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Wall Street's top regulator must correct "defects" in a new rule on share buybacks adopted earlier this year, a federal appeals court has ruled, marking a partial win for powerful trade groups waging the legal challenge against it, Reuters reported. A U.S. Securities and Exchange Commission spokesperson said Wednesday the agency was reviewing the decision. In a rule adopted in May, the SEC required public companies to disclose share buyback data, saying this would help investors evaluate the rationale behind them. Critics of share buybacks - which last year amounted to almost $950 billion in the U.S. - say they often boost a company's share price or pad executive compensation rather than allow for more investment into company operations. But on Tuesday, the U.S. Court of Appeals for the Fifth Circuit sided with some arguments from business groups, including the U.S. Chamber of Commerce. They had sued claiming that the SEC had not considered suggestions during a notice-and-comment period on how to quantify the rule's economic effects and also had not backed up its claims that the rule would benefit the investing public. "The SEC acted arbitrarily and capriciously ... when it failed to respond to petitioners' comments and failed to conduct a proper cost-benefit analysis," according to the opinion from a three-judge panel.

The New York judge overseeing Celsius Network LLC’s bankruptcy urged the U.S. Securities and Exchange Commission to move quickly in deciding if it will authorize the failed crypto lender’s plan to transform itself through chapter 11 into a publicly-traded Bitcoin mining firm, Bloomberg News reported. Judge Martin Glenn told an SEC lawyer during a Monday court hearing he hopes the regulator will go through its own decision-making process expeditiously because Celsius and its creditors have moved through chapter 11 relatively quickly. “The SEC will make whatever decision it believes is the correct one,” Judge Glenn said. “I just hope the process will move forward, so if there are any bumps in the road we can try and work those out along the way.” Judge Glenn is considering whether to approve Celsius’s plan to partially repay customers whose accounts have been frozen since June 2022, weeks before the company filed bankruptcy. Celsius’s bankruptcy plan proposes repaying customers through a combination of crypto currency and stock in a new publicly traded Bitcoin mining company guided by a new management team led by Arrington Capital. Celsius and creditors would still need clearance from the SEC if its proposal to transform the company into a new business is approved by Judge Glenn, according to court documents. The crypto firm could liquidate if its plan to exit chapter 11 as a crypto miner fails. Celsius’s repayment proposal, though widely supported by creditors, is being challenged by some of its customers. Customers who spoke Monday against the restructuring plan said they’d prefer liquidation because they’d receive more Bitcoin and Ethereum as opposed to stock in a new, unproven venture.

The U.S. Securities and Exchange Commission (SEC) levied $5 billion through enforcement actions and barred more than 100 individuals from serving as company directors and officers in fiscal 2023, the agency's chair Gary Gensler said on Wednesday, Reuters reported. Total penalties and other fees levied in the fiscal year that ran through September were down from a record of $6.4 billion in 2022, according to Gensler's remarks prepared for an industry event. Total actions rose to 780 from about 700 a year earlier. The SEC has been seen to be increasingly aggressive in policing markets under Gensler. Last year's enforcement activity included a series of high-profile cases against crypto firms and executives including FTX founder Sam Bankman-Fried and Binance founder Changpeng Zhao. The SEC also barred 133 individuals from serving as directors and officers, the highest in a decade, Gensler said. Greater use of such bans, including one against a former McDonald's Corp CEO, come as the agency has sought to focus on individual accountability and misconduct.

A federal appeals court formalized a victory for Grayscale Investments LLC in its bid to create an exchange-traded fund based on Bitcoin over the objection of the U.S. Securities and Exchange Commission, Bloomberg News reported. The move sends the matter back to the SEC. The mandate puts into effect the court’s ruling in August, when it overturned the SEC’s rejection of Grayscale’s proposal to convert its trust into an ETF. Judge Neomi Rao called the SEC’s decision “arbitrary and capricious” because the regulator failed to explain why it approved similar products. The SEC had argued that an ETF based on Bitcoin lacked adequate oversight to detect fraud. “The Grayscale team looks forward to continuing to work constructively with the SEC to convert GBTC to an ETF,” Grayscale spokeswoman Jennifer Rosenthal said in a statement. “GBTC is operationally ready, and we intend to move as expeditiously as possible on behalf of our investors.” Approval of the ETFs is seen as a potential watershed moment by digital-asset advocates, who say broader access will lead to mainstream acceptance of what has been viewed by critics as a lightly regulated speculative niche. Industry scandals and bankruptcies such as the collapse of the FTX exchange helped to cut the estimated value of the sector by more than half since late 2021 to around $1 trillion. Bitcoin accounts for about half the total.

Wall Street's top regulator proposed new regulations yesterday that it said should level the playing field among broker-dealers operating on U.S. stock exchanges by ending pricing schemes that tend to favor bigger players, Reuters reported. At a public meeting in Washington, a divided five-member U.S. Securities and Exchange Commission voted 3-2 to propose banning stock exchanges from offering lower transaction prices and rebates to brokerages with higher trading volumes, something officials said creates unfair competitive advantages for larger firms. "Sometimes the large brokers get rebates that are even larger than the fees they pay or actually have a situation where the exchanges are paying the largest brokers for that order flow," said SEC Chair Gary Gensler. However, the commission's Republican members objected, saying that the proposal was a solution in search of a problem. The number and complexity of pricing tiers that can exist among exchanges, and which leave different brokerages facing sizeable differences in cost, can make price schemes complex and difficult to understand, officials said in advance of the meeting. Ending such pricing advantages will also help prevent conflicts of interest in which brokerages may route orders for execution to larger firms or in ways that benefit the brokerage but not the client, according to the SEC.

The head of the Securities and Exchange Commission (SEC) warned that a financial crisis caused by artificial intelligence (AI) is “nearly unavoidable” in the next decade without further regulation of the rapidly advancing technology, The Hill reported. “It’s frankly a hard challenge,” SEC Chairman Gary Gensler told the Financial Times. “It’s a hard financial stability issue to address because most of our regulation is about individual institutions, individual banks, individual money market funds, individual brokers; it’s just in the nature of what we do.” “And this is about a horizontal [matter whereby] many institutions might be relying on the same underlying base model or underlying data aggregator,” he continued. Gensler predicted that a financial crisis could occur in the late 2020s or early 2030s, warning that multiple institutions basing their decisions on the same models could lead to herd mentality and undermine stability.

Hedge funds will have to start sharing significantly more information about their short-sale transactions with the Securities and Exchange Commission, setting up another clash between the industry and Wall Street’s main regulator, Bloomberg News reported. The SEC finalized rules on Friday that require hedge funds and other big investors to report gross short positions in certain stocks at the end of each month, and details on related trading activity — including in derivatives — on a more regular basis. The agency would then aggregate positioning in equities across funds and publish that with a delay. Reporting will generally be triggered if a hedge fund reaches a $10 million average short position during the reporting month, or a 2.5% gross short position relative to total shares outstanding. The SEC did away with a reporting requirement tied to a potential daily trigger. “Given past market events, it’s important for the commission and the public to know more about short sale activity in the equity markets, especially in times of stress or volatility,” SEC Chair Gary Gensler said in a statement. Short selling has long been a fixture of the U.S. equity market, but the practice has grown more controversial. The SEC has faced pressure to increase scrutiny after retail traders banded together via social media in January 2021 and bought up shares in companies like GameStop Corp.

Wall Street's top regulator on Tuesday said it has tightened the timeline for investors to disclose 5% ownership stakes in companies they intend to control, shortening the allowed window from 10 calendar days to five business days, Reuters reported. The U.S. Securities and Exchange Commission's changes mark an update to half-century-old regulations that officials said have not kept pace with advances in market technology, SEC officials said. "In our fast-paced markets, it shouldn't take 10 days for the public to learn about an attempt to change or influence control of a public company," SEC Chair Gary Gensler said in a statement. The SEC proposal, first made public in 2022, initially angered some activist investors who claimed that having to step forward sooner could make it unprofitable to build the ownership positions they need for successful takeover campaigns. The SEC is also currently seeking to force Tesla CEO Elon Musk to give evidence in the agency's investigation of his takeover of social media platform X, formerly known as Twitter, in which officials say Musk may have made such disclosures late. As adopted, the rule also shortens the disclosure deadline for certain institutional investors to 45 days from the end of the quarter in which their ownership stake surpasses 5%. Previously, the deadline was 45 days from the end of the calendar year.