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The Securities and Exchange Commission is examining whether Better.com violated federal securities laws, the online mortgage lender disclosed yesterday, the Wall Street Journal reported. Federal securities regulators have requested documents from Better.com and its blank check company Aurora Acquisition Corp. about their business activities, the companies said in filings with the SEC. They also are seeking information about the business activities of Better.com Chief Executive Vishal Garg and allegations made by former executive Sarah Pierce. Pierce alleged in a lawsuit last month that the company misled investors in financial filings and other representations it made as it attempted to go public. Ms. Pierce was Better.com’s former executive vice president for sales and operations. Better.com said at the time that Ms. Pierce’s claims were without merit and it would vigorously defend the lawsuit. In its filing Thursday, the company said it was cooperating with the SEC. Better.com said in a statement that it voluntarily provided all materials requested and that it was “happy to set a high bar for transparency and responsiveness.” Better.com was a winner amid the boom in housing prices and mortgage refinancing that accompanied the pandemic and low interest rates. The company grew revenue nearly 10-fold to $876 million in 2020 from the year prior, posted a profit of $172 million and hired thousands as it rushed to keep up with the market, company filings said. It raised $500 million from SoftBank Group Corp. last year and weeks later said it planned to go public at a valuation of $7 billion. Better.com since has been rocked by the rise in interest rates and resulting sharp pullback in refinancings, as well as a controversy when Mr. Garg laid off 900 workers via a Zoom call in December. He took a brief leave after the call sparked an uproar. The company shed about 7,500 jobs, or 72% of its total workforce, between the end of last year and May, according to the company’s filing Thursday. At its peak, it had 10,400 employees at the end of 2021. In May of this year it had about 2,900 employees.

A U.S. appeals court yesterday struck down an order by the Securities and Exchange Commission that would have allowed some financial firms that are not stock exchanges to have a say in how essential stock market data is priced and disseminated, Reuters reported. The ruling was a win for large exchange groups like Intercontinental Exchange Inc.'s NYSE, and Nasdaq Inc., which had challenged the SEC's order. Real-time consolidated equity market data, such as the best bids and offers available in the market, are a regulatory must-have for brokers when trading stocks, in part so they can show they executed their customers' orders at the best prices available. In 2020, after more than a decade of complaints by brokers claiming exchanges were conflicted in their roll of providing core market data while also selling similar proprietary market data products, the SEC approved an order governing the collection and dissemination of core market data. That order directed the exchanges and the Financial Industry Regulatory Authority, which are self-regulatory organizations (SROs), to draft a new plan for the dissemination of public equity market data that, among other things, would give non-SROs one-third of the votes on the plan's operating committee. Nasdaq, NYSE and Cboe Global Markets, which together run 12 of the 16 U.S. stock exchanges, challenged both the governance plan and the order for a new national market system (NMS) plan. In May, a three-judge panel on the U.S. Circuit Court of Appeals for the District of Columbia sided with the SEC and upheld the governance plan. But on Tuesday, that appeals court sided with the exchanges and vacated the NMS plan, saying the SEC stepped outside its authority in giving non-SROs voting power on the plan's operating committee.

Wealth manager and banking group UBS will pay $25 million to settle fraud charges relating to an options trading strategy, the U.S. Securities and Exchange Commission (SEC) said yesterday, Reuters reported. UBS marketed and sold the "Yield Enhancement Strategy (YES)" to about 600 investors through its platform of domestic financial advisers from February 2016 through February 2017, the SEC said, adding its order found that UBS did not provide its financial advisers with adequate training and oversight in the strategy. Although UBS recognized and documented the possibility of significant risk in those investments, it failed to share this data with advisers or clients, the SEC said in a statement. "As a result, the order finds, some of UBS’s advisors did not understand the risks and were unable to form a reasonable belief that the advice they provided was in the best interest of their clients," the statement added. Without admitting or denying the SEC's findings, UBS agreed to a cease-and-desist order, a censure, and to pay disgorgement of $5.8 million and prejudgment interest of $1.4 million, the SEC said. The bank also agreed to pay a civil penalty of $17.4 million.

Hundreds of auditors at accounting giant Ernst & Young cheated on ethics tests they were required to take to get or maintain their professional licenses, and the company withheld evidence of the misconduct from federal authorities investigating the matter, according to the Securities and Exchange Commission, the Washington Post reported. In response, the SEC is imposing a $100 million fine on the company, the largest ever on an audit firm, the agency announced Tuesday. “This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our nation’s public companies,” SEC enforcement director Gurbir Grewal said in a statement. “It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things.” In a statement, Ernst & Young admitted to the SEC’s charges and said it is complying with the agency’s penalty. The agency found that beginning in 2017, 49 Ernst & Young professionals shared or received answers to ethics exams they needed to pass to get licensed as certified public accountants. Hundreds more cheated on courses they needed to take to maintain their standing with state oversight boards, while others who didn’t participate themselves helped facilitate the behavior, the SEC said.

Crypto companies that have been trying to go public since last year’s boom remain stuck in a lengthy back-and-forth with US regulators, adding to the pile of challenges facing the industry, Bloomberg News reported. Bids to merge with blank-check companies are getting scrutiny from accountants at the Securities and Exchange Commission because the asset class raises fresh bookkeeping issues, according to people familiar with the matter. Dates for closing multibillion-dollar deals involving Circle Internet Financial Ltd., a stablecoin issuer, and exchanges run by Bullish Global and eToro Group Ltd. have all been pushed back multiple times. While the SEC has been stepping up oversight of all deals involving special purpose acquisition companies, the delays are particularly fraught for virtual-coin companies already reeling from a steep market downturn. The total market value of cryptocurrencies has plunged to less than $1 trillion from $3 trillion in November amid high-profile blowups and a rise in interest rates that’s sapped demand.

The top U.S. securities regulator yesterday unveiled a planned overhaul of Wall Street retail stock trading rules, aiming to boost competition for handling orders by commission-free brokerages to ensure mom-and-pop investors get the best price for trades, Reuters reported. U.S. Securities and Exchange Commission chair Gary Gensler told an industry audience he wants to require trading firms to directly compete to execute trades from retail investors. The Wall Street watchdog plans to scrutinize growth in recent years of the payment for order flow (PFOF) practice, which is banned in Canada, the UK and Australia. Some brokers, such as TD Ameritrade, Robinhood Markets and E*Trade, accept these payments from wholesale market makers for orders. In December 2020, Robinhood actually paid a fine related to the practice, which the SEC said raised costs for investors using the online brokerage. A ban on the PFOF practice is not off the table, Gensler has said. On Wednesday, he said the practice has "inherent conflicts," while noting some zero-commission brokerages operate without PFOF.

A highly anticipated Senate proposal to bring the cryptocurrency industry under federal oversight would deliver a win for the sector by empowering its preferred regulator, the Commodity Futures Trading Commission (CFTC), over the Securities and Exchange Commission, the Washington Post reported. The bill’s sponsors, Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), are touting it as the first serious effort to apply comprehensive regulation to the crypto industry, which has minted a new class of billionaires and promised to reinvent financial services while also spawning scams and investor wipeouts that have raised regulators’ alarms. But by giving primary responsibility for crypto oversight to the CFTC, the relatively small agency tasked with regulating a swath of financial markets, from grain futures to more complex products, the bill — set for introduction Tuesday — sidelines the SEC, whose chair, Gary Gensler, has taken an aggressive posture toward crypto interests. Gensler argues that most digital assets in the roughly $1.2 trillion market qualify as securities, similar to stock in publicly-traded companies, giving his agency the responsibility to police them and their issuers. The bill from Lummis and Gillibrand rejects that claim, asserting instead that “most digital assets are much more similar to commodities than securities,” a joint news release from the senators’ offices said. The CFTC already regulates futures contracts for bitcoin and ethereum, the two most popular cryptocurrencies. But the new proposal gives the agency broad new power by handing it oversight of the crypto spot market as well — and envisions that market including a wide array of digital coins. The bill would create a process for crypto trading platforms such as Coinbase to register with the CFTC.

Sen. Elizabeth Warren (D-Mass.) is planning a bill to crack down on the special purpose acquisition company, or SPAC, industry after a "proliferation" of bad deals that have often resulted in huge losses for investors, Reuters reported. Warren's forthcoming "SPAC Accountability Act of 2022" would increase the legal liability for a range of parties involved in such deals, enhance investor disclosures and lock up for a longer period early investors which bankroll the deals. While Warren's bill may struggle to gain traction this year with lawmakers focused on the midterm elections, it's likely to increase pressure on the industry which is already facing proposed new curbs from the U.S. Securities and Exchange Commission (SEC). In the report released yesterday, Warren also detailed an investigation she began last year on SPACs and their backers, which found investors had been harmed and further regulation was needed. “This investigation found that Wall Street insiders have used SPACs as their own personal piggy banks while retail investors have suffered," Warren said in a prepared statement. "This industry is rife with fraud, self-dealing and inflated fees, and the SEC and Congress should continue to act to crack down on these abuses.” Investment banks have raked in billions of dollars feeding the frenzy for SPAC deals, which have left many investors with losses, Reuters reported this month. If finalized, SEC rules proposed in March would largely close current loopholes by offering SPAC investors protections similar to those they would receive during the IPO process. Warren's bill would build on the SEC's proposal by codifying its changes into law. It would expand the definition of underwriter to include any party that facilitates the takeover of the target company, increasing legal liability for financial institutions, SPAC sponsors and boards, and the target company.

New federal rules released Wednesday could help ensure that investment funds labeled as environment, social and governance (ESG) actually deserve the name — and the high fees they command, The Hill reported. The Security and Exchange Commission (SEC) proposed a new regulation to combat the practice of “greenwashing,” the misleading marketing of unsustainable investments under the ESG label. If adopted, the measure would require funds marketing themselves as ESG-focused to disclose additional information to investors. Different categories of funds would be required to report varied information. Those that are focused on considering environmental factors would be required to share the climate contributions associated with their investments and those that claim to have certain impacts would need to summarize their progress. “The lack of specific disclosure requirements tailored to ESG investing creates the risk that funds and advisers marketing such strategies may exaggerate their ESG practices or the extent to which their investment products or services take into account ESG factors,” it said.