or hours of the ownership disclosure, Cohen began selling. Individual investors “have no idea he is dumping the stock against them,” said Joshua Mitts, a law professor at Columbia University who specializes in analytical research on trading strategies. The Securities and Exchange Commission could investigate whether Cohen had a plan to sell before he filed the Aug. 16 update that he should have disclosed, according to former regulators and law professors who specialize in securities law. The SEC’s enforcement division hasn’t contacted him, according to a person familiar with the matter. (Subscription required.)

The U.S. Securities and Exchange Commission said on Friday it adopted two amendments to whistleblower program rules, including one that would expand the circumstances in which a whistleblower can receive an award, Reuters reported. The other amendment "affirms the Commission's authority to consider the dollar amount of a potential award for the limited purpose of increasing an award but not to lower an award," the SEC said in a statement. "Today's amendments enact two changes to help enhance the whistleblower program," SEC Chair Gary Gensler said in the statement.

Pay for top executives at US companies is about to get a lot more scrutiny under a new Securities and Exchange Commission rule, Bloomberg News reported. Publicly traded firms will have to disclose more details about how senior managers are paid, including performance incentives, the SEC said on Thursday. The rule, which has been delayed for years, aims to clarify how a company’s financial performance impacts an executive’s pay, according to the agency. Shareholder advocates have for years sought greater disclosure around executive pay, arguing that it should correspond to how well a firm is performing financially. Current disclosures, they say, don’t provide enough detail for investors about the incentives that often make up a large chunk of top managers’ overall compensation. In one key change, companies will have to start detailing the link between executive compensation and the returns that their investors, and competitors’ shareholders make from holding stock. The metric, known as total shareholder return, would help investors determine a company’s performance, the SEC said.

The U.S. Securities and Exchange Commission said yesterday that it had charged three individuals for illegally tipping and trading in the securities of Equifax Inc before the company announced it had experienced a massive data breach, Reuters reported. Equifax, a provider of consumer credit scores, revealed in September 2017 that personal details of as many as 143 million U.S. consumers were accessed by hackers between mid-May and July of that year, making it one of the largest data breaches in the United States. According to the SEC's complaint, Equifax hired a public relations firm in August 2017 to help handle the media inquiries it expected to result from the breach. Ann Dishinger, who worked as a finance manager at the public relations firm, learned about the Equifax breach through her role and tipped her significant other, Lawrence Palmer, with the non-public news. The SEC alleges that Palmer then contacted a former client who arranged for the purchase of out-of-the-money Equifax put options with the understanding that the client and Palmer would split any trading profits obtained. The agency also alleges that Palmer tipped his brother and business partner, Jerrold Palmer, who then contacted a high school friend who arranged for the purchase of the same series of out-of-the-money Equifax put options.

The Securities and Exchange Commission yesterday charged 18 individuals and entities for their roles in a fraudulent scheme in which dozens of online retail brokerage accounts were hacked and improperly used to purchase microcap stocks to manipulate the price and trading volume of those stocks, according to a SEC press release. Those charged include Rahim Mohamed of Alberta, Canada, who is alleged to have coordinated the hacking attacks, and several others in and outside the U.S. who allegedly benefited from or participated in the scheme. According to the SEC’s complaint, in late 2017 and early 2018, hackers accessed at least 31 U.S. retail brokerage accounts and used them to purchase the securities of Lotus Bio-Technology Development Corp. and Good Gaming, Inc. The unauthorized purchases allegedly enabled fraudsters, who already controlled large blocks of Lotus Bio-Tech and Good Gaming stock, to sell their holdings at artificially high prices and reap more than $1 million in illicit proceeds. According to the complaint, Davies Wong of British Columbia, Canada, and Glenn B. Laken of Illinois, respectively, controlled the majority of the Lotus Bio-Tech and Good Gaming stock that was sold while the hacking attacks were being carried out, and Mohamed coordinated with Wong, Laken, and others to orchestrate the attacks. The complaint also alleges that Richard Tang of British Columbia, Canada, was involved with both the Lotus Bio-Tech and Good Gaming schemes.

The U.S. Securities and Exchange Commission is looking into Melvin Capital Management risk controls and investor disclosure after the hedge fund was crippled by the meme-stock rally last year, the Wall Street Journal reported. The regulator has contacted investors in the hedge fund in recent months as part of an investigation into what Melvin founder Gabriel Plotkin and other senior executives told them following the meme-stock rally in January 2021 and whether it misled investors when it raised money last year. The SEC has obtained from Melvin its general communications with investors and has sought information about what the firm disclosed about the risks of its investment strategy to clients, the people said. Melvin is in the process of winding down after Mr. Plotkin surprised investors in May by telling them he would return their money. The investigation is in its early stages and may not lead to any formal claims of wrongdoing. It is being handled by the enforcement division’s asset-management unit in Washington, D.C. The SEC and other law-enforcement authorities have investigated the frenzied trading in early 2021 that sent shares of GameStop Corp. and others soaring. It couldn’t be learned whether the broader inquiries are related to the SEC’s probe of Melvin. Melvin lost $6.8 billion in January 2021, or more than half its assets under management, as retail and other investors banded together to target the fund’s short positions. The loss was one of the swiftest and steepest declines for a hedge fund since the 2008 financial crisis: At the worst points, Melvin was hemorrhaging more than $1 billion a day. Melvin late that January got a total of $2.75 billion from Ken Griffin’s Citadel and Steven A. Cohen’s Point72 Asset Management in exchange for a share of its revenues, in a deal that let the firm reduce its leverage rather than sell out of its positions.

Under Chairwoman Lina Khan, the Federal Trade Commission is questioning mergers that likely would have gone unchallenged in years past — a change Ms. Khan says is needed to prevent companies from building up too much power and stifling competition, the Wall Street Journal reported. “In all too many areas of our economy, including agriculture, airlines, healthcare, we’ve seen significant consolidation and reduction of competition,” Ms. Khan said in an interview. “Mergers have played a role in that.” The FTC issued 42 letters of investigation over mergers or similar transactions during the 2021 fiscal year, almost double the number for 2020 and the highest in more than 10 years. Deal makers, antitrust attorneys and Republicans complain that in some cases the FTC is simply trying to slow down deals where there isn’t a credible threat to competition. “The emphasis is on using process to make doing deals more expensive and to heighten the risk, delay and uncertainty of doing those deals,” said Christine Wilson, a Republican commissioner who has been critical of Ms. Khan’s management. Bankers and boards of directors are now more aware of the risk that antitrust enforcers will investigate, which has sometimes led companies to postpone merger plans, said Eric Swedenburg, co-head of the mergers and acquisitions practice at Simpson Thacher LLP. “Boards are well aware of the aggressive antitrust enforcement regime right now,” Mr. Swedenburg said. “You have to assume you’re not going to get a pass on anything.”

The U.S. Securities and Exchange Commission (SEC) will propose a new rule on Wednesday aimed at boosting hedge and private fund leverage disclosures, among other details, Reuters reported. The proposal by the Wall Street regulator would require funds to provide more information on leverage as part of their confidential "Form-PF" disclosures, the person said, adding that the measure would also apply to fund advisers who operate as commodity investors and traders under Commodity Futures Trading Commission rules. The proposal is part of a broader effort by the SEC to boost transparency of the private fund industry amid worries the industry is a growing source of systemic risk, and follows a January draft rule that boosted other Form PF disclosures. Form PF, which was introduced following the 2007-2009 global financial crisis, is the primary way private funds disclose purchases and sales of securities to the SEC. Regulators have grown concerned over risk in the private industry after hedge fund de-leveraging contributed toward turmoil in the U.S. Treasuries market in March 2020 and hedge funds were again at the center of last year's GameStop "meme-stock" saga, analysts say.

The U.S. Securities and Exchange Commission (SEC) on Monday proposed new rules aimed at preventing conflicts of interest in management and governance of clearing houses, Reuters reported. Clearing houses provide essential plumbing for financial markets, ensuring that securities or derivatives trades are completed, even if one side of a transaction goes bust. Under the SEC's proposal, registered clearing houses would be required to disclose more details on board composition, independent directors, and nominating and risk management committees, among other details, the agency said. "I think these rules would help to build more transparent and reliable clearing houses, SEC Chair Gary Gensler said in a statement. "This in turn would help ensure our markets are more resilient, protecting investors and building trust in our markets," Gensler said. The plan would replace two related measures proposed following the 2009-2010 global financial crisis, but which were never adopted. Specifically, the SEC's plan would require clearing houses identify, mitigate or eliminate conflicts of interest involving directors or senior managers, and also to document such actions. It would also require such firms to implement policies and procedures that obligate directors to report conflicts of interest, among other details.