Tag Archives: Gerald Hodgkins

First Digital Asset Insider Trading Indictment

by Arlo Devlin Brown, Nihkil K. Gore, Gerald Hodgkins, Nancy Kestenbaum, Jeremy Newell, Michael Nonaka, Adrian J. Perry, D. Jean Veta, and Juliana Moraes Liu

A former non-fungible token (“NFT”) marketplace employee is facing prosecution by the U.S. Attorney’s Office for the Southern District of New York on one count of wire fraud and one count of money laundering, in an indictment unsealed on June 1, 2022. The Department of Justice (“DOJ”) alleges that the employee perpetrated a scheme to use confidential information from his employer about which NFTs would be featured on the marketplace’s front page to commit insider trading in the featured NFTs for his personal financial gain.

According to DOJ, this is the first insider trading case involving digital assets, and it notably relies on a theory that can be applied to a wide range of digital assets, whether or not the assets are regulated as securities.

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The SEC Tweaks Its Booming Whistleblower Program

by Samantha Choe, Arlo Devlin-Brown, Steven Fagell, Gerald Hodgkins, Barbara Hoffman, Nancy Kestenbaum, David Kornblau, and Mythili Raman

Last week, a divided Securities and Exchange Commission amended its whistleblower rules, hailing the changes as adding “clarity, efficiency and transparency to its successful whistleblower program.”[1] Although the agency made a large number of changes to the program, the amendments should not have a significant overall effect on SEC whistleblower activity, which we expect to continue at a high level. Continue reading →

Rulemaking Commenters Debate the SEC’s Proposed Changes to Its Whistleblower Program

by Gerald Hodgkins, Arlo Devlin-Brown, David Kornblau, and Jenny Park

Over 3,000 commenters submitted letters to the Securities and Exchange Commission (“SEC”) concerning the agency’s recently proposed amendments to its whistleblower rules.[1] This response reflects the perceived importance of the SEC’s proposal to companies and employees.

The most controversial of the proposed amendments would allow the SEC discretion to decrease the size of an award if it determines that the award would otherwise be too large to advance the goals of the whistleblower program.[2] Under current rules, if a whistleblower qualifies for an award, the SEC determines the size of the award by considering a number of specified factors that can increase or decrease the award amount within the range of 10 to 30 percent of the monetary sanctions recovered.[3] To decrease the amount of an award, the SEC can consider only the culpability of the whistleblower; whether the whistleblower unreasonably delayed reporting the misconduct to the SEC; and whether the whistleblower interfered with the company’s internal compliance and reporting systems.[4] Continue reading →