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  • SEC Commissioner Hester Peirce Slams Agency’s Crypto Actions

    SEC Commissioner Hester Peirce Slams Agency’s Crypto Actions

    SEC commissioner Hester Peirce has publicly slammed her agency for being “hostile to crypto” and a “paternalistic and lazy regulator.”

    The SEC recently orchestrated a $30 million settlement with Kraken over its crypto-staking program. While the agency touted it as a win for investors, not everyone was convinced, including Commissioner Peirce.

    “Today, the SEC shut down Kraken’s staking program and counted it as a win for investors,” Peirce wrote. “I disagree and therefore dissent.”

    Commissioner Peirce then goes on to describe Kraken’s model, which allowed crypto owners to “offer their tokens up for staking,” with both customers and company profiting. She then goes on to lament that, rather than providing guidance and guidelines for such programs, the agency went into enforcement mode, claiming Kraken’s operation should have been registered with the SEC.

    As Commissioner Peirce highlights, however, “crypto-related offerings are not making it through the SEC’s registration pipeline” in the current climate. She then makes the case that it would be better for the agency to put forth clear guidelines for crypto companies rather than immediately jumping to enforcement action.

    “Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action, purporting to ‘make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection,’” Peirce continues. “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.”

    In her most damning words of the dissent, Commission Peirce argues that Kraken’s program benefited investors and called out the SEC for shutting it down.

    “Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well,” she added. “The program will no longer be available in the United States, and Kraken is enjoined from ever offering a staking service in the United States, registered or not. A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.”

    It’s unclear if Commissioner Peirce’s dissent will have any lasting impact, especially given SEC Chair Gary Gensler’s open hostility toward crypto.

  • Activision Blizzard Will Pay $35M Fine Over Multiple Violations

    Activision Blizzard Will Pay $35M Fine Over Multiple Violations

    Activision Blizzard has reached an agreement with the SEC to pay a $35 million fine over disclosure controls and whistleblower violations.

    Activision Blizzard faced multiple accusations of sexual harassment and misconduct that went on for some time, with CEO Bobby Kotick accused of knowing about the issues, but choosing to ignore them. The SEC also accused the company of lacking the necessary disclosure controls to properly ascertain the scope of the issue.

    According to the SEC’s order, between 2018 and 2021, Activision Blizzard was aware that its ability to attract, retain, and motivate employees was a particularly important risk in its business, but it lacked controls and procedures among its separate business units to collect and analyze employee complaints of workplace misconduct. As a result, the company’s management lacked sufficient information to understand the volume and substance of employee complaints about workplace misconduct and did not assess whether any material issues existed that would have required public disclosure.

    In addition to its lack of necessary disclosure controls, Activision Blizzard is accused of violating whistleblower protection laws over a period of more than five years.

    Separately, the SEC’s order finds that, between 2016 and 2021, Activision Blizzard executed separation agreements in the ordinary course of its business that violated a Commission whistleblower protection rule by requiring former employees to provide notice to the company if they received a request for information from the Commission’s staff.

    As part of its settlement, the company has agreed to pay a $35 million fine.

    “The SEC’s order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct, which left it without the means to determine whether larger issues existed that needed to be disclosed to investors,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Moreover, taking action to impede former employees from communicating directly with the Commission staff about a possible securities law violation is not only bad corporate governance, it is illegal.”

  • Morgan Stanley to Pay $35M Fine for Exposing 15M Customer Records

    Morgan Stanley to Pay $35M Fine for Exposing 15M Customer Records

    The Securities and Exchange Commission (SEC) has reached a deal with Morgan Stanley over the latter’s failure to protect customer data.

    According to the SEC, Morgan Stanley Smith Barney LLC (MSSB) failed to properly dispose of hard drives containing customer data over a five-year period. Instead, the firm relied on an outside company that was ill-qualified to destroy and decommission thousands of hard drives for the firm, putting the data of 15 million customers at risk.

    To make matters worse, some of the hard drives found their way onto an internet auction site still containing customers’ personal information. MSSB was able to recover some of the drives, but the vast majority were never recovered.

    MSSB also failed to use various security measures that were available. For example, many of the drives had encryption capability built in, but the firm had not activated it, leaving the data unprotected.

    As a result of its failings, the SEC has charged MSSB a $35 million penalty, which the firm has agreed to pay.

    “MSSB’s failures in this case are astonishing. Customers entrust their personal information to financial professionals with the understanding and expectation that it will be protected, and MSSB fell woefully short in doing so,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “If not properly safeguarded, this sensitive information can end up in the wrong hands and have disastrous consequences for investors. Today’s action sends a clear message to financial institutions that they must take seriously their obligation to safeguard such data.”

  • VMware Agrees to Settle With SEC Over Fraud Charges

    VMware Agrees to Settle With SEC Over Fraud Charges

    VMware has agreed to a settlement with the Securities and Exchange Commission (SEC) over fraud charges.

    According to the SEC, VMware pushed “revenue into future quarters by delaying product deliveries to customers, concealing the company’s slowing performance relative to its projections.”

    The SEC found that VMware deferred tens of millions of dollars in orders to future quarters, delaying delivery of licenses until a quarter ended. As a result, the company was able to give the appearance that sales and demand were stronger than they actually were.

    “As the SEC’s order finds, by making misleading statements about order management practices, VMware deprived investors of important information about its financial performance,” said Mark Cave, Associate Director in the Division of Enforcement. “Such conduct is incompatible with an issuer’s disclosure obligations under the federal securities laws.”

    Despite the SEC’s findings, the agency only charged VMware an $8 million fine, a relative drop in the bucket compared to it the company’s revenue.

  • Elon Musk’s Twitter Cancellation Letter

    Elon Musk’s Twitter Cancellation Letter

    Sometimes legal letters can be an interesting read! Elon Musk’s cancellation letter to Twitter by his legal team may be a crushing blow to Twitter’s business, not just this deal.

    Musk’s ending of his acquisition of Twitter is centered on the company’s mDAU as reported in their SEC filings… and that is key. If Musk can prove that Twitter misrepresented investors in their official filings with the SEC then not only is Musk off the hook for any end-of-deal damages but Twitter could be subject to a not-so-friendly SEC investigation.

    For its part, Twitter continues to stand by its claim that less than 5% of monetizable daily active users are spam or bots and plans to pursue legal action to enforce the deal.

    “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” tweeted Twitter Chairman Bret Taylor.

    Elon Musk says in his filing that it appears that Twitter is dramatically understating the proportion of spam and false accounts represented in its mDAUcount:

    “Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%,”

    The letter purports that Musk’s acquisition team was not provided the key data that they requested and not in a usable format for them to further assess whether the fake accounts included in their mDAU stat is in fact lower than 5% as claimed by Twitter in all of its SEC filings. The mDAU stat is key to predicting the success of Twitter since 95% of its revenue comes from advertisers and fake people don’t convert to purchases.

    Another key aspect of the filing is Musk’s assertion that his team didn’t receive all of the Board materials they requested related to the Board members conversations about the mDAU metric and their calculation of the number of spam and false accounts.

    Why is this key? If Musk can show that Board members themselves had concerns about the accuracy of the “less than 5% mDAU are fake” metric then Musk doesn’t have to prove the stat is wrong, he can just point to Board statements. Musk did not provide any evidence that the Board in fact did discuss this issue substantively, but one assumes that because this stat is key to their business and their stock price, it’s likely they did to some extent. What was said in these possible discussions is key.

    Additionally, anything said by Board members or staff that counters the “less than 5% mDAU are fake” guidance by Twitter in SEC filings and in public statements would be evidence for any future SEC filings.

    581832232-Musk-SEC-Twitter-LetterDownload
  • Baidu Warned it May Be Delisted Over Audit Concerns

    Baidu Warned it May Be Delisted Over Audit Concerns

    Chinese search giant Baidu has been warned it may be delisted as a result of audit concerns.

    Baidu is the dominant search engine in China, and is currently listed on the Nasdaq. Unfortunately for Baidu, its listing is in jeopardy, with the Securities and Exchange Commission (SEC) putting the company on a provisional list of companies that face delisting under the Holding Foreign Companies Accountable Act (HFCAA).

    Companies are put on the provisional list when “the Public Company Accounting Oversight Board (“PCAOB”) has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.”

    Once a company is put on the provisional list, it has 15 business days to contact the SEC staff and provide evidence to support why it should not be delisted. In the case of Baidu, the deadline is April 20, 2022.

    Should Baidu fail to appeal its placement on the provisional list, or fail to convince the SEC it should remain on the Nasdaq, its delisting will likely exacerbate the US/China trade issues.

  • SEC May Require Companies to Disclose Their Climate Impact

    The Securities and Exchange Commission (SEC) has proposed rules that would require companies to disclose their environmental impact to investors.

    Climate change has become a growing concern for governments and citizens alike, with increased pressure on companies to do their part to combat it. New rules the SEC is proposing would require companies to disclose various environment-related factors. This would include both environmental impacts on a company’s business and the company’s own impact on the environment, in the form of greenhouse gas emissions. Companies would also be required to report the greenhouse gas emissions from their supply chain, both up and downstream.

    “I am pleased to support today’s proposal because, if adopted, it would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers,” said SEC Chair Gary Gensler. “Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures. Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions. Today’s proposal would help issuers more efficiently and effectively disclose these risks and meet investor demand, as many issuers already seek to do. Companies and investors alike would benefit from the clear rules of the road proposed in this release. I believe the SEC has a role to play when there’s this level of demand for consistent and comparable information that may affect financial performance. Today’s proposal thus is driven by the needs of investors and issuers.”

    Should the SEC’s proposed rules go into effect, it could be a major step forward in holding companies accountable for their environmental impact. Even if laws are slow to change, the added transparency will make them far more liable to their own shareholders.

  • Meta May Leave EU Market Over Privacy Regulations

    Meta May Leave EU Market Over Privacy Regulations

    Meta is threatening to leave the EU market if it’s not allowed to share EU user data with its US-based data centers.

    The EU ruled in 2020 that using US cloud providers was a violation of the GDPR. Because they are often required to hand over data to intelligence agencies, US companies are not capable of being compliant with the privacy protections the GDPR provides EU citizens. While many companies, on both sides of the Atlantic, have ignored the ruling, the Austrian Data Protection Authority recently ruled that it is illegal for EU companies to use Google Analytics.

    It appears Meta is preparing for the worst, according to iTWire, warning in an SEC filing that it may pull Facebook and Instagram out of the EU market if a replacement for the Privacy Shield legislation is not enacted. Privacy Shield governed the transfer of data between the EU and the US, prior to the 2020 ruling.

    In August 2020, we received a preliminary draft decision from the Irish Data Protection Commission (IDPC) that preliminarily concluded that Meta Platforms Ireland’s reliance on SCCs in respect of European user data does not achieve compliance with the General Data Protection Regulation (GDPR) and preliminarily proposed that such transfers of user data from the European Union to the United States should therefore be suspended. We believe a final decision in this inquiry may issue as early as the first half of 2022. If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe, which would materially and adversely affect our business, financial condition, and results of operations.

    It remains to be seen if Meta’s threat is genuine or idle, but its statement is another indication of the headwinds the company faces as privacy increasingly becomes a major issue.

  • Reddit Is Going Public

    Reddit Is Going Public

    After months of speculation and preparation, Reddit has filed to go public.

    Reddit has been in the news quite a bit over the last year, establishing itself as the dark horse among social media platforms. While Twitter, Facebook, and Snap have published their growth rates and user numbers for some time, Reddit just started doing so in late 2020. When it did, the company surprised the industry with a growth ratethat put its competitors to shame.

    Reddit has since been preparing to go public, hiring its first CFO and completing another round of funding that brought its valuation to $10 billion.

    The company has now revealed that it has filed paperwork with the SEC to go public.

    Reddit, Inc. today announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the ”SEC”) relating to the proposed initial public offering of its common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions.

    We are in a quiet period, and for regulatory reasons, we cannot say anything further.

  • Coinbase Lets International Users Earn Interest on Crypto

    Coinbase has announced that it will let international users earn interest on their crypto holdings.

    The company had originally planned on introducing Lend, a feature that would have enabled US customers to lend their crypto and earn interest. After threats from the SEC, Coinbase abandoned the plans.

    Coinbase is now offering a similar service to international customers, a market outside the SEC’s jurisdiction.

    Today we’re introducing a new way for Coinbase’s global customers to put their crypto to work and earn yield. We are making DeFi more accessible, enabling eligible customers in more than 70 countries to access the attractive yields of DeFi from their Dai with no fees, lockups, or set-up hassle.

    Starting today, you’ll be able to earn DeFi yield on Dai, a stablecoin that is designed to be pegged to the US Dollar.

    There is no word on when, or if, DeFi Yield will come to US customers.

  • SEC Closes Investigation Into GameStop Stock Fiasco

    The SEC has investigated so called “meme stocks,” such as GameStop’s epic run, ultimately deciding there was no wrongdoing.

    GameStop made headlines early this year when its stock skyrocketed. The frenzy was driven by investors on Reddit pumping the stock. AMC, Blackberry and Bed Bath & Beyond also saw their stocks driven up, thanks to individual stock traders. The phenomenon cost Wall Street who had shorted the stocks billions of dollars.

    The SEC investigation, however, has proven the buying frenzy was driven by individual investors, meaning there was nothing illegal about the trend…no matter how strange it may have been.

    “January’s events gave us an opportunity to consider how we can further our efforts to make the equity markets as fair, orderly, and efficient as possible,” said SEC Chair Gary Gensler. “Making markets work for everyday investors gets to the heart of the SEC’s mission. I would like to thank the staff for bringing their expertise to this important report, and for their ongoing work on to address the issues that January’s events raised.”

  • Ransomware Attack Takes Down Sinclair TV Stations

    Ransomware Attack Takes Down Sinclair TV Stations

    Sinclair appears to be the latest victim of a ransomware attack, with its channels going down over the weekend.

    Ransomware has been a growing issue for organizations around the world and across industries. Sinclair is the latest high-profile victim, and disclosed the attack in a filing with the SEC.

    On October 16, 2021, the Company identified and began to investigate and take steps to contain a potential security incident. On October 17, 2021, the Company identified that certain servers and workstations in its environment were encrypted with ransomware, and that certain office and operational networks were disrupted. Data also was taken from the Company’s network. The Company is working to determine what information the data contained and will take other actions as appropriate based on its review.

    The attack disrupted broadcasting on Sinclair-owned channels, and may continue to do so for a time.

    While the Company is focused on actively managing this security event, the event has caused – and may continue to cause – disruption to parts of the Company’s business, including certain aspects of its provision of local advertisements by its local broadcast stations on behalf of its customers. The Company is working diligently to restore operations quickly and securely.

  • Coinbase Wants a Dedicated Federal Regulator for Crypto

    Coinbase Wants a Dedicated Federal Regulator for Crypto

    Coinbase is calling on the US government to establish a new regulator for the crypto and digital assets market.

    Coinbase is one of the leading cryptocurrency trading platforms, but it recently ran afoul of the Securities and Exchange Commission (SEC). Coinbase was planning a new service called Lend that would allow individuals to loan cryptocurrency to other users, and charge interest for the transactions.

    The SEC warned Coinbase it would sue the company if it proceeded with its plans, sparking a verbal war between the two entities. Coinbase ultimately ended up abandoning Lend under the pressure. In the meantime, SEC Chairman Gary Gensler has said he doesn’t believe crypto is viable long-term.

    In that environment, it’s not surprising Coinbase is lobbying for a new federal regulator to oversee the crypto market — one that is not Gary Gensler’s SEC. As part of it’s new regulatory framework, Digital Asset Policy Proposal: Safeguarding America’s Financial Leadership (dApp), Coinbase makes its case:

    To avoid fragmented and inconsistent regulatory oversight of these unique and concurrent innovations, responsibility over digital asset markets should be assigned to a single federal regulator.

    Like many countries, the US is grappling with the impact of cryptocurrency and is trying to determine how best to regulate it. Gensler has been making the case that the SEC should have sole authority to do so, a position that has many critics, in addition to Coinbase. It will be interesting to see what direction the US government goes.

  • Coinbase Abandons Lend Feature Amid SEC Pressure

    Coinbase Abandons Lend Feature Amid SEC Pressure

    Coinbase has abandoned its plans for its Lend service after a high-profile scuffle with the SEC.

    Coinbase announced its plans to roll out Lend, a program that would allow users to lend cryptocurrency to others and earn interest on the loan. The SEC took issue with the company’s plans and threatened legal action if it continued. This led Coinbase to engage in what was widely considered an “ill-advised” public war with the SEC, with CEO Brian Armstrong calling the agency’s behavior “sketchy.”

    The company has now notified customers via a blog post that it is canceling its Lend plans as a result of the SEC’s actions.

    Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world. As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next. We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest. We will not stop looking for ways to bring innovative, trusted programs and products to our customers.

  • App Annie Pays $10 Million to Settle SEC Securities Fraud Charge

    App Annie Pays $10 Million to Settle SEC Securities Fraud Charge

    App Annie, the mobile app data firm, has agreed to pay $10 million to settle SEC charges of securities fraud.

    According to the SEC, App Annie and its co-founder and former CEO, Bertrand Schmitt, misled customers about how data was collected. 

    App Annie and Schmitt understood that companies would only share their confidential app performance data with App Annie if it promised not to disclose their data to third parties, and as a result App Annie and Schmitt assured companies that their data would be aggregated and anonymized before being used by a statistical model to generate estimates of app performance.

    Unfortunately, that’s not what App Annie did. Instead, the company used non-anonymized data, in direct violation of its promises, even selling that data to trading firms — something it explicitly said it would not do.

    Contrary to these representations, the order finds that from late 2014 through mid-2018, App Annie used non-aggregated and non-anonymized data to alter its model-generated estimates to make them more valuable to sell to trading firms.

    “The federal securities laws prohibit deceptive conduct and material misrepresentations in connection with the purchase or sale of securities,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “Here, App Annie and Schmitt lied to companies about how their confidential data was being used and then not only sold the manipulated estimates to their trading firm customers, but also encouraged them to trade on those estimates—often touting how closely they correlated with the companies’ true performance and stock prices.”

    “App Annie sought to distinguish itself in the alternative data space by providing securities market participants with valuable information in a new and innovative way,” said Erin E. Schneider, Director of the SEC’s San Francisco Regional Office. “It went to great lengths to assure its customers that the financial and app-related data it sold was the product of a sophisticated statistical model and that it had controls to ensure compliance with the federal securities laws. These representations were materially false and misleading.”

    The settlement is significant, as it’s the first enforcement action against an “alternative data” provider. Alternative data does not have to be disclosed in a company’s financial results, or in traditional data sources.

    App Annie issued a statement, neither confirming nor denying guilt, saying it had made changes to improve trust and transparency.

    Without admitting or denying the findings in the SEC’s order, App Annie settled the matter and we are pleased it is now resolved. Over the past 3 years, we made a number of material changes to our operations and established a new level of trust and transparency.

    While the company says the investigation does not pertain to its current customer relationships, it’s a safe bet its customers may not have such a rosy outlook.

  • Google May Have Run Afoul of Labor Laws for Years

    Google May Have Run Afoul of Labor Laws for Years

    Google may end up in hot water after years of not paying temp workers a similar wage as full-time employees.

    According to a report in The New York Times, Google has spent years paying some temp workers less than their full-time counterparts. While that may not be an issue in some jurisdictions, others require temp users to be paid a comparable wage to full-timers if the work they do is comparable.

    The Times reviewed emails that show Google became aware of the problem, thanks to Alan Barry, one of the company’s compliance managers in Ireland. Barry wrote in an email that, from a “compliance perspective,” the correct move was to adjust its pay rate for all temps. However, Barry pointed out that doing so would likely bring attention to Google’s past non-compliance.

    “The cost is significant and it would give rise to a flurry of noise/frustration,”Barry wrote. “I’m also not keen to invite the charge that we’ve allowed this situation to persist for so long that the correction required is significant.”

    Ultimately, the company decided not to correct the pay for all temps, instead raising pay only for new hires brought on in 2021. The issue was finally brought to light thanks to a whistleblower who reported the company to the SEC.

    It’s unclear if the SEC, or any other government agency is currently investigating. Nonetheless, it’s believed Google may ultimately have shorted temp workers a whopping $100 million, not including fines and legal fees the company may have to pay if a case is brought against it.

  • Coinbase Getting Into ‘Ill-Advised’ War With SEC

    Coinbase is calling out the SEC for what it believes is “sketchy” behavior, but TheStreet’s Jim Cramer is not a fan of its strategy.

    The issue involves Coinbase’s crypto lending program, called Lend. The service would allow individuals to lend their crypto assets and earn interest on the loans. Unfortunately, for Coinbase, the SEC seems to have an issue with Lend and has sent the company a Wells Notice.

    “Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells notice about our planned Coinbase Lend program,” writes Paul Grewal, Chief Legal Officer, on the company’s blog. “A Wells notice is the official way a regulator tells a company that it intends to sue the company in court. As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it.”

    CEO Brian Armstrong has gone even further, calling the SEC’s behavior “sketchy.”

    TheStreet’s Jim Cramer believes Armstrong and Coinbase are playing a dangerous game, especially since SEC chair Gary Gensler “taught crypto at MIT,” and has the full weight of a government agency backing him up on his already knowledgable position.

    “[Coinbase] is declaring war against a man who has unlimited firepower,” Cramer said.

  • Pearson Agrees to $1 Million Settle With SEC Over Data Breach

    Pearson Agrees to $1 Million Settle With SEC Over Data Breach

    London-based Pearson, a company specializing in educational publishing, has agreed to a $1 million settlement with the SEC over a data breach.

    Pearson suffered a data breach in 2018 that resulted in the theft of millions of student records. Unfortunately, the company misled investors, and continued to do so well into 2019, referring “to a data privacy incident as a hypothetical risk, when, in fact, the 2018 cyber intrusion had already occurred.”

    Pearson’s statements continued to gloss over what really happened as late as July 2019. In addition, the company claimed to have “strict protections,” even though the security vulnerability remained unpatched six months after Pearson became aware of it.

    The company has agreed to settle with the SEC for $1 million as a result of the violations.

    “As the order finds, Pearson opted not to disclose this breach to investors until it was contacted by the media, and even then Pearson understated the nature and scope of the incident, and overstated the company’s data protections,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “As public companies face the growing threat of cyber intrusions, they must provide accurate information to investors about material cyber incidents.”

  • Dish Moving From T-Mobile to AT&T for Network Coverage

    Dish Moving From T-Mobile to AT&T for Network Coverage

    Dish Network has reach an agreement for AT&T to provide network coverage to its customers for the next ten years, at the cost of $5 billion.

    Dish Network played a pivotal role in the T-Mobile/Sprint merger. Regulators were concerned about going from four to three major wireless carriers, and wanted Dish to move into the role of fourth. To assist it, regulators worked out a deal whereby T-Mobile would provide network coverage and resources to Dish’s customers.

    It appears Dish is looking to make its own deals, with it pursuing a $5 billion 10-year deal with AT&T, according to an SEC filing. According to The Wall Street Journal, it’s estimated T-Mobile was receiving $1.5 to $2 billion a year, so the price tag for AT&T’s service could be substantially cheaper.

    In addition, Dish has accused T-Mobile of unfairly planning on shutting down its 3G network the beginning of 2022, potentially leaving many of Dish’s customers without service. While AT&T also plans on shutting down its 3G network in early 2022, it’s possible the acrimony with T-Mobile over its 3G plans may have reached the point that Dish simply didn’t want to continue working with the Magenta carrier. Add in a potentially large financial savings, and Dish may have viewed the AT&T deal as too good to pass up.

    Regulators will undoubtably be interested in reviewing the deal, especially since they worked so hard to establish the one Dish wants out of.

  • Coinbase Warns of the Risk Bitcoin’s Founder Poses On Eve of IPO

    Coinbase Warns of the Risk Bitcoin’s Founder Poses On Eve of IPO

    As Coinbase prepares to go public, it is warning of the risk Bitcoin’s founder(s) pose to the cryptocurrency market in general, and Coinbase in particular.

    Coinbase has emerged as one of the most popular ways of trading cryptocurrencies. The company’s success has positioned it for a widely anticipated IPO, but the company is warning of risk factors it faces, unique to its industry, in an SEC filing.

    The majority of Coinbase’s net revenue is derived from Bitcoin and Ethereum trading. As a result, should the demand for those cryptocurrencies decline, without another rising to replace them, Coinbase would be in serious trouble.

    Another risk factor is “the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins.”

    The real identify of Bitcoin’s creator remains unknown, with “Satoshi Nakamoto” the pseudonymous name of the individual or group of individuals responsible. As Bitcoin’s creator, Satoshi Nakamoto’s stash of bitcoins is worth an estimated $30 billion. If Nakamoto were to transfer that large a sum, roughly 5% of the 21 million total available bitcoins, it would drive the price down substantially.

    Coinbase’s listed risk factors illustrates the challenges companies face as they navigate, adapt and build a business around the emerging cryptocurrency market.

  • Tesla Shares Rise On Record Deliveries

    Tesla Shares Rise On Record Deliveries

    Tesla’s stock rose some 15% in extended trading on news the automaker had its highest number of vehicles deliveries in a single quarter.

    In a filing with the SEC, Tesla disclosed that it produced 102,672 vehicles, and delivered 88,400. in the first quarter. As Reuters points out, this was higher than expected in the midst of a pandemic-driven economic crisis.

    Webush analyst Daniel Ives told Reuters, “it appears China production and demand are starting to rebound and should be a key growth driver over the coming quarters, although clear challenges remain in the months ahead.”

    One of those challenges is the shutdown of Tesla’s California factory. It remains to be seen how much the shutdown will impact production, although the longer the crisis goes on, the more serious of an impact it will have.