Cryptocurrency experts are closely watching a legal battle between Ripple Labs Inc. and the Securities and Exchange Commission, anticipating the case could establish precedent and clarify the regulatory landscape for digital coin offerings.
The SEC last year sued the company, CEO Brad Garlinghouse and Executive Chairman Chris Larsen in the U.S. District Court for the Southern District of New York, alleging they should have registered XRP under securities law. Ripple and its executives have asked the court to dismiss the case.
Ripple scored wins in preliminary rulings in the federal court, including gaining access to internal SEC documents and shielding its executives’ personal bank records from discovery. Holders of Ripple’s XRP cryptocurrency at issue in the litigation were also granted permission in April to intervene in the case.
Those wins don’t necessarily foreshadow a victory for Ripple, but the case is on track to establish legal precedent for the SEC’s authority over digital coin offerings, according to Drew Hinkes, a lawyer at Carlton Fields PA in Miami who works on cryptocurrency matters.
“This is a significant case,” Hinkes said in an interview with CQ Roll Call. “Ripple has tremendous financial resources, has assembled an incredible team of well-respected lawyers and has one of the most high-profile projects in the industry.”

Most securities enforcement actions end up resolved with a settlement, but the deep resources and firm positions on each side could take this case to the 2nd U.S. Circuit Court of Appeals, or eventually the Supreme Court, and provide the industry more reliable guidance than the current mix of district court decisions, settlements and nonbinding statements from agency officials, Hinkes said.
“The 2nd Circuit is incredibly sophisticated in this area, and it will be very interesting to see how they rule on these keystone issues,” said Hinkes, who teaches part time at New York University’s law and business schools. The 2nd Circuit is based in New York.
Suit over registration
San Francisco-based Ripple was founded in 2012 and offers a real-time payment settlement network based on blockchain technology. Since its formation, the fintech has raised $1.38 billion from the sale of more than 14 billion units of its digital coin called XRP, according to court documents.
XRP is the world’s fourth-largest cryptocurrency today, with a $70 billion market value.
The SEC says XRP meets the definition of a security because it’s an investment contract, the test articulated in 1946 by the Supreme Court in a case called SEC v. Howey. “Section 5 of the Securities Act is all embracing,” the agency wrote in the complaint.

The SEC wants to focus the dispute narrowly on whether XRP meets that long-standing definition, according to Thomas Gorman, a securities lawyer at Dorsey and Whitney LLP in Washington and former senior counsel in the agency’s enforcement division.
If money is pooled, and the investors are expecting to share profits, it’s probably a security subject to registration, Gorman told CQ Roll Call.
Ripple says XRP isn’t an investment contract but a medium of exchange, like cash or other cryptocurrencies. It cited a settlement in 2015 with the Justice Department and the Treasury Department’s Financial Crimes Enforcement Network that required the company to register as a money services business.
The cryptocurrencies bitcoin and ether were determined by the SEC to be commodities, not securities, in recent years, and the SEC doesn‘t have jurisdiction over them. Ripple wants to know more about that decision and was granted access in the court case to internal documents on how the agency concluded that XRP should be treated differently.
Ripple and the executives say the SEC failed to demonstrate that the company should have known XRP was subject to registration and because the agency remained silent for years while “a massive global trading market” built up around XRP, according to court filings.

Unfair delay can be a persuasive argument, Linda Jeng, an adjunct professor at Georgetown Law and former SEC lawyer, said in an interview.
“As a former regulator, I am disappointed to see the SEC wait so many years after the introduction of a product to launch an enforcement action,” said Jeng, who is also global head of policy at fintech startup Transparent.
Regulators should always apply their power thoughtfully and proportionally, and it should be predictable, Jeng said. When the agency waits this long to pursue an action, it makes them look arbitrary and chips away at their credibility, she said.
Hinkes also found Ripple’s arguments to be “very sympathetic” and said the agency’s delay and different classification of other coins undermines the government’s position that Ripple executives should have known XRP had to be registered as a security and recklessly disregarded the obligation.
Still, he cautioned that doesn’t mean the agency lacks authority to bring the case. The SEC has broad enforcement discretion, and it appears to be filed within the statute of limitations, Hinkes said.

Increasingly broad

Gorman predicted the court will focus its decision on the investment contract analysis and downplay delays in bringing the action.
The SEC has been increasingly broad in recent years as to what constitutes intent to pool an investment, so greater clarity on that issue would be beneficial, Gorman said. As for Ripple’s preliminary discovery wins, Gorman said the judge may be granting Ripple broad access because the case is likely to be scrutinized on appeal. 
Experts don’t anticipate any surprises when the SEC turns over internal memos, but industry insiders would be interested to take a peek behind the regulator’s veil.
“To my knowledge, these documents have not been publicly disclosed before,” Hinkes said. “Though it’s unclear whether they’ll be made public here, I imagine many in our industry would find those interesting.”
Leadership transition
The SEC filed suit against Ripple on Dec. 22, 2020, the day before former Chairman Jay Clayton’s resignation, and some noticed the timing.

“It made it seem more political,” Jeng said, also noting that Ripple is the largest cryptocurrency issuer the agency has gone after in recent years. Regulators should never appear political and must consistently apply the law to maintain credibility, she said.
The SEC didn’t respond to a request for comment.
Some think new SEC Chairman Gary Gensler, who has an interest in digital assets, is poised to launch a broader effort to clarify the regulatory landscape for cryptocurrencies. They don’t necessarily expect the agency to abandon the Ripple case or rush to settle under Gensler.
“I think the SEC has already headed down this path and they’re not turning back,” Jeng said.
Ripple isn’t backing down either, according to General Counsel Stuart Alderoty. 

“The SEC is out of step with the rest of the world,” Alderoty told CQ Roll Call. “This is much bigger than Ripple. It’s about the future of digital assets in the U.S.

[…]

Read More…

(RTTNews) – Syncona Ltd said that its portfolio company, Gyroscope Therapeutics Holdings plc, has filed an amended registration statement on Form F-1 with the U.S. Securities and Exchange Commission relating to a proposed initial public offering in the United States of its American Depositary Shares.
The registration statement discloses an indicative pricing range for the proposed offering of $20.00 – $22.00 per ADS. It would represent an increase in value of Syncona’s current shareholding in Gyroscope of 52 million pounds -72 million pounds.
The proposed offering amount specified in the filing is 6.75 million ADSs which at the midpoint of the indicative pricing range would result in gross proceeds to Gyroscope of about $141.8 million and does not include the underwriters’ option to purchase additional ADSs.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

[…]

Read More…

Twitter Facebook LinkedIn Email Print
Font Size:

Fintech promises to decentralize and democratize financial markets, but consumer protection and regulation are still needed.

Font Size:

Last month, Coinbase, one of the world’s largest cryptocurrency exchange platforms, distributed shares of common stock in a highly anticipated public offering. Instead of engaging a storied investment bank to launch an initial public offering (IPO) through a well-developed network of institutional investors—such as pension funds, mutual funds, endowments, and exceptionally wealthy individual investors—Coinbase sold its shares directly to the investing public.
Coinbase’s direct offering and its luminary role in the cryptocurrency sector illustrate a mounting movement toward disintermediation. This movement aims to minimize or eliminate the role of legacy financial intermediaries such as investment banks that underwrite IPOs or broker-dealers that facilitate secondary market trading. As I explore in a recent article, juxtaposing intermediary-driven transactions with those executed on blockchain protocols without traditional intermediaries reveals the promise and peril of disintermediation.
For nearly a century, regulation, market structure, and popular culture have characterized public offerings as intermediary-driven transactions. Statutory exemptions and regulatory safe harbors often presume intermediation. Award-winning films and television shows feature seductive, charismatic, jet-setting twenty-something bankers—and their lawyers—launching IPOs. In fact, determining the valuation of a business, attracting geographically dispersed and diverse classes of investors, and complying with a complex set of disclosure regulations adopted and enforced by the U.S. Securities and Exchange Commission (SEC) to ensure compliance with federal statutes (the Securities Act of 1933 and the Securities Exchange Act of 1934) proves quite challenging for first-time issuers. These structural barriers may compel issuers to engage outside counsel and a competent investment bank as intermediaries.
In large public offerings, issuers may agree to distribute discounted shares to a syndicate of Wall Street investment banks as compensation for the banks undertaking the risks of underwriting the offering. In contemporary markets, however, these risks may be illusory. The underwriting syndicate has often engaged in a careful valuation analysis and solicited indications of interests that establish a fairly accurate price range for the shares. Before the date of the IPO, shares not reserved for the proprietary portfolio of a syndicate member are traditionally allocated to a network of institutional investors with whom the syndicate has well-established, pre-existing relationships.
Even if an issuer’s IPO does not reach anticipated valuation pricing, the underwriters typically include contract provisions that enable them to hedge against offering-related losses. For example, on the debut of Uber’s IPO, market demand did not support underwriters’ anticipated $120 billion valuation. To mitigate against the threat of losses related to underwriting Uber’s IPO, the investment banking syndicate exercised rights nestled in a provision in the Underwriting Agreement that enabled them to hedge their risk exposure by employing a “naked short” strategy. These types of protections undermine the traditional gatekeeper role assigned to underwriters, eliminating risk exposure as well as accountability. In addition to deepening frustration regarding these types of tactics, issuers and investors express understandable consternation about the staggering amounts of compensation paid to underwriters. Consider the $300 million in fees Chinese e-commerce behemoth Alibaba paid its underwriters—Citigroup, Inc., Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group, Inc. and JPMorgan Chase Co.—for their assistance with Alibaba’s $25 billion IPO.
Beyond IPOs, protests against traditional financial institutions have also erupted in secondary trading markets. Last winter, in a David-versus-Goliath-styled conflict, retail investors began a coordinated bidding campaign to increase the price of video game retailer GameStop’s common stock (GME), challenging hedge funds’ predictions that GME would persistently decline in value. The ensuing class warfare engendered market volatility and trading disruption spurred by broker-dealers’ efforts to meet margin calls. Congressional scrutiny targeted Robinhood Markets Inc., an online trading platform that retail investors relied on to execute their GME trades. Robinhood had engaged in a decades-old practice known as payment for order flow, funneling retail customers’ orders to trading firms that employ controversial high-speed trading strategies believed to extract excessive fees and result in retail customers paying higher prices.
In the wake of several high-profile incidents over the last fifteen years—the GameStop saga, the Flash Crash in 2010, and the financial crisis of 2007—consumer advocates, issuers, and regulators have introduced persuasive evidence that certain financial institutions may abuse their role as intermediaries, profiting richly by extracting fees from both unwary and sophisticated investors. These critics argue that, at best, intermediaries prey upon the public, targeting marginalized populations. At worst, in the event of severe market disruption, these intermediaries externalize the costs of self-interested misconduct and otherwise opportunistic behavior.
As I have observed elsewhere, the expansion of alternative trading venues and certain new trading strategies continue to place intermediaries at the center of capital markets, raising important normative questions about fairness in secondary market trading. These intermediary platforms may impede price discovery and price accuracy, harming retail traders. These platforms and practices also impede the efficient allocation of capital—one of the central goals of capital markets.
In addition, misconduct by intermediaries in capital markets undermine existing legal standards. Section 6 of the Securities Exchange Act of 1934 empowers the SEC to adopt rules that prevent fraudulent and manipulative acts and practices in secondary trading markets. It also seeks to promote fair principles of trade, foster cooperation, protect investors and the public interest, and prohibit unfair discrimination.
Buttressing the movement to displace legacy financial institutions, architects of blockchain claim that decentralization is the linchpin to disintermediation. Blockchain protocols operate through a permissionless, peer-to-peer network to create a decentralized distributed digital ledger. Relying on the blockchain protocol, enthusiasts have created a new class of assets: digital coins and tokens known as cryptocurrencies.
According to proponents, blockchain-based platforms enable investors to participate in initial coin offerings distributed directly from issuers to investors without the costs of relying on traditional (rent-seeking) intermediaries. Developers of blockchain technology claim that this new asset class will democratize access to finance and liberate markets from the hold of legacy financial institutions.
Careful examination reveals that many of the platforms that identify as part of the decentralized finance ecosystem actually maintain operational features that foster intermediation. In disclosures related to its announced public offering, for example, Coinbase explained that trading customers transfer funds from a traditional checking or savings account into their Coinbase accounts or “wallets.” Similar to traditional and digital broker-dealer platforms, Coinbase provides custody and trade execution services. In addition to providing broker-dealer services, Coinbase also acts as an exchange.
In each context, Coinbase executes many aspects of transactions by relying on centralized operational infrastructure rather than the decentralized, peer-to-peer distributed digital ledger methodology associated with blockchain technology. Thus, in these contexts, Coinbase is the intermediary that manages accounts, maintains custody of funds, transfers funds, facilitates exchanges, determines pricing, and matches orders. In other words, Coinbase has displaced legacy intermediaries, but its customers do not gain any of the attendant benefits of decentralization.
Although a few platforms such as Uniswap have integrated operational infrastructure that is more consistent with the principles of decentralization, these platforms face different but equally frustrating limitations. For these decentralized exchanges, customers retain control over their funds while clearing and trading occurs “on chain.” This approach, however, is resource-intensive, expensive, and slow. Latency, or trade execution delays, attract the same predatory tactics that plague conventional trading markets. Consequently, high-frequency trading strategies are becoming increasingly commonplace in cryptocurrency markets. For example, Gemini––a popular cryptocurrency exchange––permits clients to co-locate, meaning they can place their servers within close proximity of its New York and Chicago data centers. Co-location enables investors to identify and prey upon trades in the exchange pipeline.
Beyond infrastructure challenges, consumer protection concerns, mismanagement, misconduct, fraud, market manipulation, and predatory trading tactics, both centralized and decentralized exchanges face the threat of disruptive cyberattacks. For centralized platforms, cinematic heists have emptied hundreds of millions of dollars of customer assets from cryptocurrency exchange coffers. Periodic cyberattacks have temporarily paralyzed platforms, suspending trading and halting customer withdrawals.
In a speech in 2018, the then-Director of the SEC’s Division of Corporation Finance, William Hinman, triggered a polarized debate in the cryptocurrency community by proposing that regulators might determine whether federal securities laws apply to the distribution of coins or tokens, and by extension to the operation of trading platforms, by asking whether the coins, tokens, or platform are “sufficiently decentralized.” Although laudable, this proposal introduced as many questions as it aimed to resolve.
Recent guidance and enforcement actions by the SEC and Commodity Futures Trading Commission supplement a parade of informal announcements, commissioners’ speeches, and formal congressional hearing testimony. Yet, all of these efforts fall short of the one approach that would resolve regulatory uncertainty and increase accountability: notice-and-comment rulemaking.
Having premised so much of financial markets regulation on the presumption of intermediation, it may be useful to consider the need for new rules and formal amendments aimed at achieving the longstanding regulatory goals of promoting investor protection, facilitating capital formation by establishing fair and orderly markets, and mitigating risks that disrupt and destabilize markets.

This essay is part of an 11-part series, entitled Regulation In the Era of Fintech.

[…]

Read More…

Law360 (May 3, 2021, 8:20 PM EDT) — Blockchain-based trading platform INX said Monday it raised roughly $85 million in the first IPO of a blockchain-based security token to be registered with the U.S. Securities and Exchange Commission.Gibraltar-headquartered INX Ltd. sold about 95 million tokens for $0.90 apiece in a multi-stage offering that wrapped up Monday. That was less than its original plan to offer 130 million tokens, prompting INX to remove from registration the roughly 30 million tokens that remained unsold, according to SEC filings.The INX token is a so-called security token, a digital asset that functions like a security under U.S.

[…]

Read More…

The SEC logo at the headquarters on Vibhavadi Rangsit Road. Patipat Janthong
The Securities and Exchange Commission (SEC) is conducting a public hearing to redefine and reclassify types of investors as it considers including investment knowledge, financial literacy and financial prowess as qualifications to better protect inexperienced investors from risk.
According to the SEC’s proposition, investors will be reclassified into four groups: professional investors (PI) with proven experience in investments or credentials as experts or analysts; qualified investors (QI) with a net worth of over 60 million baht; affluent investors (AI) with a net worth above 30 million; and retail investors.
In addition to their financial assets, QI and AI must meet qualifications regarding knowledge about investment products and risks, which can be based on their experience with risk assets and asset management, in accordance with criteria specified by the SEC.
Individual investors as well as institutional investors can qualify as PI if they have an investment planner (IP) or investment consultant (IC) licence; are angel investors with a net worth exceeding 50 million baht; have revenue of more than 4 million baht or have more than 20 million baht in their investment portfolios; or have at least three years of experience investing in small and medium-sized enterprises or startups.
However, individuals with IP and IC licences can only be classified as PI for products for which they are licensed. For example, if they are a licensed IP or IC for trading stocks and bonds, they will be accredited as a PI for only stocks and bonds, not other investment products.
Holders of IP and IC licences or individuals with any certified investment licences such as CFA or CISA can also qualify as AI and QI if their financial status meets the criteria.
Under the new criteria, retail investors will only be able to invest in products that have passed the screening process for quality, information, and plain products (or QIP instruments) by the SEC, such as equities, real estate investment trusts, rated bonds, perpetual bonds, investment-grade bonds, and structured notes with principal protection.
Retail investors can also invest in products with low impact and no ongoing requirements such as crowdfunding and initial coin offerings, but only a limited amount.
AIs are allowed to invest in risky products with more complex and higher risks such as unrated bonds, non-investment grade bonds, non-diversified funds, and structured notes without principal protection.
QI and PI are allowed to invest in “super-risky” products.
If the proposition is accepted and enforced, the new criteria will apply to all types of financial products the SEC supervises except cryptocurrencies.
Qualifications for crypto traders are different from those for other products.
The public hearing is open to public opinions on the SEC website until May 21.

[…]

Read More…

Law360 (May 3, 2021, 5:46 PM EDT) — The U.S. Securities and Exchange Commission has accused a convicted felon of duping dozens of investors into purchasing “worthless shares” in a wireless energy project as part of a $17 million fraudulent securities offering scheme, which allegedly netted him about $5.3 million that he used on personal expenses.In a lawsuit filed in Dallas federal court Friday, the government said Richard Randall defrauded at least 52 investors who thought they were putting their millions into developing a “revolutionary wireless technology for transmitting electricity,” but in actuality were lining his pockets.

[…]

Read More…

The interim final amendments (IFR) adopted by the U.S. Securities and Exchange Commission (SEC) to Forms 10-K, 20-F, 40-F and N-CSR to implement the submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act) will become effective May 5, 2021. The SEC is seeking public comments on the IFR which are due on the same date.
Background
As explained in our earlier alert (available here), the HFCA Act was signed into law by former President Trump on December 18, 2020. The HFCA Act requires the SEC to identify reporting public companies using registered public accounting firms (auditors) with a branch or office located in a foreign country that the Public Company Accounting Oversight Board (PCAOB) determines that it is unable to “inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction” (Commission-Identified Issuers). The PCAOB has not yet issued rules setting forth its process for making these determinations. 
Section 2 of the HFCA Act requires Commission-Identified Issuers to submit documentation establishing that they are not owned or controlled by a governmental entity in the foreign jurisdiction of the auditor where the PCAOB is unable to inspect or investigate completely, and requires the SEC to prohibit trading of securities of such Commission-Identified Issuers in U.S. markets after three consecutive non-inspection years (generally, any year the Commission-Identified Issuer is so identified by the SEC). The SEC is expected to engage in a separate notice and comments process addressing how the trading prohibition will be implemented.
In addition, Commission-Identified Issuers that are foreign issuers (“Commission-Identified Foreign Issuers”) are subject to the additional disclosure requirements under Section 3 of the HFCA Act outlined below. 
Additional Disclosure Requirements for Commission-Identified Foreign Issuers
The IFR requires a Commission-Identified Foreign Issuer to provide the following specific additional disclosures in its annual report filed for each non-inspection year:

“That, during the period covered by the form, the registered public accounting firm has prepared an audit report for the issuer;
The percentage of the shares of the issuer owned by governmental entities in the foreign jurisdiction in which the issuer is incorporated or otherwise organized;
Whether governmental entities in the applicable foreign jurisdiction with respect to that registered public accounting firm have a controlling financial interest with respect to the issuer;
The name of each official of the Chinese Communist Party (“CCP”) who is a member of the board of directors of the issuer or the operating entity with respect to the issuer; and
Whether the articles of incorporation of the issuer (or equivalent organizing document) contains any charter of the CCP, including the text of any such charter.”

The additional disclosures, including the requirements of the last two bullet points, evidence that a primary objective of the HFCA Act and the IFR is to address China’s restrictions on the PCAOB’s ability to inspect auditors of Chinese public reporting companies. The SEC is amending Form 10-K, Form 20-F, Form 40-F, and Form N-CSR (the “Forms”) to add the above disclosure requirements in annual reports filed by the Commission-Identified Foreign Issuers.
Submission Requirement
The IFR requires each Commission-Identified Issuer to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in the foreign jurisdiction where PCAOB is unable to inspect or investigate completely the auditor. The SEC is also amending the Forms to implement this requirement. In contrast to the additional disclosure requirements outlined above that apply only to Commission-Identified Foreign Issuers, this submission requirement applies to all Commission-Identified Issuers.
The IFR provides that the submissions must be made electronically through the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system and, as an initial matter, Commission-Identified Issuers will have flexibility to determine the types of documentation to be submitted to satisfy this requirement. At the same time, the SEC is requesting comment as to whether it should require specific types of documentation or whether additional guidance would be necessary or useful.
Timing Considerations
A reporting public company will not be required to comply with the IFR until the SEC has identified it as having a non-inspection year after December 31, 2020, under a process to be established by SEC with appropriate notice. Once identified, the Commission-Identified Issuer will be required to comply with the IFR in its annual report for each fiscal year it is identified.
Request for Comment
The IFR requests comments and feedback from any interested person on any aspect of the IFR, including the identification of Commission-Identified Issuers, implementation of the HFCA Act disclosure requirements and submission requirements, and other related matters. The comments are due by May 5, 2021.
Companies that are likely to be identified by the SEC as Commission-Identified Issuers should consider providing feedback to the SEC regarding the implementation of the HFCA Act and consider how to comply with the disclosure and submission requirements.

[…]

Read More…

(Bloomberg) — Under Armour Inc. will pay $9 million to settle a U.S. regulator’s allegations that the sports apparel company booked revenues earlier than it should have because it was at risk of missing analyst estimates.

(Bloomberg) — Under Armour Inc. will pay $9 million to settle a U.S. regulator’s allegations that the sports apparel company booked revenues earlier than it should have because it was at risk of missing analyst estimates.

Starting in the third quarter of 2015, Under Armour pulled forward $408 million in existing orders that customers had requested be shipped later on, the Securities and Exchange Commission said in a Monday statement. Baltimore-based Under Armour attributed the growth to other factors without disclosing to investors that its actions raised significant questions as to whether the company could meet analysts’ future revenue estimates.

“Under Armour created a misleading picture of the drivers of its financial results and concealed known uncertainties concerning its business,” said Kurt Gottschall, head of the SEC’s Denver office.

The company agreed to pay the SEC penalty without admitting or denying the agency’s findings.

In a statement, Under Armour said the SEC has confirmed that no member of management, including Chairman and Founder Kevin Plank, will face an enforcement action as a result of the agency’s investigation.

Under Armour added in the statement that while the Justice Department had previously requested documents from the company, that agency hasn’t sought any information since the second quarter of 2020.

©2021 Bloomberg L.P.

[…]

Read More…

… 2020 as filed with the Securities and Exchange Commission, contains an audit opinion from its independent registered public accounting firm that …

[…]

Read More…

Dive Brief:

The Securities and Exchange Commission charged eight companies for seeking permission to delay their quarterly or annual filing without saying they needed the extra time to restate a previous filing. 
“Due to the companies’ failure to include required disclosure … investors … were kept in the dark regarding the unreliability of the company’s financial reporting or anticipated material changes in operating results,” said Anita Bandy, associate director in the SEC’s enforcement division.
The SEC said it used a data analytics tool to spot the companies’ alleged compliance failures. 

Dive Insight:
Companies seeking to delay their 10-K or 10-Q filing must fill out a request with SEC using Form 12b-25, commonly known as Form NT, which stands for “not timely,” which requires giving a reason for the delay. 
In its orders announcing the enforcement actions, the SEC said the companies didn’t disclose in their Form NT they needed the extra time to restate or correct a past filing.
“Each of the companies announced restatements or corrections to financial reporting within 4-14 days of their Form NT filings despite failing to provide details disclosing that anticipated restatements or corrections were among the principal reasons for their late filings,” the SEC said. 
The companies also failed to disclose that management anticipated a significant change in quarterly income or revenue. 
“Reporting companies are required to provide investors with timely, accurate, and full information with which investors can evaluate the significance of reporting delays,” Bandy said. 
Data analytics
The SEC has stepped up its use of data analytics to uncover compliance problems. Last year, it used a technology tool to spot two companies that improperly reported their earnings per share.   
“We will continue to use data analytics to uncover difficult to detect disclosure violations,” said Melissa Hodgman, acting director of the SEC’s enforcement division. “Targeted initiatives like this allow us to efficiently address disclosure abuses that have the potential to undermine investor confidence in our markets if left unaddressed.”
The eight companies charged with Form NT violations agreed to cease-and-desist-orders and pay penalties. The companies are Fortem Resources, TruTankless, ShiftPixy, Rokk3r, Daniels Corporate Advisory Company, HQDA Elderly Life Network Corp., Asta Funding and Igen Networks Corp.

[…]

Read More…

TipRanksRide the Crypto Boom with These 3 StocksSome 15% of the American public owns some form of cryptocurrency – and a large part of that group jumped on the bandwagon in the last two years. The digital currencies – Bitcoin is the most famous, but there are scores of others – offer users a distinct set of advantages, based on their blockchain technology. First, the crypto coins are secure – as a digital technology, blockchain is notoriously difficult to break. Second, the coins have the chief attribute of any store of value: scarcity. There is a mathematical limit to how many Bitcoin, for example, will ever exist – and that limit gives them their value. People want a secure online currency, are willing to pay for it, and the relatively scarce (compared to traditional fiat currencies) crypto coins offer both attributes. The result, in recent years, has been a boom as investors have started looking seriously at the crypto sector. Of course, any digital currency is going to need a range of services to be usable. Financial companies, to back it, and payment servers, to handle transactions, to name just two. Other companies and major business figures – Elon Musk comes readily to mind – will invest heavily in it. All of this creates a landscape in which investors can profit from crypto without ever buying an actual coin. They can buy into the companies that are poised to ride the cryptocurrency boom to higher profits. How big is crypto? The market for it surpassed $2 trillion earlier this month, a number that’s hard to get your head around. So, as usual, we’ve turned to the TipRanks platform to help us make sense of the equity landscape as pertains to crypto. We’ve located three stocks – from different sectors – that according to some of the Street’s top analysts are all set to deliver crypto charged gains. Let’s dive in. Silvergate Capital (SI) We’ll start in the financial world, fitting when we’re discussing a new financial asset like crypto. Silvergate Capital is a commercial bank, chartered in California and providing financial services and infrastructure to customers in the digital currency industry. Silvergate has been in the finance industry for over 3 decades and has turned a profit every year for the last 21 years. Silvergate got into digital currency in 2013, with an active pursuit of digital currency customers. Today, the company has over 1,100 customers in this sector. In March of this year, Silvergate expanded its digital currency services, using a custody service to hold Bitcoin as collateral for US dollar commercial loans. The service offers large Bitcoin holders a way to access liquid capital without selling off the underlying cryptocurrency. Silvergate provides custody for the Bitcoin collateral through Coinbase and Fidelity Digital Assets. In the recent financial release, for 1Q21, Silvergate reported EPS of 55 cents per share, beating the industry estimates by 14% and better yet, growing 139% year-over-year. Supporting the earnings growth, Silvergate recorded 29% customer base growth year-over-year. Digital currency deposits grew from $5 billion at the end of December to $6.8 billion at the end of March. The company’s rapid growth can also be seen in the share value, which is up an astounding 582% in the past 12 months. 5-star analyst Joseph Vafi, of Canaccord Genuity, is impressed by Silvergate’s growth in digital currency banking, and writes, “Silvergate delivered again in Q1, highlighted by another near 40% sequential increase in deposits on top of the 130+ % q/q increase in Q4. This impressive deposit growth was driven by similarly strong growth in demand for use of the Silvergate Exchange Network (SEN) as institutional interest in bitcoin continues to accelerate. Just as important are the implications of the two strategic deals with Fidelity and Coinbase inked in Q1. In our view, it is becoming clear that not only is it emerging as a key financial services cog across all of institutional cryptocurrency trading, but SI is now becoming the key partner for cryptocurrency custodians seeking to offer margin lending. Importantly, Silvergate has a core competitive cost advantage in crypto margin lending, given its underlying bank charter which provides a very low cost of capital via raising zero interest customer deposits.” Vafi, who is rated in the top 100 of Wall Streets analysts, puts a Buy on SI shares, and his $150 price target suggests the stock has room for 36% growth this year. (To watch Vafi’s track record, click here.) Canaccord’s Vafi is no outlier in his bullish views. Silvergate has 5 recent reviews, and they include 4 Buys against a single Hold, for a Strong Buy consensus rating. The stock’s share price is $107.22, and the average price target of $158 implies a 45% upside – even more bullish than Vafi allows – for the coming year. (See Silvergate’s stock analysis at TipRanks.) PayPal Holdings, Inc. (PYPL) While Silvergate is hardly a household name, PayPal has become one. The company is the market leader in online payment processing, a booming industry in itself, and its top line revenue grew from $17.7 billion in 2019 to $21.4 billion in 2020. The company recorded sequential increases in revenue the second, third, and fourth quarters of last year, and saw Q4 EPS reach $1, up from 43 cents in the prior’s year’s first quarter. That PayPal’s growth has come during the pandemic is unsurprising. We all know e-commerce boomed last year, benefitting from social lockdown policies, and e-commerce requires online payment processors. PayPal has a leading role in that industry, with over 377 million active accounts, conducting 4.4 billion payment transactions totaling $277 billion in payment volume. In a major development for the company, PayPal announced in April that its mobile payment app, Venmo, will now offer users the ability to buy, sell, and hold four crypto currencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. According to one survey, some 30% of Venmo’s users already deal in crypto; this move makes their transactions more convenient, and opens an easy avenue to crypto for Venmo’s full 70-million-strong userbase. BTIG analyst Mark Palmer, points out a key factor in PayPal’s new Venmo feature when he writes, “The move marked the first time that consumers will be able to use crypto to make purchases at a large array of merchants. The crypto option is now available in the U.S. with more than half of PYPL’s 29mm merchants, with the company stating that more would be added soon.” Palmer believes that this move toward crypto will be a net positive for PayPal, and he backs that with a Buy rating and $345 price target implying a one-year upside of 31%. (To watch Palmer’s track record, click here.) That Wall Street agrees with Palmer is obvious from the Strong Buy consensus rating on the stock, supported by new fewer than 29 recent Buy ratings. These outweigh the 4 Holds that have also been set here. PYPL shares are trading for $262.29, and their $310.68 average price target suggests the stock has room to grow 18% this year. (See PayPal’s stock analysis at TipRanks.) CleanSpark (CLSK) Last up, CleanSpark, is both a software company and a clean energy company. That makes more sense than at first would be apparent – CleanSpark’s software products are designed to control microgrid and distributed energy systems. These systems allow users to go off-grid, opting out of traditional power distribution to tap into cleaner green energy sources. CleanSpark provides the control software for these systems. Earlier this year, CleanSpark made a couple of bold moves that made waves in its own industry, and in crypto. In March, the company put an offering of public shares on the market – more than 9 million common shares – at $22 each, raising more than $200 million before expenses. That alone got notice from investors. In addition, the company started using the funds to buy up more Bitcoin mining rigs. These are the computer systems through which new bitcoins are generated. They draw massive amounts of power, put out a lot of heat – and CleanSpark has invested heavily, not only in the computational mining rigs, which will slowly produce new bitcoins, but in the clean energy infrastructure to make the company’s Atlanta mining location 95% carbon-free. The company’s latest investment in Bitcoin mining will start to take physical shape later this year. And finally, in April, CleanSpark announced that it had secured contracts for an additional 22,680 Bitcoin miners. When all of the new rigs are installed, up and running, CleanSpark expects to increase its Bitcoin mining production to more than 3.2 EH/s. In the quarter ended March 31, CleanSpark produced 144 Bitcoins, and has produced a total of 205 Bitcoins since it began mining ops in December. In all of this, CleanSpark has not lost sight of its original focus. The company also announced in April that it had secured a net $16.2 million increase in its microgrid contracts, a year-over-year increase of 220%. In coverage of this stock for H.C. Wainwright, top analyst Amit Dayal writes, “We believe CleanSpark’s execution on the microgrid and Bitcoin mining fronts could position the company to exceed our expectations for FY2021, as our assumptions now appear relatively conservative. The stock has pulled back since its January 2021 highs alongside some other Bitcoin mining comps, and general weakness across small-cap names. However, we believe, with Bitcoin prices remaining well above our assumptions, no known changes to mining operations, and the company adding to its microgrid backlog, the operational side of the story appears to be intact. We believe CleanSpark’s valuation remains compelling at current levels with the company set for YoY revenue and earnings growth of more than 150% and more than 1,000%, respectively, in FY2022.” In line with his upbeat outlook, Dayal gives CLSK shares a Buy rating with a $50 price target that indicates confidence in a robust 135% upside in the next 12 months. (To watch Dayal’s track record, click here.) There are only two recent reviews on this stock – including Dayal’s – but both agree: this is one to Buy. CLSK shares are currently trading for $21.26 and the price target averages to $47.50, suggesting an upside of 123% this year. (See CleanSpark’s stock analysis at TipRanks.) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

[…]

Read More…

BALTIMORE, May 3, 2021 /PRNewswire/ — Under Armour, Inc. (NYSE: UA, UAA) (the “Company”) today announced that it has entered into a settlement with the U.S. Securities and Exchange Commission (the “SEC”), resolving a previously announced investigation related to disclosure and the impact of certain “pull forward” sales for the third quarter of 2015 through the fourth quarter of 2016.
Under the terms of the settlement, the Company has agreed to pay a civil monetary penalty of $9.0 million, in addition to other non-monetary settlement terms. This settlement relates to the Company’s disclosures and does not include any allegations from the SEC that sales during these periods did not comply with generally accepted accounting principles. The Company neither admitted nor denied the SEC’s charges. The settlement resolves all outstanding SEC claims. The SEC Staff has confirmed that it does not intend to recommend that any enforcement action be taken against the Company’s Executive Chairman, Chief Financial Officer or any other member of management in connection with this investigation.
The Company previously announced that it had also been responding to requests for documents and information from the U.S. Department of Justice (the “DOJ”). The Company has not received any requests from the DOJ since the second quarter of 2020.
About Under Armour, Inc.
Under Armour, Inc., headquartered in Baltimore, Maryland, is a leading inventor, marketer and distributor of branded athletic performance apparel, footwear and accessories. Designed to help advance human performance, Under Armour’s innovative products and experiences are engineered to make athletes better. For further information, please visit http://about.underarmour.com.
SOURCE Under Armour, Inc.

Related Links
www.underarmour.

[…]

Read More…

The full text of the proposal will be included in the Company’s proxy statement to be filed with the Securities and Exchange Commission (“SEC”) prior …

[…]

Read More…

FAIRLESS HILLS, Pa., May 03, 2021 (GLOBE NEWSWIRE) — Hydrofarm Holdings Group, Inc. (“Hydrofarm” or the “Company”) (Nasdaq: HYFM), a leading independent distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture, today announced the closing of the Company’s previously announced underwritten upsized public offering of 5,526,861 shares of its common stock at a public offering price of $59.00 per share, including 720,894 shares issued pursuant to the full exercise by the underwriters of their option to purchase additional shares of common stock. The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions and offering expenses payable by the Company, were approximately $309.8 million.
J.P. Morgan and Stifel acted as lead book-running managers for the offering. Deutsche Bank Securities, Truist Securities and William Blair acted as book-running managers for the offering.
A registration statement relating to the sale of these securities was declared effective by the Securities and Exchange Commission (“SEC”) on April 28, 2021 and is available on the SEC’s website located at www.sec.gov. The offering was made only by means of a prospectus. A copy of the final prospectus relating to the offering may be obtained from: J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by email at [email protected] or by telephone at (866) 803-9204; or Stifel, Nicolaus & Company, Incorporated, Attention: Prospectus Department, One Montgomery Street, Suite 3700, San Francisco, CA 94104 or by telephone at (415) 364-2720 or by email at [email protected].
This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Hydrofarm
Hydrofarm is a leading independent distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, growing media and nutrients, as well as a broad portfolio of innovative and proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the current beliefs and expectations of management. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Although Hydrofarm believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are subject to risks and uncertainties that may cause Hydrofarm’s actual activities or results to differ significantly from those expressed in any forward-looking statement, including, without limitation, risks and uncertainties related to market conditions and the risks and uncertainties described under the heading “Risk Factors” in documents Hydrofarm files from time to time with the SEC, including Hydrofarm’s Annual Report on Form 10-K filed with the SEC on March 30, 2021, the prospectus for this offering filed with the SEC on April 30, 2021, and its future periodic reports to be filed with the SEC. These forward-looking statements speak only as of the date of this press release, and Hydrofarm undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.
Contacts:
Investor ContactFitzhugh Taylor / [email protected]
Media ContactThe LAKPR GroupHannah Arnold, 202-559-9171, [email protected] Trono, 323-672-8226, [email protected] Gallagher, 513-505-2334, lgallagher@hydrofarm.

[…]

Read More…

… was initially filed with the Securities and Exchange Commission (“SEC”) on April 22, 2021 and declared effective by the SEC on April 30, 2021.

[…]

Read More…