Skip to main content

%1

U.S. SEC to Consider New Restrictions on Company Insiders' Trading Plans

Submitted by jhartgen@abi.org on

The head of the U.S. Securities and Exchange Commission (SEC) said yesterday that he has asked staff to tighten up a legal safe-harbor that allows corporate executives to buy or sell company stock without running afoul of insider trading laws. The "Rule 10b5-1" trading plans allow insiders to execute trades in the company's stock on a pre-determined future date, providing legal protection against potential allegations of insider trading on material nonpublic information. Progressive Democrats and consumer advocates have long complained the rules for adopting, amending or canceling trades are far too lax, allowing insiders to game the system and reap windfalls at the expense of ordinary investors. SEC Chair Gary Gensler said yesterday that SEC staff should consider tougher restrictions on such changes and increased transparency. "When insiders or companies adopt 10b5-1 plans, there’s currently no cooling-off period required before they make their first trade," Gensler said. "I worry that some bad actors could perceive this as a loophole to participate in insider trading." While the rules do not treat canceling a trading plan as a securities transaction, Gensler added that doing so may be "as economically significant as carrying out an actual transaction." He had also asked staff to consider more robust disclosures regarding the adoption, modification and terms of the trading plans. An SEC proposal could also curb the number of plans executives can set up and reduce the risk of improper trading by requiring insiders to wait up to six months after a plan’s conception before trading, he added.
https://www.reuters.com/business/us-secs-gensler-says-has-asked-staff-c…

Article Tags
Finance and Banking
SEC Issues
Read more.

Proposed Framework Aims to Guide Regulators in Decisions to Charge Chief Compliance Officers

Submitted by jhartgen@abi.org on

A proposed framework guiding decisions to bring enforcement actions against financial sector chief compliance officers aims to address growing concern over the individual liability of compliance professionals, the Wall Street Journal reported. The proposed framework, released on Wednesday by the New York City Bar Association, asks regulators to evaluate 12 affirmative factors and three mitigating factors in deciding whether to charge chief compliance officers for conduct relating to their job-related duties under federal securities laws. The proposal is aimed at guiding decisions to charge CCOs made by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, which could decide to adopt the framework.

Article Tags
SEC Issues
Read more. (Subscription required.)
Bankruptcy Code
101
105
303
351
363
365
503
507
553
554
701
702
721
1112
1166
1170
362
541
Topics
Health Care
SEC Issues

Archegos Prepares for Insolvency as Banks Seek Compensation for $10 Billion Losses

Submitted by jhartgen@abi.org on

Archegos Capital is preparing for insolvency, triggered by banks’ attempts to recoup some of the $10bn they lost on its soured bets in March, the Financial Times reported. The family office run by Bill Hwang has hired restructuring advisers to assess potential legal claims from banks and to plan for a possible winding down of its operations. Six banks that acted as prime brokers to Archegos — Credit Suisse, Nomura, Morgan Stanley, UBS, MUFG and Mizuho — lost more than $10bn when they were forced to liquidate the family office’s positions in US-listed companies such as ViacomCBS after it failed to meet margin calls. A number of them are preparing to issue “letters of demand” to the firm — a request for payment ahead of launching a legal claim. They first want to finish closing out the Archegos positions; last week Credit Suisse said it had sold 97 per cent of the related securities. Lenders are also investigating whether Hwang’s family office withheld or provided incorrect information about the scale of its borrowing from other prime brokers.

Article Tags
Claims
Corporate Governance
Creditors' Committee
Business Reorganization
Finance and Banking
International Insolvency
Investment Banking
SEC Issues
Read more.

U.S. SEC Chair Says Reviewing Short-Selling, Swap Rules after GameStop, Archegos Sagas

Submitted by jhartgen@abi.org on

The U.S. securities regulator is considering measures to require big investors to disclose more about short positions, or bets that stocks will fall, use of derivatives to bet on other stock moves and to protect small investors from trading apps that use features common to video games in order to boost risky trading activity, Reuters reported. The review of rules by the Securities and Exchange Commission (SEC) was prompted by January's GameStop saga and the meltdown of Archegos Capital, its new chair plans to tell lawmakers. Gary Gensler, sworn in last month as chair of the top markets watchdog, will testify before the House of Representatives Financial Services Committee today. Democrats are pressuring him to take a tough stance on Wall Street after Gamestop's fierce rally in January, fed by bullish posts on Reddit, and the March implosion of New York investment fund Archegos. "Whenever there are major market events, it's a good idea to consider what risks they might have placed on the entire financial system," Gensler will tell lawmakers, according to prepared testimony published by the committee yesterday. SEC staff are working on potential measures, Gensler will say, including greater disclosure of "short-selling," a strategy hedge funds and other big investors use to bet a stock will fall; increasing transparency around securities lending, which underpins short-selling; and new reporting rules for the "total return" equity swaps that felled Archegos, a family office.

Article Tags
Business Reorganization
Finance and Banking
Investment Banking
SEC Issues
Read more.

Fed Leaves Interest Rates Unchanged as Economy Begins to Heal

Submitted by ckanon@abi.org on
Jerome H. Powell, the Federal Reserve chair, made it clear that his central bank wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates, the New York Times reported. Powell spoke at a news conference after the Fed announced that it would leave rates near zero and continue buying bonds at a steady clip, as expected. He painted a picture of an economy bouncing back — helped by vaccines, government spending and the central bank’s own efforts. The Fed’s post-meeting statement also portrayed a sunnier image of the American economy, which is climbing back from a sudden and severe recession caused by state and local lockdowns meant to contain the coronavirus. Yet Fed officials signaled that they were looking for more progress toward their goals of full employment and stable inflation before reconsidering their cheap-money stance. Officials made it clear that they see a recent increase in inflation, which is expected to intensify in the months to come, as likely to be short-lived rather than worrying. Powell was careful to avoid sounding as though he and his colleagues knew precisely what the future held. He pointed out, repeatedly, that reopening America’s giant economy from pandemic-era shutdowns was an uncharted project. For now, things are looking up. After reaching a low point a year ago, employment is rebounding, consumers are spending and the outlook is increasingly optimistic as vaccines become widespread. Data that will be released on Thursday is expected to show gradual healing in the first three months of the year, which economists think will give way to rapid gains in the second quarter.
Article Tags
Govt. Claims/Sovereign Immunity
SEC Issues
Read more.

Today’s Economic-Growth Numbers Could Show Signs of Boom to Come

Submitted by ckanon@abi.org on
The U.S. recovery probably found its rhythm in the first three months of 2021, according to early forecasts of data to be released by the Bureau of Economic Analysis and reported by The Washington Post. It appears likely that all coronavirus-era losses will be recovered by the middle of this year. Experts expect to learn the economy grew 1.3 percent in the quarter, according to a survey by Wolters Kluwer’s Blue Chip Economic Indicators. That would be 5.4 percent at an annual rate, but annual rates can be misleading amid an unprecedented crisis in which no trend is expected to continue for an entire year, so The Washington Post is focusing on quarterly rates until the economy is fully recovered. Other sources expect growth of up to 2 percent (8.2 percent annualized). Other than last summer, when early reopenings kicked the recovery off with a record 7.5 percent surge, Thursday’s figures could represent the fastest growth the economy has seen in 42 years. “I think we are on track for some pretty strong numbers, even beyond what we see in the Q1 number,” said Wendy Edelberg, director of the Hamilton Project. Edelberg said she’s looking out for strong consumer spending in 2021, driven by an easing of the pandemic, pent-up demand, solid household balance sheets and, “layering on top of that, a whole lot of fiscal support” from the American Rescue Plan. As recently as early January, economists thought the first quarter would see just 0.6 percent growth (2.3 percent annualized) as the pandemic peaked, but they raised their forecasts as stimulus money flooded the country and 94 million Americans were at least partly vaccinated in a three-month period.
Article Tags
Govt. Claims/Sovereign Immunity
SEC Issues
Read more.

Even as Economy Heats up, Fed to Stick with Near-Zero Rates

Submitted by ckanon@abi.org on
Hiring is accelerating as Americans increasingly venture out to shop, eat at restaurants and travel, and inflation pressures are even picking up after lying dormant for years, the Associated Press reported. Yet this week, the Federal Reserve is all but sure to reiterate its commitment to ultra-low interest rates. At a news conference after the Fed’s latest policy meeting ends, Chair Jerome Powell will likely underscore his view that the economy is far from fully recovered and needs the central bank’s continued support in the form of low borrowing costs. There are still 8 million fewer jobs than there were before the pandemic struck. And the unemployment rate, at 6%, though well below where it was a year ago, remains elevated. Powell has stressed that further gains in the job market are needed to help the many Americans — especially low-income workers and people of color — who have been disproportionately hurt by the loss of jobs and incomes and have yet to benefit from the early stages of the recovery. At the same time, the central bank this week could bring into sharper focus the significance of the gamble the Powell Fed is taking in its approach to inflation. Under a new framework the Fed adopted last summer, it will no longer raise rates in anticipation of high inflation, which had been its policy for decades.
Article Tags
Labor/Employment
SEC Issues
Read more.

Augustus Intelligence Files for Bankruptcy with SEC Probe as ‘Final Blow’

Submitted by ckanon@abi.org on
Augustus Intelligence Inc., which has received more than $100 million from investors since 2019, has filed for bankruptcy, a month after regulators had begun investigating its equity fundraising, the software developer said, WSJ Pro reported. The New York-based company said that one of the goals of its chapter 11 restructuring, filed Saturday in the U.S. Bankruptcy Court in Wilmington, Del., is to settle investor disputes. Brian Ryniker, recently hired as chief restructuring officer, said that in addition to unsecured debts totaling $2.1 million, there also are claims, which the company disputes, made by certain former employees. Augustus was co-founded in 2018 by Wolfgang Haupt to develop and license artificial intelligence software. Haupt is controlling founder, holding 68% of the company’s equity, Ryniker said. In 2019, Augustus raised $113.5 million from investors and was once valued at as much as $250 million, he said. The company initially used the funds to hire key employees, develop technology and invest in research and development. It has developed or acquired several patents and patents pending, Ryniker said in a court filing. Augustus also has made two acquisitions. Through subsidiaries that aren’t part of the bankruptcy, the company has roughly 30 clients. Ryniker said some employees were fired by prior management for breaching confidentiality and noncompete agreements. Prior management said they conducted a “smear campaign” against Augustus in the AI community, he added. The former employees last year sued Augustus, alleging they were “fraudulently induced” to join Augustus based on representations about the status of its seed funding and product development, Ryniker said.
Article Tags
SEC Issues
Telecom/Tech
Read more.

Top Senate Democrat Announces Return of Earmarks

Submitted by ckanon@abi.org on
Sen. Patrick Leahy (D-Vt.), the chairman of the Senate Appropriations Committee, formally announced a return to earmarks, offering details for how the spending will work in the Senate, The Hill reported. "Today I'm announcing that the Senate Appropriations Committee will again accept requests for congressionally directed spending items on a bipartisan basis, requests of both the Republican leadership and Democratic leadership and will do so in a manner that promotes accountability and transparency," Leahy said from the Senate floor. Under the rules for requesting the congressional spending, lawmakers can not request spending for an item related to their financial interest or those of their immediate family and the request must be made in writing. The committee will also publicly disclose the requests online. Leahy is also implementing new rules, which align with a proposal from House Democrats earlier this year. Money for earmarks will be capped at 1 percent of discretionary spending, which Republicans have estimated will amount to roughly $4 billon per side. There will also be a ban on requesting the earmarks to go toward for-profit entities. The Government Accountability Office would also be required to audit a sample of enacted earmarks to ensure that the funding was used for its original intent.
Article Tags
Govt. Claims/Sovereign Immunity
SEC Issues
Read more.
Subscribe to %1