A Volkswagen logo is seen as it launches its ID.6 and ID.6 CROZZ SUV at a world premiere ahead of the Shanghai Auto Show, in Shanghai, China April 18, 2021. REUTERS/Aly Song/File PhotoThe U.S. Securities and Exchange Commission has opened an inquiry into the U.S. unit of Volkswagen’s AG over a marketing stunt in which it falsely said it was changing its name in the United States to “Voltswagen,” a person briefed on the matter confirmed.Spiegel first reported the inquiry and the SEC’s request for information about the issue made in early April and quoted VW as confirming the investigation.Volkswagen declined to comment on the matter to Reuters. The SEC did not respond to a request for comment.The company in March apologized after a false statement it issued about a phony name change was widely slammed on social media.The stunt, which came just ahead of April Fool’s Day on the first of the month, when companies often release prank statements, was meant to call attention to its electric vehicle efforts, the carmaker said.The initial statement outlining the name change, posted on its website and accompanied by tweets, was reported by Reuters and other outlets globally and included a detailed description of its purported rebranding efforts and new logos.At least one analyst wrote a research note praising the name change. VW’s preferred shares, common shares and ADRs rose on the day of the phony name announcement.Volkswagen Group of America CEO Scott Keogh told Reuters in an April 1 interview that the phony name announcement was a “gag” and an attempt to “have some humor and “to celebrate our profound focus on electrification.”Volkswagen in 2015 admitted to using illegal software to rig diesel engine tests in the United States, sparking Germany’s biggest corporate crisis and costing the carmaker more than 32 billion euros in fines, refits and legal costs.Our Standards: The Thomson Reuters Trust Principles.

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A doctor ordered to pay more than $4 million after the SEC accused him of defrauding immigrant investors will take his case to the Ninth Circuit, he told a federal judge in California.
Robert Yang faced a Securities and Exchange Commission suit for allegedly raising almost $20 million from Chinese investors for sub-acute nursing care facilities and diverting the funds for other uses. He and three relief defendants will appeal the U.S. District Court for the Central District of California’s decision.
Judge Stephen V. Wilson in February ordered Yang to individually pay about $1.4 million in disgorgement. The judge…

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The name-change stunt, which was meant to draw attention to the ID 4 EV, only managed to earn the ire of the automotive press and now the attention of the US government.
Tim Stevens/Roadshow

It’s pretty safe at this point to say that Volkswagen’s attempt at an April Fool’s Day prank, in which it claimed to be changing its name to “Voltswagen,” was an unmitigated disaster that severely damaged the automotive media’s trust in the organization and likely damaged the public’s image of the company as well. Still, it looks like embarrassment is the least of VW’s worries.According to a report published Thursday by Der Spiegel, the Securities and Exchange Commission has decided to launch an investigation into Volkswagen’s North American arm to determine if the whole Voltswagen affair influenced the brand’s stock price.

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While it’s unlikely that Volkswagen will suffer anywhere near the financial penalties it saw for its diesel cheating scandal, it will likely have to go into its pockets should the SEC find against it. We’ve seen similar investigations into automakers like Tesla after its founder Elon Musk sent his fateful “Funding Secured” tweet a few years ago.The Voltswagen thing may seem like a silly reason to be upset with a company — after all, it was supposed to be a joke, right? But the fact that Volkswagen deliberately lied to the press when asked if it was a joke, and attempted to pawn off its joke as a legitimate name change, irrevocably damaged the brand’s credibility — which it’s spent years trying to claw back after Dieselgate.The SEC investigation seems to be in the early stages, and while we reached out to Volkswagen representatives for comment, we didn’t hear back in time for publication.

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… relating to the units and the underlying securities was declared effective by the Securities and Exchange Commission (the “SEC”) on March 9, 2021.

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The Securities and Exchange Commission today charged eight companies for failing to disclose in SEC Form 12b-25 filings that their request for seeking a delayed quarterly or annual reporting filing was caused by an anticipated restatement or correction of prior financial reporting. The violations were uncovered by an initiative focused on Form 12b-25 filings by companies that quickly thereafter announced financial restatements or corrections. Each of the companies was a public reporting company at the time of the violations and agreed to settle the Commission’s charges and pay civil penalties.

Public companies are required to file the SEC’s Form 12b-25 “Notification of Late Filing,” commonly known as “Form NT,” when “not timely” filing a Form 10-Q or Form 10-K and seeking additional days to file their reports. Companies must disclose on the Form NT why their quarterly or annual report could not be filed on time, as well as any anticipated, significant changes in results of operations from the corresponding period for the last fiscal year. The SEC orders find that 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 orders also find that the companies failed to disclose on Form NT, as required, that management anticipated a significant change in quarterly income or revenue.
“As today’s actions show, we will continue to use data analytics to uncover difficult to detect disclosure violations,” said Melissa R. 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.”
“Reporting companies are required to provide investors with timely, accurate, and full information with which investors can evaluate the significance of reporting delays,” said Anita B. Bandy, Associate Director in the SEC’s Enforcement Division.  “In these cases, due to the companies’ failure to include required disclosure in their Form 12b-25, investors relying on the deficient Forms NT were kept in the dark regarding the unreliability of the company’s financial reporting or anticipated material changes in operating results.”
The SEC’s orders find that the below listed companies violated Section 13(a) and Rule 12b-25 under the Securities Exchange Act of 1934 by failing to make the required Form NT disclosures. Without admitting or denying the findings, the companies agreed to cease-and-desist-orders that made the following findings and require payment of the following penalties:
Fortem Resources, Inc. (FTMR) – Filed one deficient Form NT. The British Columbia-based company agreed to pay a penalty of $25,000.
TruTankless, Inc. (TKLS) – Filed one deficient Form NT. The Arizona-based company agreed to pay a penalty of $25,000.
ShiftPixy, Inc. (PIXY) – Filed one deficient Form NT. The Florida-based company agreed to pay a penalty of $25,000.
Rokk3r, Inc. (ROKK) – Filed one deficient Form NT and filed one untimely Form 8-K. The Florida-based company, now private, agreed to pay a penalty of $50,000.
Daniels Corporate Advisory Company, Inc. (DCAC) – Filed one deficient Form NT. The New York-based company agreed to pay a penalty of $25,000.
HQDA Elderly Life Network Corp. (HQDA) – Filed two deficient Forms NT. The California-based company agreed to pay a penalty of $50,000.
Asta Funding, Inc. (ASTA) – Filed one deficient Form NT and filed one Form 10-Q outside the extension period. The New Jersey-based company, now private, agreed to pay a penalty of $50,000.
Igen Networks Corp. (IGEN) – Filed one deficient Form NT. The California-based company agreed to pay a penalty of $25,000.
The SEC’s investigation was conducted by Jonathan Cowen and supervised by Jeffrey P. Weiss and Ms. Bandy.

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Staff at the Securities and Exchange Commission are drafting guidance on forward-looking statements by special purpose acquisition companies (SPACs) as part of a regulatory push on the IPO alternative, but whether the SEC leadership will sign off on the guidance isn’t clear, Reuters reported.  
The SEC has said it’s concerned about the rush in SPACs, which let investors take a promising start-up public more easily by pooling money to acquire it through a publicly listed blank-check company. 
SPACs have been around for decades, but their popularity increased shortly before the pandemic and has surged since then. More than 550 SPACs have filed to go public this year, a record, although the number of filings is expected to wane as the SEC steps up its scrutiny.
In late March and April, the SEC released statements on issues it says need addressing, including the liability risk SPACs could be incurring on their forward-looking guidance.
The SEC statements don’t have the force of law, but they’re slowing down the market as SPAC executives and investors seek clarity on the SEC’s concerns. 

Accounting for warrants
In addition to the liability issue, which concerns whether SPACs should adhere to the same quiet period rules of regular IPOs, the SEC has concerns over a number of other matters, including how SPACs are accounting for the warrants they give investors in exchange for becoming shareholders.
SPACs have been treating the warrants, which entitle shareholders to acquire additional shares after the merger closes, as equity. But the SEC says they should be treated as a liability on the company’s balance sheet. 
Treating the warrants as a liability is more onerous and expensive administratively because it requires SPACs to undertake a complex valuation process each quarter. As equity, the warrants are only valued once, when they’re issued.  
“You have to use a more complex model,” Harris Antoniades, managing director of global investment bank and advisory firm Stout, told CFO Dive.
Forward statements
Valuation accuracy is at the core of the SEC’s concern over forward-looking statements. SPACs are generating such large investor interest in part over what critics believe are unrealistically optimistic growth projections for some of these new business combinations. 
Amir Emami and Michael Ventura of RBC Capital Markets have said the market is due for a reset, which the SEC is trying to engineer with its statements, because SPAC valuations are becoming frothy, Reuters reported. 
“When there’s a reset,” Ventura said in the Reuters report, “it’s a hard reset. We’re going through that reset right now.

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Law360 (April 29, 2021, 4:04 PM EDT) — The U.S. Department of Justice and U.S. Securities and Exchange Commission have pursued numerous banks for violations of the Foreign Corrupt Practices Act involving hiring relatives and friends of officials in Asia and the Middle East.While the banks have settled these cases — paying hundreds of millions of dollars in penalties — the U.S. authorities have not yet charged any individuals based on these corrupt hiring practices.Recently, however, a former JPMorgan Chase & Co.

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CANTON – Hall of Fame Resort & Entertainment Co. is restating financial results for last year following a rules change by the Securities and Exchange Commission.
Earlier this month, the SEC issued a “staff statement” that recommended changes in accounting and reporting rules for warrants issued by a special purpose acquisition companies. The SEC encouraged the companies to amend financial statements that already had been filed.
Hall of Fame Resort formed last July 1 with the merger of Hall of Fame Village LLC and Gordon Pointe Acquisition Corp., which was a special purpose acquisition company.
The new company issued warrants that allowed the owner to buy 1.421333 shares of Hall of Fame Resort stock. The warrants can be traded on an exchange, similar to stock.
The new company was created to complete the Hall of Fame Village powered by Johnson Controls, a multi-use facility that will create a campus around the Pro Football Hall of Fame and Tom Benson Hall of Fame Stadium. Plans are to build a hotel, retail shopping area, water park, offices, indoor sports center and other facilities.

Restating 2020 earnings
The SEC action means Hall of Fame Resort will restate earnings reports issued for the third and fourth quarters of 2020, representing the first six months the new company was operating.
The rules change affects the accounting process used for warrants issued as part of last summer’s merger. When HOF Village and Gordon Pointe merged, warrants were issued that allowed holders to buy shares of stock in Hall of Fame Resort & Entertainment.

When the new company filed earnings reported last year, the warrants were listed as an equity. Because of the SEC change, the warrants now will be listed as liabilities.
The change means the company will see an additional $25 million of non-operating income for 2020. That will decrease Hall of Fame Resort’s net operating loss by about $25 million, according to a filing with the SEC on Thursday.

Hall of Fame Resort reported a loss of $71.5 million last year, compared with a loss of $55.9 million the previous year. The loss came on revenue of $7.1 million, down 9.7% from 2019 revenue of $7.86 million.
The $25 million figure could change, Michael Crawford, Hall of Fame Resort president and chief executive officer, explained in a letter to shareholders. The letter also is filed with the SEC.
The company still is completing the new earnings statements, and those statements will be reviewed by the company’s independent accounting firm.
Operations aren’t affected
While the bottom line numbers likely will change, the company’s cash flows, cash and cash equivalents and liquidity aren’t affected by the change in accounting for the warrants, Crawford wrote.
“The company will remain in compliance with all of its financial covenants under its credit facilities, after giving effect to the restatement,” Crawford’s letter states.
Crawford said Hall of Fame Resort is one of several companies that will have to change financial statements because of the SEC rules change.
Hall of Fame Resort is now constructing the Constellation Center for Excellence, an office building and retail center west of the football stadium. Later this year, work is set to begin on the hotel and a retail promenade, with construction of the water park and the center for performance to follow.
The company’s SEC filings from last year indicate the second phase of construction will be finished by 2023. The cost is estimated at $300 million.

Hall of Fame Village is one of three business segments for the company, along with media and gaming.

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Volkswagen (VWAGY, VOX.DE) could find itself in hot water with the U.S. Securities and Exchange Commission (SEC) over a fake news release claiming it was changing the name of its U.S. operations to “Voltswagen of America” that turned out to be an April Fools’ Day stunt.Der Spiegel reported on Thursday that the SEC was investigating whether the ill-advised prank affected the stock price of the automaker, which apologized for the early April Fool’s joke and said it was intended to publicize its electric vehicle efforts.Former SEC chief economist, Chester Spatt, at the time of the prank told Yahoo Finance that the SEC would likely decide whether to launch a probe based on whether it concluded that Volkswagen executives intended to move the company’s stock price.“What was the motive? Were they trying to signal that they’re going to be seriously electric?” he said the agency would ask. “I think if it did, the Commission won’t be very happy and probably would pursue it. If the SEC just sees it as an April Fools’ joke it’s probably not going to get so much traction. Although, obviously, securities disclosures are supposed to be serious stuff.”A Volkswagen logo sign is seen inside the lobby of the U.S. headquarters building of Volkswagen Group of America in Herndon, Virginia, September 18, 2008. REUTERS/Larry Downing (UNITED STATES)The next step to bring an action against Volkswagen would depend, in part, on the SEC’s evaluation of whether the fake announcement confused investors into thinking it was true. One issue that could work against the company in that regard, he said, is that its fake press release was issued on March 29, several days before April 1, which failed to tip off reporters who typically look out for hoaxes.“I think it does undercut, a little bit, the nature of securities disclosure, because if you see some disclosure that looks a little bit outlandish, you have to kind of wonder: Is this true? Or is this April Fool’s? And that would be a reason to bring some sort of action,” Spatt said. “It’s a little bit outside the bounds of April 1st humor, and therefore has more potential to be misleading to investors, and that is a concern. And that should be a concern of the staff.”Story continuesOther potential problems for Volkswagen, Spatt added, are the “full fledged” nature of its false press release, and the company’s possible appearance as a repeat offender when it comes to misleading the public.In 2017, executives of its German entity, Volkswagen AG, reached a settlement with the U.S. Justice Department, agreeing to plead guilty to criminal and civil charges over a conspiracy to cheat U.S. emissions tests, and pay $4.3 billion in penalties. A federal lawsuit by the SEC remains pending in California, alleging that Volkswagen lied to investors about the emissions cover-up.On Thursday, Der Spiegel reported that the SEC investigation was in its early stages. Yahoo Finance reached out to the SEC and Volkswagen and will update this post with any responses it receives.Read more:Coinbase customers with hacked accounts get no justice from ‘horrible’ US laws: Fintech lawyerSquare’s Cash App vulnerable to hackers, customers claim: ‘They’re completely ghosting you’Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn,YouTube, and reddit.

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Thursday, April 29, 2021

On March 8, 2021, the Depository Trust Company (“DTC”), the Fixed Income Clearing Corporation (“FICC”), and the National Securities Clearing Corporation (“NSCC”) (each a “Clearing Agency” and collectively the “Clearing Agencies”) filed with the U.S. Securities and Exchange Commission (“SEC”) a proposal to amend the investment policy for each Clearing Agency. The Clearing Agencies investment policy is regulated by the SEC pursuant to Rule 19-4 adopted under Section 19(b)(1) of the Securities Exchange Act of 1934, as amended. The proposal was published in the Federal Register on March 16, 2021. No comments were received, so on April 16, 2021, the SEC approved the proposed policy change.
Proposed Rule Change to Clearing Agency Investment Policy
Clearing agencies (not the defined term) are financial service entities that undertake a variety of services as “middle persons” in the trading of securities. They serve as central counterparties (“CCP’s”) in transactions AND as central securities depositories (“CSD”). Some seven clearing agencies are registered with the SEC and at least another five are not registered, as they have been granted exemptions from registration by the SEC. The concept of clearing agencies arose in the late 1960s as Wall Street “choked” on the back office problems of the major firms, where records were kept in pen and paper and stock transfers were affected by the exchange of physical certificates. As trading volume surged (from 5 million shares) to 15 million shares in 1968, the “back office” mess became unsupportable.
In 1968, the New York Stock Exchange established the “Central Certificate Service” to replace physical certificate exchange for electronic, centralized records. This transformation saved the Wall Street firms from choking on their own paperwork. By 1973, the Depository Trust Company had been created to allow “book-entry” changes. Now, it settles some 10 trillion transactions in securities each year from all over the world, including American Depository Receipts, stocks, and bonds. In 1976, the NSCC was established to clear, settle, and police almost all broker-to-broker trades. Finally, FICC, created in 2003, provides clearing for fixed income securities including corporate issues, Treasuries, and mortgage-backed securities.
In 1999, the Depository Trust & Transfer Corporation (“DTTC”) was established as a holding company for each of the three Clearing Agencies. DTTC settles the vast majority of all securities transactions in the United States and many of those transactions throughout the rest of the world. At the same time, the FICC has a Government Securities Division (“GSD”) whose regulatory positions are not necessarily congruent with those of the FICC. The FICC has long sought to bring its regulations into harmony with those of the GSD.
Tightening the Reins
Now, as part of an effort to reduce risk and also to increase regulatory harmony, the Closing Agencies proposed amendments to their Investment Policy. The SEC Release notes that the Investment Policy “would adhere to a conservative investment philosophy, that places the highest priority on maximizing liquidity and avoiding risk.” The Policy is derived from the 2016 investment “Framework.” The Policy focuses primarily on bank deposits, which until this proposal had been based on the “bank deposit investment limits …determined based on the bank’s counterparty’s external credit rating.” The new proposal would also include “a consideration of the size of the bank counterparty, measured as the total shareholders’ equity capital.” Under the new methodology, the investment limit for a bank deposit is to take into account the counterparty’s credit rating AND be the lower of a percentage of total shareholders’ equity capital OR the applicable dollar value as determined under the Investment Policy. This change takes “into account the size of a counterparty in setting investment limits.”
This new limit “would help the Clearing Agencies … cap their exposure to smaller counterparties, measured by their shareholder equity capital.” Accordingly, the SEC expressed its belief that the proposed changes:
…are reasonably designed to help safeguard the Clearing Agencies’ own and their participants’ assets in instruments with minimal credit, market, and liquidity risks.

And so the reins on this thoroughbred remains “unsettled,” but Derby Day is coming, and Essential Quality may prevail over Hot Rod Charlie.

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The U.S. Securities and Exchange Commission has reached a $137K settlement with a Missouri attorney they allege misrepresented how he was going to use investments in two entities he incorporated purportedly to launch a medical marijuana business, the agency announced.
Photo Credit: Shutterstock
The SEC said Corbyn W. Jones, of Kansas City, agreed to disgorge $82,700 with prejudgment of interest of $3,950, and to pay a $50,000 civil penalty after the SEC sued him in Missouri federal court over his alleged misappropriation and use of investor funds for personal expenses.
According to the SEC’s investigation, Jones co-founded two companies in 2019: Strayne Holdings LLC and 1107 Property Management LLC. After Missouri legalized medical marijuana in November 2018, the SEC saw a boost in submitted business plans related to the cultivation, manufacturing and dispensing of medicinal marijuana.
Jones quickly began soliciting investors, and between February 2019 and January 2020 he secured more than $650,000 from investors across two states, the SEC claims. Jones made oral misrepresentations and provided written offering materials to the investors that claimed Strayne and 1107 Property Management would use investor funds for “various operational expenses.”
In addition to the salary he informed investors he would collect, Jones was found to have used an extra, undisclosed $83,000 on personal expenses between March 2019, and January 2020, according to the SEC.
Jones is CEO of both businesses and indirectly owns a 42% stake in each of them, the SEC said. The federal regulator accused the attorney of violating antifraud , including Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Although an agreement was reached, Jones neither admitted to nor denied the SEC’s claims. As part of the settlement, he agreed to a permanent injunctive relief, an order prohibiting him from serving as an officer or director of any public company, amongst other conditions.
Read more articles from Haute Lawyer, visit https://hauteliving.com/hautelawyer/
Source: https://www.law360.

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Luke La Rocca, left, and Merhnaz Jalali, right, with Cozen O’Connor. Courtesy photos
Once considered an afterthought, environmental, social and governance (ESG) issues have steadily gained momentum in recent years becoming a key component in many of the world’s largest companies’ strategies and a popular metric by which potential investors evaluate investment opportunities.It is no coincidence that the ESG phenomenon has also garnered the attention of the Securities and Exchange Commission (SEC). While the SEC has faced criticism for its failure to compel ESG specific disclosures as no new rule-making has been issued just yet, the agency has sent clear signals over the last few months to public companies and investors about its commitment to disclosures of ESG matters.

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By Tom Wilson2 Min ReadLONDON (Reuters) – China’s planned digital yuan will not dethrone the dollar, a top Securities and Exchange Commission official said on Thursday, citing the growth of so-called stablecoins backed by the greenback.FILE PHOTO: Commissioner Hester Peirce participates in a U.S Securities and Exchange Commission open meeting to propose changing its decades-old definition of an “accredited investor” in order to allow more Americans to buy shares in private companies, in Washington, U.S., December 18, 2019. REUTERS/Erin ScottThe world’s biggest central banks, including the People’s Bank of China and U.S. Federal Reserve, are stepping up work on issuing digital cash, eyeing improvements to payment systems and looking to pre-empt the rise of cryptocurrencies.The PBOC’s work on a digital yuan – part of a push to internationalise the currency and reduced its – is far ahead of similar initiatives in other major economies.That has led some analysts to question if the faster pace from the globe’s second largest economy could lead the yuan to gain dominance over the dollar, which remains the world’s dominant reserve currency.Yet Hester Peirce, a Republican commissioner at the SEC, said the rise of stablecoins – privately issued cryptocurrencies often backed by the dollar – would maintain the U.S. currency’s status.“Even in 2021, there’s been a tremendous growth in stablecoins – these are essentially private digital dollars,” she said. “That, effectively, may be our answer to the Chinese CBDC (central bank digital currency). It may be just private stablecoins.”“If they’re dollar-backed then I think that the dollar will still be quite relevant,” said Peirce during a digital currency event.Federal Reserve Chair Jerome Powell said on Wednesday China’s digital yuan plans would not push the Fed to rush its own digital dollar plans, emphasising that its primary goal was not speed to market but to avoid any misstep in digitising the dollar.Stablecoins are a fraction of the size of bitcoin, the largest cryptocurrency.The biggest, Tether, has a market capitalisation of about $51 billion, compared to bitcoin’s $1 trillion. Like bitcoin, it is still little used in commerce.

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MENLO PARK, Calif., April 29, 2021 /PRNewswire/ — Today, Lex Machina and LexisNexis release their annual Securities Litigation Report looking at securities litigation trends in federal district court. It focuses on the three-year period of 2018 to 2020 and includes looks at emerging trends in cryptocurrency cases and the impact of COVID-19.
“The data revealed that in 2020, there was a continuation of the steady increase in securities case filings – and shareholder derivative suits – we’ve seen over the past three years. This could be a result of event-driven litigation, including pandemic-driven litigation, pushing shareholders to file securities cases,” said Laura Hopkins, Lex Machina’s Securities Legal Data Expert and author of the report. “This is unexpected, given the slow down many courts experienced in 2020 due to the pandemic.”
Findings from the report include:

Yearly securities case filings as a whole, and shareholder derivative cases in particular, have increased steadily since 2016, reaching a total of 2,159 securities cases filed in 2020 (an 89% increase since 2016).
Cases involving cryptocurrencies sharply increased since 2016, with 113 filed in 2020.
Over the last three years, the most securities cases were filed in the Southern District of New York (1,294 cases); however, Judge Stark, from the District of Delaware, heard the highest number of securities cases (242 cases). The top four most active judges were in the District of Delaware.
The Securities and Exchange Commission (the “SEC”) appeared as the plaintiff in 760 cases over the last three years. The most active defendants in securities cases over the last three years were banks and financial institutions, with J.P. Morgan Securities LLC appearing as the defendant in the most cases (63 cases) over the same time period.
Over the past three years, the Securities and Exchange Commission topped the most active plaintiffs’ firms with 710 securities cases filed, followed by Rigrodsky Law with 534 cases. Skadden, Arps, Slate, Meagher & Flom appeared most often on behalf of defendants in securities cases filed over the last three years, with 172 cases.
The total damages awarded increased from nearly $4.0 billion to $4.2 billion between 2019 and 2020. The securities case with the largest amount of damages awarded in 2020 was Securities and Exchange Commission v. Telegram Group Inc. et al, with $1.2 billion in disgorgement damages and $18.5 million in SEC/CFTC Penalties on consent judgment.

Lex Machina’s reports and software enable practitioners to devise data-driven litigation strategies. The metrics in this report may help readers decide who to pursue as clients, whether to pursue a particular motion, or when to settle. This research supplements traditional legal research and anecdotal data for a competitive edge in litigation.
Register here for a copy of the report: https://pages.lexmachina.com/2021_Securities-Report-LP.html
Securities Report WebcastLex Machina is hosting a webcast to discuss the report on April 29, 2021 at noon ET/9am PT with Susan Saltzstein (Partner and Co-Deputy of Skadden’s nationwide Securities Litigation Group), Jonathan Schorr (Managing Director and Senior Counsel in the Litigation and Regulatory Proceedings Group at Goldman Sachs), Laura Hopkins (Legal Data Expert at Lex Machina and report author), and Gloria Huang (Legal Content Associate at Lex Machina). Register for the event or view a recording: https://pages.lexmachina.com/SecuritiesLitigationReportWebcastApril2021_LP.html
About LexisNexis Legal & ProfessionalLexisNexis Legal & Professional is a leading global provider of legal, regulatory and business information and analytics that help customers increase productivity, improve decision-making and outcomes, and advance the rule of law around the world. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis® and Nexis® services. LexisNexis Legal & Professional, which serves customers in more than 160 countries with 10,400 employees worldwide, is part of RELX, a global provider of information-based analytics and decision tools for professional and business customers.
About Lex MachinaLex Machina fundamentally changes how companies and law firms compete in the business and practice of law. The company provides strategic insights on judges, lawyers, law firms, parties, and other critical information across 17 federal practice areas and a rapidly growing number of state courts. Lex Machina allows law firms and companies to predict the behaviors and outcomes that different legal strategies will produce, enabling them to win cases and close business.
Lex Machina was named “2021 Legal Technology Trailblazer” (National Law Journal Trailblazer Awards, 2021), Winner of the “Media Excellence” Award for Analytics/Big Data (13th Annual Media Excellence Award, 2021), “Best Decision Management Solution” (AI Breakthrough Awards, 2019), and “Disruptor of the Year” (Changing Lawyer Awards, 2019). Based in Silicon Valley, Lex Machina is part of LexisNexis, a leading global provider of legal, regulatory, and business information and analytics. For more information, please visit www.lexmachina.com.
Media Contact:Candice Stokes
[email protected]
(706) 718-1143
SOURCE Lex Machina

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The US Securities and Exchange Commission (SEC) has charged the owner of an investment adviser firm with fraudulently raising and misappropriating more than $38 million from approximately 90 investors from the sale of limited partnership interests in a private fund.
According to the SEC’s complaint, Andrew Franzone defrauded investors by making misrepresentations regarding the strategy and investments of a private fund called FF Fund I LP. The regulator alleges Franzone misappropriated fund assets, failed to eliminate or disclose conflicts of interest, and falsely represented the fund would be audited annually. Franzone allegedly told potential and existing investors that his investment strategy for the fund was to maintain a highly liquid portfolio that was mainly focused on options and preferred stock trading.
However, the SEC alleges that in reality Franzone began to invest in highly illiquid investments such as private startups, early-stage companies, and real estate ventures, some of which were launched by Franzone’s friends and associates. The SEC said that despite the change in investment strategy Franzone continued to promote the fund as a primarily liquid investment.
The complaint also alleges multiple conflicts of interests, such as Franzone taking personal loans from the founders of at least two companies in which the fund invested, and pledging fund assets to secure other loans for his own personal benefit.  
The SEC also alleges Franzone misappropriated fund assets for personal expenses, including using $565,000 of FF Fund’s cash to purchase a private airplane hangar to store his personal race car collection.
In late September 2019, FF Fund filed for Chapter 11 bankruptcy and, according to the chief restructuring officer appointed in the bankruptcy, the fund entered bankruptcy holding no liquid securities other than four hedge fund investments that were liquidated for a total of $175,000. The majority of FF Fund’s investments, according to the complaint, were illiquid, non-tradeable, privately held shares in early stage or startup companies, minority interests in real estate partnerships, or unsecured promissory notes with long-term maturities.
The SEC’s complaint, filed in federal court in Manhattan, charges Franzone and FFM with violating the antifraud provisions of the federal securities laws and seeks disgorgement of ill-gotten gains, civil penalties, and permanent and conduct-based injunctive relief.
In a parallel action, the US Attorney’s Office for the Southern District of New York also filed criminal charges against Franzone and arrested him.
“Andrew Franzone allegedly promised his clients access to his successful liquid trading strategy and consistent, positive trading returns. As alleged, those promises were lies,” Audrey Strauss, the US attorney for the Southern District of New York, said in a statement. “Franzone lied about his fund’s investments and performance, and he lied in promising clients that they had could readily access their invested capital.”
Franzone, 44, of Fort Lauderdale, Florida, was charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which also carries a maximum sentence of 20 years in prison.

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