In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important SEC enforcement developments from the past month, with links to primary resources. This month’s installment covers:
- Charges against the founder and three promoters of a cryptocurrency trading service operating as a Ponzi scheme;
- A ruling that a blockchain’s digital token qualifies as a security;
- An action against a registered investment advising firm for failing to follow its own ESG policies and procedures;
- The SEC’s remarks at the Securities Enforcement Forum, with a focus on the Commission’s enforcement trends for the 2022 fiscal year; and
- An overview of the SEC’s Strategic Plan for the 2022–2026 fiscal years.
1. SEC Charges Creator and Promoters of Alleged Crypto Ponzi Scheme
On November 3, 2022, the SEC accused the creator of a crypto trading service and three of its promoters of running a Ponzi scheme. In one of two simultaneously filed complaints, the SEC alleged that the founder of Trade Coin Club, Douver Torres Braga, and two of Trade Coin Club’s promoters, Joff Paradise and Keleionalani Taylor, executed a scheme to recruit new investors to join Trade Coin Club, and charged Braga and his promoters with violating Sections 10(b) and 15(a) of the Exchange Act, Sections 5(a), 5(c), and 17(a)(1), (2), and (3) of the Securities Act.
According to the SEC, from December 2016 to May 2018, Trade Coin Club collected…
