Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) is one of the four main regulators USA who are members of the US President's Working Group on Financial Markets.

The commission oversees key market participants in the world of securities: stocks, corporate, state and municipal bonds. The list of actively regulated participants includes: exchanges on which securities are traded, clearing organizations, brokers and dealers operating securities, investment advisers and mutual funds (mutual funds).

The SEC oversees and actively cooperates with so-called world-famous rating agencies. For example, Moody's and Standard and Poor's. Any company that wants to issue its securities on U.S. exchanges must receive a valuation from one of the rating agencies.

In addition to direct trading in these markets, the SEC also oversees the merger of companies in the United States.

Derivatives based on stocks or bonds also fall under the supervision of the SEC.

History

2024: Hackers hack US Securities Commission account and cause hype in crypto market

A notable case of hacking happened on January 9, when the account of the American Securities Commission (SEC) was intercepted, on the page of which a message was published allegedly about the approval of spot Bitcoin funds for exchange trading (BTC-ETF). Moreover, the date of such a verbal intervention was chosen uniquely precisely - it was at that moment that the SEC, according to rumors, had to approve a whole list of such funds. Preparations for this point were underway throughout the fall of 2023, and the market was looking forward to this moment. More

2023: Payment of $279 million to a whistleblower for information about bribing officials by Ericcson employees

On May 26, 2023, it became known that the US Securities and Exchange Commission (SEC) paid a record amount of $279 million to an informant in the case of bribery of officials by Ericsson.

According to The Wall Street Journal, the reward was awarded to a whistleblower under the Money in Exchange for Information program. We are talking about the process concerning the settlement agreement in the amount of $1.1 billion, which Ericsson reached with the US authorities in 2019. A Swedish telecommunications equipment supplier has been accused of violating the US federal Foreign Corrupt Practices Act (FCPA): it prohibits companies from bribing foreign government officials. According to the case file, Ericsson bribed officials in Djibouti, China, Vietnam, Kuwait and Indonesia from 2000 to 2016. According to the investigation, Ericsson units in Saudi Arabia, China and Djibouti received contracts for $427 million thanks to bribes to officials through third parties.

Swedish telecom equipment supplier accused of violating US federal Foreign Corrupt Practices Act

Under SEC rules, a whistleblower can receive a reward ranging from 10% to 30% of the amount of fines collected from offenders if they exceed $1 million. The regulator does not specify how exactly the record reward of $279 million was calculated. The whistleblower's name has not been disclosed under whistleblower protection rules. The SEC awarded the previous record amount of $114 million to the whistleblower in October 2020.

It is noted that as part of the proceedings against Ericsson, two more whistleblowers sent applications to the SEC for the award, but their requests were rejected. The information they provided did not help during the investigation. However, monetary sanctions against Ericsson have become one of the highest in the framework of proceedings related to the violation of the FCPA.^[1]

2022

Recovery of $1.3 million with Kim Kardashian for advertising cryptocurrency

On October 3, 2022, Kim Kardashian decided to pay a fine of $1.26 million to the Securities and Exchange Commission (SEC) in order to settle civil charges after the reality star published information about the crypto asset EthereumMax on Instagram (owned by Meta, which in Russia is recognized as an extremist organization and banned). Read more here.

Former top manager Zhublin Hugues accused of manipulating the stock exchange when buying a company for $7 billion

In early June 2022, the purchase of 500 shares of Daiichi Sankyo 16 days before the company signed a favorable licensing deal with AstraZeneca put the former head of AstraZeneca under consideration by the Securities and Exchange Commission in the United States. The agency accuses Hugues Zhublin of using insider information for commercial purposes in the form of mergers and acquisitions in biopharmaceuticals by buying shares. Read more here.

2020

SEC notes increase in whistleblower amid move of company employees to remote work

A side effect of the coronavirus pandemic, which forced many companies to transfer employees to remote work, send people on vacation without pay or even fire, was the increase in the number of appeals to the Securities and Exchange Commission (SEC) with information about corporate violations of the^[2].

According to Stephen Peikin, co-director of the SEC's enforcement department, from mid-March to mid-May, the regulator received almost 4,000 messages regarding various violations, which is 35% more than a year earlier.

As a result, the SEC has launched hundreds of new investigations, some of which are related to the COVID-19 coronavirus pandemic, while others relate to traditional violations, he said.

Lawyers note that many people, working from home and being out of view of colleagues, are less afraid of the possibility of exposing them as an SEC whistleblower. The lack of the need to constantly engage with management also allays whistleblower fears that they will be exposed and repressed. There is even less doubt about people going on leave without pay or being laid off.

"People have more time at their disposal," said Christopher Connors, an attorney at Connors Law Group, a Chicago-based law firm. "They don't have to see the leadership, and that gives them courage.

Connors' company has received seven new cases since late February where it represents SEC whistleblowers.

The likelihood of corporate violations increases during difficult financial periods when it becomes more difficult for company employees to achieve their goals, writes The Wall Street Journal. Anti-corruption organizations are already warning that the current economic crisis could set the stage for increased corruption.

Connors' clients passed on information to the SEC, the US Department of Justice, as well as the Federal Bureau of Investigation (FRB) related to cases of foreign corruption in health care, pharmaceuticals and the technology sector.

Stuart Meissner, a lawyer for New York-based Meissner Associates, notes that some of the SEC whistleblower cases received by his company relate to violations related to the COVID-19 pandemic, for example, the promotion by small public companies of deliberately non-working tests coronavirus for home use.

Other cases mostly involve cases of money laundering, insider trading and bankruptcy fraud, Meissner says.

Another incentive for SEC whistleblowers may be to be rewarded, notes Rebecca Katz of law firm Motley. In the current financial year, which began in October 2019, the regulator has already paid remuneration to 16 informants, which is a record number.

Under SEC rules, a whistleblower can receive 10% to 30% of the amount of the fine imposed by the regulator in a case that was initiated thanks to the whistleblower, provided that the amount of the fine exceeds $1 million.

Since the beginning of 2020, the SEC has paid over $64 million to its whistleblowers - more than ever, with the exception of 2018.

SEC reaches agreement with accused of hacking her system

On April 9, 2020 U.S. Securities and Exchange Commission , she announced the conclusion of an agreement with a citizen, UkraineIgor Sabodaha whom the regulator, along with some other hackers, accused of hacking his IT system. More. here

2019

First ICO Permit

In July 2019, Blockstack became the first company to receive official approval from the U.S. Securities and Exchange Commission (SEC) for the initial placement of tokens. Read more here.

Ukrainian hacker hacked the SEC IT system and helped earn a trader from Russia

In January 2019, the US Department of Justice formally charged nine people with illegal enrichment as a result of hacking the IT system of the Securities and Exchange Commission USA (SEC) - Electronic Data Gathering, Analysis and Retrieval (EDGAR). More. here

Notes