The Securities and Exchange Commission maintained a high level of enforcement actions last year despite the pandemic, but activity fell to record lows at the Public Company Accounting Oversight Board.
A report released Tuesday by Cornerstone Research found accounting- and auditing-related enforcement by the SEC remained strong in 2020, but the opposite was the case at the PCAOB. The SEC and PCAOB publicly disclosed 63 accounting and auditing enforcement actions last year, but nearly 80 percent of those were initiated by the SEC. While SEC enforcement actions did decline substantially in the first quarter of 2020 in the early days of the pandemic, it rebounded afterward. On the other hand, finalized PCAOB actions never returned to pre-pandemic levels.
The PCAOB had been going through a tumultuous period even before the pandemic broke out, with a changing set of board members and top officials replacing many of the longtime employees after Chairman William Duhnke took the helm in 2018. Under his leadership, the PCAOB has also been overhauling its inspection process and agenda.

The SEC has also gone through changes, especially this year with the new Biden administration. Chairman Jay Clayton departed at the end of 2020 and was succeeded initially by SEC commissioner Allison Herren Lee as acting chair, and more recently by Gary Gensler, who was confirmed by the Senate this month.

Securities and Exchange Commission headquarters in Washington, D.C.
Joshua Roberts/Bloomberg

There was a slight decline in enforcement actions last year at the SEC. The commission initiated 50 enforcement actions involving accounting or auditing allegations in 2020, compared to 58 in 2019. The total number of respondents declined from 76 to 70. Most of the SEC actions last year involved SEC registrants and related individuals.
“After a steep decline in SEC accounting and enforcement activity in the first quarter of 2020, activity ramped up for the remainder of the year,” said report co-author Elaine Harwood, who is a senior vice president and head of the accounting practice at Cornerstone, in a statement. “Accounting issues remained at the forefront of SEC enforcement, increasing by 10 percent compared to 2019.”
Nearly all the SEC settlements came after a Supreme Court ruling last year in the case of Liu v. SEC, which authorized the commission to seek disgorgement as an equitable remedy. “After that ruling, the average disgorgement was nine times larger than the average disgorgement imposed against firms earlier in the year,” said Simona Mola, a senior manager at Cornerstone Research who co-authored the report, in a statement.
Of the 50 actions brought by the SEC in 2020, approximately one-third alleged revenue recognition violations, while more than half of them alleged violations related to a company’s internal control over financial reporting. The SEC initiated 46 accounting and auditing actions last year as administrative proceedings, accounting for 92 percent of its actions. Only four were civil actions, and all but one of them were resolved by the end of the year. The percentage of non-U.S. actions brought by the SEC was lower in 2020 at 14 percent, compared to 17 percent in 2019, but that was basically in line with the 2015–2019 average.
Slowdown at the PCAOB
As for the PCAOB, the board disclosed 13 audit-related actions in 2020, but that was just over half the number initiated in 2019. Similar declines were seen in the number of respondents, which fell from 40 to 27. Nearly two-thirds of the PCAOB actions last year involved a firm and at least one individual auditor.
“The PCAOB also saw a steep decline in auditing enforcement during the first quarter of 2020, remaining below pre-pandemic levels throughout the year,” said Alison Forman, a principal at Cornerstone Research who also co-authored the report, in a statement. “The PCAOB finalized fewer actions in each quarter of 2020 than the corresponding quarter in each of the last three years, and PCAOB enforcement activity for 2020 as a whole was the lowest of any year since we have been reporting on the data.”
The PCAOB defended its approach. “The board’s strategic approach is to prevent audit violations from occurring in the first place, which if we do effectively, will naturally lead to fewer enforcement cases,” said PCAOB spokesperson Jackie Cottrell. “That’s a good thing for audit quality and investors. We continue, of course, to prioritize and pursue vigorously cases involving violations of PCAOB standards, PCAOB rules, and related securities laws. Our investigative pipeline remains consistent with prior years.”
The percentage of board actions in 2020 involving restatements and/or material weaknesses in internal control was 38 percent, which was more than double the 2015–2019 average. Only one PCAOB action involved revenue recognition.
The proportion of PCAOB actions involving non-U.S. respondents in 2020 was only 8 percent, a significant decrease from 29 percent in 2019. In 2020, for the second year in a row, the board didn’t disclose any actions pertaining to audits of broker-dealers. In the previous four years, actions involving auditors and audit firms of broker-dealers made up close to 30 percent of all actions on average.
There were some similarities with both the SEC and PCAOB last year in terms of penalties and settlements, as both of them imposed monetary penalties against around three-fourths of respondents. The settlements totaled more than $1.4 billion in 2020. Total monetary settlements in SEC actions increased in 2020, but the median settlement fell from $4.1 million in 2019 to $3.4 million in 2020.

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Cynthia M. Mabry and Stacey H. Mitchell are partners at Akin Gump. Courtesy photos
Acting Securities and Exchange Commission Chair Allison Herren Lee issued a statement Feb. 24 directing the Division of Corporation Finance to “enhance its focus on climate-related disclosure in public company filings.” While it’s not clear how far or how fast Lee’s changes to the SEC’s 2010 interpretative guidance to public companies regarding existing SEC disclosure requirements as they apply to climate change matters will go, companies should remain vigilant for changes to their disclosure requirements and prepare for further scrutiny.
Texas Lawyer spoke recently about the likelihood of increased complexities and costs associated with changes to the SEC’s 2010 interpretive guidance with Cynthia M. Mabry, a partner in the corporate practice at Akin Gump Strauss Hauer & Feld and co-leader of its climate change practice; and Stacey H. Mitchell, a partner in the environment and natural resources practice at Akin Gump and co-leader of its ESG and climate change practices.

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The confirmation on April 14 of Gary Gensler as chairman of the Securities and Exchange Commission has fueled worries that increased regulation of cryptocurrencies would hurt trading volumes and prices and stifle innovation in the nascent segment, and prompt industry participants to flee to less stringent jurisdictions. However, those fears are unfounded, and tighter regulation could purge the industry of bad actors and engender trust, which in turn would help it grow, according to Brian Feinstein and Kevin Werbach, Wharton professors of legal studies and business ethics.
The day of Gensler’s confirmation coincided with the $85 billion IPO of Coinbase, the largest cryptocurrency trading platform in the U.S. The Coinbase IPO was “a watershed moment for an industry that began a decade ago as an experiment in digital money,” according to The Wall Street Journal. Cryptocurrencies will be high on Gensler’s agenda. He had described them as “catalysts for change” in his confirmation hearings, but also said they raise “new issues of investor protection.” In the least, he promised that the SEC would provide “guidance and clarity” on regulating the cryptocurrency market.
“With the confirmation of a new SEC chair who has his eye on cryptocurrency, we can expect the imposition of securities law framework onto cryptocurrencies in the U.S. and new investor protection measures,” Feinstein said in an interview on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast above.)

A Wall Street Journal editorial titled “The SEC’s Cryptocurrency Confusion” echoed the concerns raised by critics who are worried about regulatory overreach, stating that “regulators are creating danger for currency developers and retail investors” in the cryptocurrency market, the size of which it estimated at $2 trillion in market capitalization.
Cryptocurrency regulation is clearly evolving. Former SEC Chairman Jay Clayton had stated in 2019 and 2020 that bitcoin and ether (a cryptocurrency of the Ethereum blockchain network) are not securities, thereby exempting them from regulations governing securities markets, although no formal rules about their exemption have been established, according to the Journal editorial. A day before Gensler’s confirmation, SEC commissioner Hester Peirce released a proposal for discussion that seeks to provide digital currencies a three-year exemption from most securities regulations while they develop their networks.
“With all this interest among regulators, crypto proponents fear that new regulation will spook market participants and drive down the price [and volumes] of cryptocurrencies and drive all of that trading activity offshore,” said Feinstein. “And that other countries will reap the benefits of the trading, while the risks are still imposed on a global level.”
Not Spooked by Regulation
Feinstein and Werbach put those concerns to the test and examined if price declines follow cryptocurrency regulation in a country. “The answer there is, ‘Almost always not,’” said Feinstein. That finding was the result of an exhaustive study by Feinstein and Werbach of trading activity at several exchanges worldwide following key cryptocurrency regulatory announcements.

Their study found “almost entirely null results,” they wrote in an article published April 25 in the Journal of Financial Regulation. “From the creation of bespoke licensing regimes to targeted anti-money laundering and anti-fraud enforcement actions, as well as many other categories of government activities, we found no systemic evidence that regulatory measures cause traders to flee, or enter, the affected jurisdictions.” Their findings “at last provide an empirical basis” for regulation of cryptocurrency trading, they added.
“Crypto enthusiasts assert that limited regulation encourages trading on domestic exchanges and thus attracts development activity around a promising frontier technology, while unfavorable regulations will cause trading to move offshore,” Feinstein and Werbach wrote in a recent opinion piece in The New York Times. “But that wasn’t the case in multiple countries, including the U.S., that are home to large and active cryptocurrency exchanges. Despite concern from some in finance that strong regulations would dampen enthusiasm for crypto or push trading to more laissez-faire countries, we found few hints of price movement around regulatory events and no evidence of capital flight.”

“When a country imposes a new restriction, we don’t see crypto traders fleeing that jurisdiction for more permissive countries.” –Brian Feinstein

For sure, the cryptocurrency market takes a hit when regulators crack down on illegal activities. “When countries enact anti-money laundering measures, we can see price declines, and that’s obvious to the extent that people using cryptocurrencies for illicit reasons are trading them,” said Feinstein. “But across all the other categories of regulation — think tax treatments, securities law treatments, cyber security and anti-fraud measures — none of that affects price [or] trading volume. So when a country imposes a new restriction, we don’t see crypto traders fleeing that jurisdiction for more permissive countries.”
Regulators also help temper cryptocurrency prices when they purge the market of illegal activities and thereby provide a safer environment for genuine investors. “[With regulation], a group of bad actors — people who are interested in using cryptocurrencies for money laundering and other sorts of illegal activities — would be spooked,” said Feinstein.
“But another group of investors is getting more and more prominent, and they are legitimate investors, from day traders to major investment firms,” he continued. “Those investors get more comfortable with cryptocurrencies, as its regulation drives out some of those bad actors.”
The valuation of Coinbase is an example of how regulation can inspire confidence, Feinstein said. (The share price of Coinbase has dropped since its IPO, taking its market capitalization down from $85 billion to $60 billion, but investor sentiment continues to be strong.) “[That valuation] is possible in part because they operate in the U.S., so investors are confident that their trades on Coinbase are subject to U.S. regulation, which tends to be quite strong,” he added. “With anti-fraud and cybersecurity measures, investors can be assured that trades on a U.S.-based exchange are more secure and safer than on some other jurisdiction’s exchanges.”
Shape of Things to Come
Feinstein said he expected to see “a divergence” between the U.S. and some other countries in how they approach cryptocurrency regulation. “Across the globe you see increased regulatory interests following increased investor interests,” he noted. “You’ll see Western countries moving towards more traditional securities regulation and other authoritarian countries banning private cryptocurrencies to try to create their own surveilled central bank cryptocurrency.”

“Across the globe you see increased regulatory interests following increased investor interests.” –Brian Feinstein

“The U.S. seems to be moving forward towards creating smart regulations that build trust. They’re focused on cybersecurity, anti-fraud, and other investor protection measures as you see with traditional securities,” Feinstein continued. “Another group of countries led by China and Turkey sees cryptocurrency as a strategic threat.”
China has in recent years banned cryptocurrency-based fundraising and trading, but is now developing its own digital currency. “They can see at a granular level what people are buying if they are using a currency that’s on the blockchain and controlled by the central government,” said Feinstein. Earlier this month, Turkey moved to ban cryptocurrencies as currency traders fled the lira to bitcoin and other foreign currencies.
Cryptocurrency traders left China for other markets after it imposed restrictions, but that did not affect prices or volumes at a global level, Feinstein continued. “Part of that lukewarm reaction to the ban is that it’s relatively easy for people in China to get around that ban by using VPNs (virtual private networks that mask user locations) and other kinds of spoofing techniques.”
In some cases, state regulators are taking the lead in protecting cryptocurrency investors, Feinstein said. He pointed to the recent investigation and punitive actions by the New York Attorney General into Tether, a cryptocurrency trading platform. “New York recognizes how having regulations that facilitate cryptocurrency trading and encourage exchanges to locate in its state can have real positive spillovers for its economy.” To build on their relationship with regulators, cryptocurrency firms and markets ought to focus on the fundamental issues such as ethical conduct, he noted.
Feinstein had some advice for regulators on how they could approach cryptocurrencies. “First, they shouldn’t worry that their actions will drive offshoring of [cryptocurrency] activity,” he said. “Instead, they should be focused on regulations that increase investor trust in their jurisdictions.

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Jonathan Ernst/Reuters

The SEC obtained an asset freeze to stop an alleged Ponzi scheme involving Florida resident Jonathan P. Maroney.
The US regulator alleges Maroney’s Harbor City Capital raised at least $17.1 million from more than 100 investors in a series of fraudulent securities offerings.
Maroney misappropriated funds to purchase a waterfront property and Mercedes Benz, the SEC said.
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The US Securities and Exchange Commission announced Monday it had filed an emergency action and obtained an asset freeze to stop an alleged Ponzi scheme involving Florida resident Jonathan P. Maroney.
According to the SEC’s complaint, Maroney and his companies raised at least $17.1 million from more than 100 investors in a series of fraudulent securities offerings.For at least five years, Maroney’s companies, including Harbor City Capital Corp, promised investors annual returns of 10%-60%, the SEC said. Maroney’s companies told investors their funds would be used to finance his “customer lead generation campaigns” and reselling the leads to other businesses would bring in cash.
However, most of the funds Maroney’s companies took in didn’t go into the businesses. The complaint says Maroney misappropriated at least $4.8 million of the funds to purchase a waterfront property, a Mercedes Benz, and pay his credit card bills.
The complaint also alleges Maroney fraudulently used investor funds to make payouts to other investors in a classic Ponzi scheme.

“As alleged in our complaint, Maroney lured investors with promises of double-digit returns and false claims, while pocketing millions of investor dollars for himself,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Investors should be skeptical of any investment that promises extraordinarily high rates of return.”
According to the complaint, Maroney solicited investors primarily through Harbor City’s website and through videos he posted on Youtube. He also told investors he was a “seasoned business growth strategist” but did not disclose to investors that securities regulators in Alabama issued an administrative cease-and-desist order against him for selling unregistered securities in June 2020.
Harbor City did not immediately respond to Insider’s request for comments.

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Advertisement

Tuesday, April 27, 2021

One of the priorities announced in the 2021 Examination Priorities Report of the U.S. Securities and Exchange Commission’s Division of Examinations (“EXAMS”) is a review of robo-advisory firms that build client portfolios with exchange-traded funds (“ETF’s”) and mutual funds. EXAMS notes that these clients are almost entirely retail investors without investments large enough to support the costs of regular human investment advisers. EXAMS sees that the risks involved in these robo-advisor accounts pose particular issues, that retail clients may well not recognize.
Law of Robotics
Accordingly, it may help to reflect on the Laws of Robotics invented by that science fiction author Isaac Asimov (for “I Robot,” a short story in his 1950 collection), particularly the First Law:
A robot may not injure a human being or, through inaction, allow a human being to come to harm.

This “policy” undergirds the 2021 Examination Priorities Report’s focus on robo-advisors. EXAMS notes the following as matters of particular concern:
Investors may not understand the risks associated with specific investments; the risk profiles of mutual funds and of ETF’s vary widely, from diversified to concentrated, from simple to complex strategies. Robo-advisors have a fiduciary duty to provide adequate disclosure to investors and to insure that the information is understood.

Funds used in client accounts may not be suitable for the investor, again the robo-advisor has a fiduciary duty to know a client’s particular financial situation and investment goals. EXAMS notes that it will be checking on the bases for selecting investments, especially when niche or leveraged/inverse ETF’s are involved.

Full disclosure of any conflicts of interest are mandatory, noting the continuing enforcement actions for abuses in mutual fund investments involving higher cost fund shares.

The SEC Evaluates
Now is the time for compliance personnel to review all of the account opening documentation to ensure that relevant information about a client’s financial condition, investment objective, and time horizons are captured. Further, the firm brochure and websites should be carefully scrutinized to ensure that disclosures are written in plain English AND are robust. Then compliance personnel should review the process by which investments are recommended to ensure it adequately takes into account the client’s risk tolerance and investment objectives, and to be able to confirm that a recommended investment aligns with those factors, all of which should be documented.
The 2021 Examination Priorities Report makes clear that the Law invented by Isaac Asimov some 70 years ago equally applies to robo-advisory firms.

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©2021 Norris McLaughlin P.A.

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By MARK GILLISPIE, Associated Press
CLEVELAND — The failure of an Ohio-based electric truck startup to pay $570,000 in real estate taxes due in early March is yet another troubling sign for a company that has been barraged by bad news this year.
Lordstown Motors Corp. stock has plummeted from nearly $31 a share on Feb. 11 to just over $10 on Tuesday in the wake of a U.S. Securities and Exchange Commission inquiry and the filing of four potential class-action lawsuits by investors who claim they have been defrauded.
The company appeared to be primed for success last June during a showcase event at the massive former GM plant outside Youngstown, Ohio. Then-Vice President Mike Pence sat in the passenger seat of an Endurance prototype as it rolled onto a stage to hearty applause. Noisy, colorfully lit robots building nothing gyrated nearby.
The first drip of bad news came in January when an Endurance pickup truck prototype caught fire 10 minutes into its initial test drive in Michigan. A company spokesperson issued a statement afterward saying, “No one was hurt, and like all of our test findings, we do it to create a great product.”
The company did not respond Tuesday to an emailed request for comment about the unpaid taxes, initially reported by the Tribune Chronicle in Warren. Lordstown Motors also owes a 10% late-payment penalty of around $57,000.
Company officials announced in January it had received more than 100,000 pre-orders for the Endurance and production was scheduled to begin this September, which critics claim is untrue.
Lordstown Motors CEO Steve Burns acknowledged during an earnings call in March that the SEC was conducting an inquiry based on a lengthy and hyper-critical report by the investment firm Hindenburg Research, which holds a short position on Lordstown Motors stock.
The shareholder lawsuits filed in federal court in Youngstown are largely based on the Hindenburg Research report, which says Lordstown Motors has “no revenue and no sellable product” and has “misled investors on both its demand and production capabilities.”
The report and lawsuits say production of the Endurance is three to four years away based on information provided by a former employee.
Investors, business partners and former employees contend “the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” one of the lawsuits claims.
A $735 million deal for 14,000 trucks the company announced earlier this year involved a purported buyer that doesn’t operate a vehicle fleet and is based out of a small apartment building in Texas, according to the Hindenburg report.

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WOODSIDE, Calif.–(BUSINESS WIRE)–Apr 27, 2021–

Rodgers Silicon Valley Acquisition Corporation (the “Company”) announced today that, as the result of the U.S. Securities and Exchange Commission’s (“SEC’s”) recent Staff Statement, released on April 12, 2021 relating to the accounting treatment of certain warrants issued by special purpose acquisition companies (“SPACs”), the Company has completed an analysis of the effect of the SEC’s guidance on the accounting treatment of its warrants.

The Company’s conclusion based upon the SEC’s recent guidance has resulted in a corrective disclosure, approved by its auditor, Marcum LLP (“Marcum”). This disclosure is described on Form-8K (“the Filing”) filed today, and will result in a restatement of the Company’s Form-10K for the fiscal year ended 2020. Both the Company’s original Form-10K and restated Form-10KA were timely filed according to Nasdaq rules, and both received the approval of Marcum with respect to the then-current SEC guidance.

For a full description of the Company’s Warrants, please refer to the Company’s final prospectus filed in connection with its initial public offering (“IPO”) on December 1, 2020 (“Final Prospectus”).

The closing of the Company’s Initial Business Combination with Enovix Corporation remains planned for the second quarter of 2021. Upon closing, the company will be named Enovix Corporation and is expected to remain listed on the Nasdaq Stock Market under the new ticker symbol, “ENVX.”

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, 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.

Forward Looking Statements

This press release includes forward-looking statements that involve risks and uncertainties, including statements related to the Initial Business Combination. Forward looking statements are not historical facts and are based on the Company’s current expectations. Such forward- looking statements are subject to risks and uncertainties, including those risks described in more detail in the Company’s most recent Annual Report on Form 10-K and other documents on file with the SEC and available at the SEC’s website at www.sec.gov, which could cause actual results to differ materially from those anticipated in such forward looking statements. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based, except as required by law.

About Rodgers Silicon Valley Acquisition Corp.

Rodgers Silicon Valley Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. RSVAC’s mission is to provide fundamental public technology investors with early access to an excellent Silicon Valley technology company with a focus on green energy, electrification, storage, Smart Industry (IoT), Artificial Intelligence and the new automated-manufacturing wave. On February 22, 2021, RSVAC announced its Initial Business Combination with Enovix Corporation. For more information, go to www.rodgerscap.com.

CONTACT: The Blueshirt Group

Gary Dvorchak, CFA

Phone: (323) 240-5796

Email:[email protected]

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: OTHER MANUFACTURING TECHNOLOGY OTHER TECHNOLOGY PROFESSIONAL SERVICES SOFTWARE ALTERNATIVE ENERGY MANUFACTURING ENERGY HARDWARE OTHER PROFESSIONAL SERVICES

SOURCE: Rodgers Silicon Valley Acquisition Corporation

Copyright Business Wire 2021.

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TORONTO–(BUSINESS WIRE)–Apr 27, 2021–
Li-Cycle Corp. (“Li-Cycle” or “the Company”), an industry leader in lithium-ion battery resource recovery and the largest lithium-ion battery recycler in North America, today announced that it has launched The Green-Cycle Podcast, featuring the latest news, trends, and innovations in clean technology.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210427005336/en/

The Green-Cycle Podcast hosted by Lee Constable, a notable TV personality and professional science communicator, made its official debut today with its first episode discussing the importance of lithium-ion battery recycling and resource recovery with Li-Cycle’s Co-founders Ajay Kochhar and Tim Johnston. The Green-Cycle Podcast is easily accessible and listeners can find episodes on The Green-Cycle Podcast webpage, in the Podcasts section on Li-Cycle’s website and on platforms such as Apple Podcasts and Spotify.
“We are excited to launch our brand-new Green-Cycle podcast in celebration of Earth Month as part of our efforts to promote sustainability and showcase innovations in clean technology,” said Ajay Kochhar, President, CEO and Co-founder of Li-Cycle. “This will be a great platform for clean tech leaders to share their ideas and initiatives through discussions on how companies and people can make a truly positive impact on our environment.”
The Green-Cycle Podcast releases episodes monthly featuring a range of clean tech guests and experts. Inquiries into how to become a future guest are encouraged; those interested in becoming part of the conversation should reach out to: [email protected]
On February 16, 2021, Li-Cycle announced its entry into a definitive business combination agreement with Peridot Acquisition Corp. (NYSE: PDAC) (“Peridot”). Upon the closing of the business combination, which is expected in the second quarter of 2021, the combined company will be named Li-Cycle Holdings Corp. Li-Cycle intends to apply to list the common shares of the combined company on the New York Stock Exchange under the new ticker symbol, “LICY.”
ABOUT LI‑CYCLE CORP.
Li-Cycle is on a mission to leverage its innovative Spoke & Hub Technologies™ to provide a customer-centric, end-of-life solution for lithium-ion batteries, while creating a secondary supply of critical battery materials. Lithium-ion rechargeable batteries are increasingly powering our world in automotive, energy storage, consumer electronics, and other industrial and household applications. The world needs improved technology and supply chain innovations to better manage battery manufacturing waste and end-of-life batteries and to meet the rapidly growing demand for critical and scarce battery-grade raw materials through a closed-loop solution. For more information, please visit https://li-cycle.com/.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction involving Li-Cycle and Peridot, Newco has prepared and filed with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4 that includes both a prospectus of Newco and a proxy statement of Peridot (the “Proxy Statement/Prospectus”). Once effective, Peridot will mail the Proxy Statement/Prospectus to its shareholders and file other documents regarding the proposed transaction with the SEC. This communication is not a substitute for any proxy statement, registration statement, proxy statement/prospectus or other documents Peridot or Newco may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, ANY AMENDMENTS OR SUPPLEMENTS TO THE PROXY STATEMENT/PROSPECTUS, AND OTHER DOCUMENTS FILED BY PERIDOT OR NEWCO WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the Proxy Statement/Prospectus and other documents filed with the SEC by Peridot or Newco through the website maintained by the SEC at www.sec.gov.
Investors and securityholders will also be able to obtain free copies of the documents filed by Peridot and/or Newco with the SEC on Peridot’s website at www.peridotspac.com or by emailing [email protected].
PARTICIPANTS IN THE SOLICITATION
Li-Cycle, Peridot, Newco, and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed Business Combination. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection with the proposed Business Combination, including a description of their direct or indirect interests, by security holdings or otherwise, are set forth in the Proxy Statement/Prospectus. Information regarding the directors and executive officers of Peridot is contained in Peridot’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 26, 2021 and certain of its Current Reports filed on Form 8-K. These documents can be obtained free of charge from the sources indicated above.

NO OFFER OR SOLICITATION
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities of Li-Cycle, Peridot or Newco or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
CAUTION CONCERNING FORWARD‑LOOKING STATEMENTS
Certain statements contained in this communication may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed transaction involving Li-Cycle and Peridot and the ability to consummate the proposed transaction. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely”, “believe,” “estimate,” “project,” “intend,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: (i) the risk that the conditions to the closing of the proposed transaction are not satisfied, including the failure to timely or at all obtain shareholder approval for the proposed transaction or the failure to timely or at all obtain any required regulatory clearances, including under the Hart-Scott Rodino Antitrust Improvements Act; (ii) uncertainties as to the timing of the consummation of the proposed transaction and the ability of each of Li-Cycle and Peridot to consummate the proposed transaction; (iii) the possibility that other anticipated benefits of the proposed transaction will not be realized, and the anticipated tax treatment of the combination; (iv) the occurrence of any event that could give rise to termination of the proposed transaction; (v) the risk that stockholder litigation in connection with the proposed transaction or other settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; (vi) changes in general economic and/or industry specific conditions; (vii) possible disruptions from the proposed transaction that could harm Li-Cycle’s business; (viii) the ability of Li-Cycle to retain, attract and hire key personnel; (ix) potential adverse reactions or changes to relationships with customers, employees, suppliers or other parties resulting from the announcement or completion of the proposed transaction; (x) potential business uncertainty, including changes to existing business relationships, during the pendency of the proposed transaction that could affect Li-Cycle’s financial performance; (xi) legislative, regulatory and economic developments; (xii) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism, outbreak of war or hostilities and any epidemic, pandemic or disease outbreak (including COVID-19), as well as management’s response to any of the aforementioned factors; and (xiii) other risk factors as detailed from time to time in Peridot’s reports filed with the SEC, including Peridot’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Neither Li-Cycle nor Peridot can give any assurance that the conditions to the proposed transaction will be satisfied. Except as required by applicable law, neither Li-Cycle nor Peridot undertakes any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
View source version on businesswire.com:https://www.businesswire.com/news/home/20210427005336/en/
CONTACT: Investor Relations:[email protected]
Press:[email protected]
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: TECHNOLOGY ALTERNATIVE VEHICLES/FUELS AUTOMOTIVE GENERAL AUTOMOTIVE OTHER TECHNOLOGY ALTERNATIVE ENERGY ENERGY HARDWARE CONSUMER ELECTRONICS
SOURCE: Li-Cycle Corp.
Copyright Business Wire 2021.
PUB: 04/27/2021 07:00 AM/DISC: 04/27/2021 07:01 AM
http://www.businesswire.

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Earlier this month, the Securities and Exchange Commission’s Division of Examinations issued an expression of concern based on recent …

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The meteoric rise in the use of special purpose acquisition companies (SPACs)—with more than $98 billion raised in over 300 deals year-to-date alone—has prompted increased government scrutiny of, and civil litigation involving, SPACs and their sponsors, directors, officers, and affiliates. SPAC-related civil litigation is heating up in U.S. state and federal courts, and the Securities and Exchange Commission’s (SEC) commencement of an informal investigation into investment banks’ SPAC activities portends a more aggressive enforcement posture under incoming SEC leadership. This Legal Update examines the evolving regulatory landscape for SPACs and the potential for SEC enforcement in the SPAC market, details emerging trends and risks posed by SPAC-related litigation in state and federal courts, and offers practical guidance for SPAC market participants to mitigate the regulatory and litigation risk posed by such transactions.
I. Background on SPACs
SPACs are shell (or “blank check”) companies formed by a sponsor group to raise capital in an initial public offering (IPO) with the express purpose of using the proceeds to identify and acquire a yet-to-be-identified privately held target company. The sponsor group typically brings expertise and experience in the business or industry sector in which the SPAC will pursue a transaction. After filing a registration statement and navigating the IPO process with the SEC, a publicly traded SPAC has a specific period of time—typically 18 months to two years—to combine with a private company in what is commonly referred to as a “de-SPAC-ing” transaction. If a business combination is not consummated during the designated time period, the public investors’ money must be returned. In the event of a business combination with a target company, SPAC investors have the option of redeeming the common stock portion of their investment (they are allowed to keep the warrant portion of their investment) or becoming shareholders of the combined company.
II. SEC Enforcement Risk and the SPAC Regulatory Landscape
The SEC has recently signaled a renewed enforcement interest in SPACs, no doubt in large part due to significant deal volume, intense public interest in such deals, and instances of sharp post-acquisition SPAC share price declines. Last year, then-SEC Chairman Jay Clayton acknowledged that the SEC was examining the “incentives and compensation to the SPAC sponsors.”1 Earlier this year, SEC Commissioner Hester Peirce remarked that “[w]e should ensure SPACs are providing sufficient disclosures to enable informed investment decision-making at each stage.”2 The SEC’s regulatory efforts have also included publishing guidance on disclosure considerations related to conflicts of interest3 and disseminating investor alerts and bulletins to educate the public on the risks associated with investing in SPACs, particularly given the involvement of celebrities and athletes as SPAC sponsors or anchor investors.4
Notably, in March 2021, the SEC’s Division of Enforcement reportedly launched an informal investigation into the SPAC dealings of several Wall Street investment banks.5 According to news reports, the SEC requested information—on a voluntary basis, for now—regarding banks’ SPAC deal fees and volumes, as well as their compliance, reporting and internal controls functions related to such deals.6 In addition, SEC Chairman Gary Gensler reportedly hinted that heightened scrutiny of SPACs would be part of his enforcement agenda.7
Another sign of looming enforcement activity (and civil litigation) in the SPAC market came by way of an April 2021 public statement issued by John Coates, the acting director of the SEC’s Division of Corporate Finance.8 In his statement on SPACs, IPOs, and liability risk under the federal securities laws, Coates warned that SEC staff is “continuing to look carefully at filings and disclosures by SPACs and their targets” and cautioned that “[a]ny simple claim about reduced liability exposure for SPAC participants is overstated at best, and potentially seriously misleading at worst.” He challenged the prevailing notion that SPAC transactions, as compared with traditional IPOs, lessen securities law liability exposure for targets and the SPACs themselves, suggesting that the de-SPAC-ing transaction could be treated as the “real IPO” and subject to the “full panoply of federal securities law protections.” Coates also stressed that any material misstatements in or omissions from registration statements or proxy solicitations disclosed in connection with a SPAC IPO or de-SPAC-ing transaction may give rise to securities law violations.9
The SEC has brought SPAC-related enforcement actions in the past, most notably in 2019, when it settled securities fraud allegations that a SPAC CEO negligently failed to conduct appropriate due diligence on the target company, resulting in proxy statements containing false or misleading financial projections about the target company’s business prospects.10 In a related matter, last year, the SEC brought a civil action, now pending in the Southern District of New York, against the managers of the target company, alleging that they misled SPAC shareholders in connection with the merger.11 The civil action illustrates that the SEC may even seek to hold the target company’s management directly liable for securities fraud and proxy statement deficiencies when managers put their “reputation in issue” in proxy materials or other disclosures such that they owe a duty to SPAC shareholders.
In addition, insider trading investigations related to SPAC deals are likely on the horizon. SPAC-related insider trading risk stems from individuals with access to material non-public information, such as the SPAC’s likely merger targets, before the de-SPAC-ing transaction occurs. Since SPACs are publicly traded companies prior to the de-SPAC-ing transaction, any trading in SPAC shares on the basis of insider information regarding the proposed target company may violate insider trading laws. It is just a matter of time before the SEC, or even a federal prosecutor’s office, takes a crack at bringing an insider trading case related to a SPAC transaction in which insiders trade ahead of a transaction or are the source for a tippee who trades on material non-public information.
III. SPAC-Related Civil Litigation Risk
The recent SPAC boom is also beginning to create a wave of SPAC-related litigation in state and federal courts. Like any IPO, the initial SPAC IPO requires the filing of a registration statement with the SEC, but because SPACs are shell companies with no operations, their registration statements typically contain fewer disclosures than statements of companies going public through traditional IPOs. Thus, while SPAC managers can still be held liable under the Securities Act for any material misstatements or omissions, the disclosures made in connection with an initial SPAC IPO are less likely to be sources of litigation risk.
Rather, most SPAC-related litigation risk stems from the potential for lawsuits filed in connection with the de-SPAC transaction, which generally requires approval of a majority of SPAC shareholders. If SPAC shareholders contend that inadequate disclosures in the proxy statement prevented them from making an informed investment decision regarding the de-SPAC transaction, they can assert disclosure-based claims under Section 14 of the Securities Exchange Act of 1934, as amended (Exchange Act) and SEC Rule 14a-9. When SPAC shareholders challenge proposed mergers before the de-SPAC transaction is completed, a SPAC can typically ward off such nuisance claims by amending the proxy statement and paying a “mootness fee” to plaintiff’s counsel.12 When SPAC shareholders challenge de-SPAC transactions after their completion, however, such actions often result in more protracted litigation. Over the past year, SPAC shareholders have filed several lawsuits alleging material statements in or omissions from proxy statements and other disclosures issued in connection with de-SPAC transactions, with shareholders claiming, for example, that SPACs and their managers fraudulently misrepresented due diligence efforts with respect to target companies and otherwise misled investors regarding the nature of the merged company’s business operations and prospects, in violation of Sections 10(b) and 14(a) of the Exchange Act and SEC Rules 10b-5 and 14a-9.13
Two recently filed class action lawsuits pending in federal courts in New York and California are illustrative. In a putative class action complaint filed in the Eastern District of New York, the plaintiff alleges, on behalf of himself and similarly situated SPAC investors, that the SPAC and its managers disseminated proxy statements containing materially false and misleading statements regarding the due diligence conducted on the target company, a pharmaceutical company.14 Specifically, the plaintiff claims that the SPAC ignored or failed to disclose safety issues discovered during the company’s clinical trials of the pharmaceutical product in question.15 Similarly, in a putative class action complaint filed in the Central District of California, the plaintiff, a SPAC shareholder, alleges that the SPAC and its managers violated Section 10(b) and 20(a) of the Exchange Act by failing to disclose that the target company, an electric vehicle developer, among other things, changed its business model and did not maintain a key partnership with an established car manufacturer that was touted in the registration statement.16
In addition to cases alleging violations of federal securities laws, de-SPAC transactions may also be the subject of actions brought under state law alleging breaches of fiduciary duties. Since SPAC sponsors typically hold “founder shares” or other equity stakes in the SPAC, plaintiffs frequently argue that such incentives, along with the time restriction for consummating a deal, amount to a conflict of interest. For example, in a recent class action complaint filed in the Delaware Court of Chancery, the plaintiff, a SPAC investor, alleges that the SPAC and its sponsor and directors breached their fiduciary duty by acquiring the target company through a “deeply flawed and unfair process, including severe disclosure defects, [which] led to a grossly mispriced transaction.”17 Another investor in the same SPAC filed a federal lawsuit in the Southern District of New York alleging violations of Sections 10(b), 14(a) and 20(a) of the Exchange Act, demonstrating that the same de-SPAC transaction may give rise to both fiduciary- and securities law-based claims.18
IV. Mitigating Enforcement and Litigation Risk
With the expectation of increased enforcement scrutiny of SPACs on the horizon, and a plaintiffs’ bar aggressively monitoring SPAC share prices and exploring novel theories of liability based on the unique characteristics of SPACs, SPAC market participants should consider proactive steps to mitigate the regulatory and litigation risk associated with these investment vehicles, including, where applicable, the following:

SPACs should seek to include appropriate exculpatory and indemnification provisions in SPAC governing documents (e.g., charter, bylaws) to limit potential civil litigation risk.
SPAC sponsors, officers and directors, and affiliates should closely examine existing SEC guidance on disclosures, SPAC merger transactions and proxy statements for de-SPAC transactions.
SPAC sponsors, officers and directors should conduct and document robust due diligence on target companies to reduce the risk of shareholder complaints alleging inadequate due diligence or failure to uncover red flags.
SPACs should take steps to avoid any conflict of interest or related-party transactions and fully disclose any such conflicts or transactions prior to the de-SPAC transaction.

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The GameStop frenzy raises questions about the adequacy of securities market plumbing.

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Recent market volatility in GameStop and other “meme stocks” has put a national spotlight on certain practices by Wall Street firms and prompted discussion about the evolving role of technology in regulating U.S. capital markets.
In response to this market volatility, some broker-dealers chose temporarily to restrict trading on meme stocks. The U.S. House of Representatives Committee on Financial Services quickly responded by convening a hearing to discuss the circumstances around the trading frenzy. Retail investors instigated the market volatility when they collectively executed an investment strategy using the social media site Reddit’s “WallStreetBets” subchannel to identify securities in which hedge funds had amassed significant short interest positions.
In a follow-up hearing, members of Congress noted that recent market events raised critical questions about how U.S. capital markets operate, including: conflicts of interest associated with a practice known as payment for order flow; the sufficiency of short sale disclosures; the market dominance of certain participants; the impact of gamification on U.S. capital markets; and the issue of whether regulators should accelerate settlement times.
In his testimony before Congress, Vlad Tenev, the Chief Executive Officer of Robinhood Markets Inc., one of the broker-dealers involved, noted that the firm’s decision to place temporary trading restrictions on certain securities was solely to “facilitate compliance with clearinghouse deposit requirements” and comply with all trading regulations. In addition, Robinhood’s CEO claimed that real-time settlement of securities would have prevented the need for trading restrictions and would reduce overall clogging in the securities clearing system.
That sentiment was echoed in statements and questions from Representatives Warren Davidson (R-Ohio), David Kustoff (R-Tenn.), Barry Loudermilk (R-Ga.), Blaine Luetkemeyer (R-Mo.), and John Rose (R-Tenn.), all of whom wondered whether a same-day settlement cycle would have solved the problems in this situation and what unintended consequences may occur from reducing the settlement period to real-time. James J. Angel, a professor of finance at Georgetown University, concluded that the restrictions on trading were due to “a mad dash to deal with the leaks in our antiquated market plumbing.”
Yet, in late January 2021, the Acting Chair and all Commissioners of the U.S. Securities and Exchange Commission (SEC) issued a statement about the recent market volatility affirming that the “core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes.” Days later, during an exchange between Elon Musk and Robinhood’s CEO on social networking app Clubhouse, Musk questioned the motive behind the trading restrictions, asking whether certain hedge funds pressured broker-dealer firms to halt trading.
Did antiquated plumbing in the securities trading infrastructure indeed cause the trading restriction? Or, as Musk suggested, “did something maybe shady go down here?” In either case, the SEC should respond to the long-standing calls to speed up the process of clearing and settling securities trades.
Securities “clearance” is the process of calculating the securities and money that participants owe each other from a securities trade. “Settlement” refers to the completion of a securities transaction—where the seller transfers securities to the buyer and the buyer transfers money to the seller. Today, the standard clearance and settlement cycle for most securities transactions is two business days after the trade is executed (T+2). The national clearance and settlement system for securities transactions in place today is largely a product of the difficulties experienced in the U.S. securities markets in the late 1960s and early 1970s—known as the “Paperwork Crisis.”
The Depository Trust & Clearing Corporation (DTCC) stands at the center of most securities transactions in the U.S. securities markets. DTCC’s subsidiaries, the Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC), clear and settle nearly all securities transactions in the United States. NSCC serves as the central counterparty to nearly all U.S. equity trades. It becomes the buyer for every seller and the seller for every buyer.
When a party sells a stock, the clearing system debits the shares electronically from the account of the seller’s broker at NSCC and credits them to the NSCC account of the buyer’s broker. By offsetting a firm’s buy orders for a particular security against its sell orders for that security—a process known as “netting”—NSCC is able to reduce by 98 percent the total number of daily trade obligations requiring financial settlement.
The Continuous Net Settlement System (CNS) is NSCC’s core netting system. CNS nets every security on a daily basis to one position for each participant, meaning that each broker-dealer only owes or is owed a single block of shares for each security at the end of every day. NSCC is the central counterparty to each broker-dealer through the legal concept of “novation.” CNS either owes shares of a security to the broker-dealer, or the broker-dealer owes shares of that security to CNS. Broker-dealer customers are invisible to CNS.
Parties in a securities transaction face counterparty risk during the time between trade execution and settlement. On the sell-side, NSCC and the clearing members assume the risk of counterparty default. Broker-dealers are responsible for maintaining capital with NSCC to protect both NSCC and its membership from this risk. In addition, both institutional and retail investors have broker-dealer default exposure. To safeguard against a potential default by either the buyer or seller, NSCC maintains a multibillion-dollar clearing fund, which is funded by member broker-dealers in accordance with rules approved by the SEC.
Events such as “Black Monday” in 1987 have resulted in calls to reduce credit, market, and liquidity risk by shortening the settlement cycle. Shortening the time between trade execution and settlement by one business day would significantly reduce the risk of counterparty default. Decreasing counterparty risk would, among other things, reduce the capital requirements the NSCC imposes as a self-regulatory organization on its member broker-dealers to mitigate this risk.
DTCC has joined the chorus, advocating regulatory enhancements by releasing a white paper that outlines a two-year industry roadmap for shortening the settlement cycle for U.S. equities to one business day after the trade is executed (T+1). As the frequency and intensity of market volatility has increased, so have advancements in technology and core business processes.
Given the potential benefits of accelerated settlement, regulators should carefully consider enhancements to DTCC. One example is Project ION, a set of initiatives proposed by DTCC that includes the implementation of distributed ledger technology to accelerate and optimize the settlement process.
New technology platforms, such as Reddit and Robinhood, have created unprecedented volatility in the securities markets. The SEC and DTCC must move fast to ensure that the market plumbing that supports this trading can keep up.

Marlon Paz is the head of the Broker-Dealer Regulation & Compliance practice at Mayer Brown LLP and a Lecturer in Law at the University of Pennsylvania Law School.

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

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NEW YORK, April 26, 2021 /PRNewswire/ — Pomerantz LLP announces that a class action lawsuit has been filed against MoneyGram International, Inc. (“MoneyGram” or the “Company”) (NASDAQ: MGI) and certain of its officers. The class action, filed in the United States District Court for the Central District of California, and docketed under 21-cv-02161, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired MoneyGram securities between June 17, 2019 and February 22, 2021, inclusive (the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”).Fighting for victims of securities fraud for more than 85 years (PRNewsfoto/Pomerantz LLP)If you are a shareholder who purchased MoneyGram securities during the Class Period, you have until April 30, 2021 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.[Click here for information about joining the class action]MoneyGram, together with its subsidiaries, provides cross-border peer-to-peer payments and money transfer services in the United States and internationally. The company operates through two segments, Global Funds Transfer and Financial Paper Products.Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) XRP, the cryptocurrency that MoneyGram was utilizing as part of its Ripple Labs, Inc. (“Ripple”) partnership, was viewed as an unregistered and therefore unlawful security by the U.S. Securities and Exchange Commission (“SEC”); (ii) in the event that the SEC decided to enforce the securities laws against Ripple, MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period; and (iii) as a result, Defendants’ public statements were materially false and/or misleading at all relevant times.Story continuesOn December 22, 2020, the SEC filed a lawsuit against Ripple, alleging that Ripple’s cryptocurrency XRP is an unregistered security in violation of the securities laws.The SEC alleged a brazen scheme in which Ripple received legal advice as early as 2012 that XRP could be considered an investment contract and therefore a security that needs to be registered under the securities laws. Nevertheless, Ripple decided to ignore this advice and assume the risk of initiating a large-scale distribution of XRP without registration.Relying on Ripple’s own statements, the SEC points out that Ripple’s stated business plan has been to sell XRP to as many speculative investors as possible, and any non-speculative or non-investment use of the cryptocurrency represents a very small and inconsequential piece of the enterprise.In fact, the SEC alleged specifically that the major non-investment use of the XRP cryptocurrency—transferring money on Ripple’s On Demand Liquidity (“ODL”) platform—is not market-driven but subsidized by Ripple itself.In order to convince anyone to use ODL to transfer money, the SEC alleged, Ripple had to make a $50 million equity investment and pay significant financial compensation to an entity that the SEC’s Complaint refers to only as the “Money Transmitter.” Of course, the “Money Transmitter” is MoneyGram.In addition, the SEC’s Complaint describes how MoneyGram itself took part in the sale of unregistered XRP securities on the open market.On December 23, 2020, MoneyGram issued a press release entitled: “MoneyGram Statement on the SEC Action Against Ripple.” The press release stated: “The Company has not currently been notified or been made aware of any negative impact to its commercial agreement with Ripple but will continue to monitor for any potential impact as developments in the lawsuit evolve. MoneyGram has had a commercial agreement with Ripple since June 2019; this agreement represents the use of Ripple’s foreign exchange (FX) blockchain trading platform (ODL) for the purchase or sale of four currencies. MoneyGram has continued to utilize its other traditional FX trading counterparties throughout the term of the agreement with Ripple, and is not dependent on the Ripple platform to accomplish its FX trading needs.” / “As a reminder, MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action.”On February 22, 2021, MoneyGram filed its annual report on Form 10-K with the SEC for the year ended December 31, 2020 (the “2020 10-K”), which was signed by defendants W. Alexander Holmes, the Company’s Chief Executive Officer, and Lawrence Angelilli, the Company’s Chief Financial Officer (together, the “Individual Defendants”). Attached to the 2020 10-K were certifications pursuant to the Sarbanes-Oxley Act of 2002 signed by the Individual Defendants attesting to the accuracy of financial reporting, the disclosure of any material changes to the Company’s internal control over financial reporting and the disclosure of all fraud.The 2020 10-K stated the following about Ripple, in pertinent part: “On December 22, 2020, the SEC filed a lawsuit against Ripple alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset offering in violation of the registration provisions of the Securities Act of 1933. Subsequently, substantially all of the U.S.-based digital asset exchanges removed XRP from their platforms. MoneyGram ceased transacting with Ripple under the commercial agreement in early December 2020 and has not since resumed trading. It is possible that MoneyGram will not resume transacting with Ripple under the commercial agreement and will be unable to receive the related market development fees in 2021 and beyond. Per the terms of the commercial agreement, the Company does not pay fees to Ripple for its usage of the ODL platform or the related software and there are no clawback or refund provisions.” / “The ‘Transaction and operations support’ line on the Consolidated Statements of Operations includes market development fees of $50.2 million and $11.3 million for the years ended December 31, 2020 and December 31, 2019, respectively.” (Emphases added.)Also, on February 22, 2021, MoneyGram issued a press release on its financial results for its fourth quarter and full year ended December 31, 2020. The press release stated, in pertinent part: “Assuming the global economic environment were to remain consistent with the fourth quarter the Company is providing the following outlook:” / “For the first quarter of 2021, the Company anticipates reporting total revenue of approximately $300 million on the strength of its money transfer business and continued triple-digit cross-border MoneyGram Online growth, partially offset by an estimated $8 million reduction in gross investment revenue.” / “In addition, the Company is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform. In the first quarter of 2020, the Company realized a net expense benefit of $12.1 million from Ripple market development fees.” / “Based on the combination of these factors, the Company anticipates reporting Adjusted EBITDA of approximately $50 million in the first quarter of 2021.” (Emphases added.)On this news, MoneyGram securities fell 33.2%, from a closing price on February 19, 2021 of $10.87 per share, to a closing price on February 23, 2021 of $7.26 per share, damaging investors.The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.comCONTACT:Robert S. Willoughby Pomerantz LLP [email protected] 888-476-6529 ext. 7980 CisionView original content to download multimedia:http://www.prnewswire.com/news-releases/shareholder-alert–pomerantz-law-firm-reminds-shareholders-with-losses-on-their-investment-in-moneygram-international-inc-of-class-action-lawsuit-and-upcoming-deadline–mgi-301277311.

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By Yelena Barychev and Jane Storero
Apr 26, 2021

With large institutional investors, proxy advisory firms, regulators, consumers and other company stakeholders focused on environmental, social and governance metrics in evaluating a company, the board’s oversight of ESG risks and opportunities is no longer optional.
The rise of stakeholder capitalism, coupled with the Covid-19 pandemic and social justice issues, have significantly increased focus on ESG matters. The Securities and Exchange Commission even increased its bandwidth, creating a new Senior Policy Advisor for Climate and ESG position, as well as a new Climate and ESG Task Force in the SEC Division of Enforcement. Acting SEC Chair Allison Herren Lee directed her staff to evaluate disclosure rules to facilitate “consistent, comparable, and reliable information on climate change” and to create an effective ESG disclosure system. These developments signal that boards can no longer take a “wait and see” approach with respect to ESG and should start addressing matters proactively.

Given the growing body of evidence that ESG makes good business sense and the anticipation that the SEC rule making in this area is on the horizon, companies should integrate ESG initiatives into their operations. To be effective, companies need to identify ESG risks and opportunities, include ESG initiatives in long-term strategic planning, enterprise risk management efforts and culture, and link executive compensation to ESG goals. The evaluation of what initiatives to incorporate in the strategic plan requires careful consideration and the integration of ESG risks into the company’s risk management system has the effect of placing these risks in the purview of the board’s oversight.
Clearly communicating the company’s ESG strategy and metrics to investors and other stakeholders is critical. Many companies have issued annual ESG or sustainability reports. Given the increased focus, more frequent updates may be necessary and companies must determine whether to report such updates on their key ESG initiatives. Public reporting of ESG metrics in standalone reports or on the company’s website requires this information be accurate, complete and consistent. It should be reviewed with the same rigor as financial information included in SEC reports.

The success of a company’s ESG initiatives requires the board or board committee to exercise oversight over management’s implementation of the ESG strategy across the company and its integration into the company’s culture. A company’s board needs to proactively engage with management on such issues. With any companywide initiative, it is important that the board sets the tone. Simply put, boards need to get on board with ESG now.

Yelena Barychev is Partner at Blank Rome LLP and Co-Lead of Blank Rome’s ESG team. Yelena has represented a wide range of companies in connection with capital markets and corporate governance matters. Yelena also serves as President of the Association of Audit Committee Members, Inc., and is a member of the board of directors of The Forum of Executive Women.
Jane Storero is the Senior Corporate Governance Counsel at LTSE Services. Jane combines her years of experience as a securities partner in a large law firm and in house experience as corporate secretary for a Fortune 500 company to advise companies on corporate governance, ESG and other related matters. Jane is a member of The Forum of Executive Women.

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Law360 (April 26, 2021, 9:09 PM EDT) — Following the landmark U.S. Supreme Court ruling that disgorgement may be collected as “equitable relief” for victims of investment fraud, the U.S. Securities and Exchange Commission on Monday asked a California district court to make the defendants at the center of an alleged EB-5 visa fraud case pay back nearly $21 million.In line with the June 2020 high court ruling in Liu v. SEC, which said the agency can collect on the ill-gotten gains minus “legitimate expenses,” the agency asked the court to make defendants Charles Liu, Xin Wang and their associated companies pay just under $20.

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Law360 (April 26, 2021, 7:51 PM EDT) — A Florida investment adviser has been arrested on charges of lying to clients about his hedge fund to get them to pump $40 million into worthless investments, federal authorities said.Andrew Franzone, 44, of Fort Lauderdale, who was busted Friday, is facing parallel criminal and civil charges for running the scheme through his New York-registered company FF Fund I LP, prosecutors said. He allegedly swindled more than 100 investors out of $40 million.”Franzone lied about his fund’s investments and performance, and he lied in promising clients that they could readily access their invested capital,” U.S.

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