Compliance Bricks and Mortar for December 8

These are some of the compliance-related stories that recently caught my attention.


ICO Enforcement Actions Threatened, ICO Lawsuits Proliferate By Kevin LaCroix

According to the latest update on the Coinschedule website (here), there have been a total of 228 initial coin offerings so far this year through mid-October, raising a total of over $3.6 billion. At least five of this year’s ICOs have raised over $100 million. This burgeoning activity notwithstanding, ICOs are at the center of controversy. Among other things, China and South Korea have banned ICOs. The SEC has already shown its willingness to pursue enforcement actions against ICO sponsors, as discussed further here. And now a high-profile statement by one of the country’s leading securities regulation experts suggests even greater scrutiny may lie ahead. In the meantime, as discussed below, ICO and cryptocurrency-related litigation appears to be proliferating. [More…]

See also:
Bitcoin futures are coming as CFTC gives blessing by William Watts
Bitcoin Is the World’s Hottest Currency, but No One’s Using It By Georgi Kantchev, Steven Russolillo, Paul Vigna and Christopher Whittall


What Makes a Safe Asset Safe? by Thomas Eisenbach and Sebastian Infante in Liberty Street Economics

Over the last decade, the concept of “safe assets” has received increasing attention, from regulators and private market participants, as well as researchers. This attention has led to the uncovering of some important details and nuances of what makes an asset “safe” and why it matters. In this blog post, we provide a review of the different aspects of safe assets, discuss possible reasons why they may be beneficial for investors, and give concrete examples of what these assets are in practice. [More…]


Using Side Letters in Private Funds by Alexander Davie in Strictly Business

For many fund managers, especially those early in their careers, obtaining capital and new investors is the biggest challenge, and so the temptation is great to accede to side letter requests from investors that are willing make a large investment in the fund. This can be especially true when the investor is demanding the side letter just prior to closing and may have the fund managers over a proverbial barrel. There are several risks that should be kept in mind when negotiating and drawing up such agreements. [More…]


IOSCO issues report on hedge fund statistics, trends By Amy Leisinger, J.D. in Jim Hamilton’s World of Securities Regulation

The International Organization of Securities Commissions (IOSCO) has published its biannual report on the global hedge fund marketplace, key regulatory changes, and the potential systemic risks posed by the industry. IOSCO’s survey assembles information from national authorities on hedge fund activities and is designed to enable regulators to share information and observe trends regarding exposure, leverage, liquidity management, funding, and trading activities in the hedge fund industry. [More…]


REIT controllers owed fiduciary duties to public stockholders by Joanne Cursinella, J.D. in Jim Hamilton’s World of Securities Regulation

Claims that certain defendants in a convoluted REIT scheme violated their fiduciary duties to stockholders survived a motion to dismiss. The court found that the plaintiff sufficiently alleged that the defendants set up a structure whereby they profited at the expense of the stockholders, maximizing the profits at the first entity they created to the detriment of the non-controlling stockholders of another entity they created and took public (RCS Creditor Trust v. Schorsch, November 30, 2017, Glasscock, S.). [More…]


France Gets Climate Risks Disclosures from Invest Firms by Mara Lemos Stein

France added momentum to the global push for greater climate risks awareness last year by requiring disclosures from not only companies but also institutional investors and asset managers. After the first year of reporting, governance mavens are encouraged by the level of compliance.

The energy transition and green growth law implemented in 2016 requires investors to report how they are integrating environmental, social and governance, or ESG, criteria in their portfolios; on their exposure to physical risks and risks caused by the transition to a low-carbon economy; and on steps being taken to align their firm’s decarbonization strategy with national and global emissions targets.[More…]