Tag Archives: Kevin S. Schwartz

Cryptoasset Developments: Prospects for Legal Clarity

by Kevin S. Schwartz, David M. Adlerstein, Samantha M. Altschuler, and Sabina M. Beleuz Neagu

Photos of the authors

Left to Right: Kevin S. Schwartz, David M. Adlerstein, Samantha M. Altschuler, and Sabina M. Beleuz Neagu (photos courtesy of Wachtell, Lipton, Rosen & Katz)

A resilient cryptoasset industry is emerging from weathering years of headwinds — from edicts prohibiting the banking of the industry, to an SEC leadership bent on aggressive regulation-by-enforcement in lieu of transparent rulemaking. Looking ahead, tailwinds abound: Bitcoin and Ether exchange-traded products, approved just this year, already have over $150 billion in assets under management. Leading financial institutions have announced plans to tokenize substantial new funds on public blockchains. And tens of millions of Americans own cryptoassets, as use cases continue to proliferate — from payments for goods and services, both on- and off-blockchain; to decentralized financial (DeFi) platforms; to the authentication of content provenance (an essential need amidst AI’s rapid development). With a new Administration and Congress in the offing, there are at last prospects for regulatory clarity in an arena long clouded by uncertainty.

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The Supreme Court’s Business Docket: October Term 2023 in Review

by John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Akua Abu

Photos of the authors

Left to right: John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Akua F. Abu. (Photos courtesy of the authors)

In early July, the Supreme Court concluded its most consequential Term in years, with a flood of decisions on contentious issues ranging from abortion access to the regulation of social media companies and gun possession to presidential immunity. The Court’s business docket was no less active. While the Consumer Financial Protection Bureau narrowly survived a constitutional challenge to its funding mechanism, the Court’s conservative majority elsewhere struck body blows to the administrative state—including the long-anticipated reversal of the Chevron doctrine of judicial deference to agency interpretation of ambiguous statutes. Beyond this headline-grabbing showstopper, the Court issued a string of commercially significant decisions, affecting bankruptcy, arbitration, securities, and employment law. We summarize below the key business decisions from this Term and flag a few key cases to watch in the coming Term.

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AI in the 2024 Proxy Season: Managing Investor and Regulatory Scrutiny

by William Savitt, Mark F. Veblen, Kevin S. Schwartz, Noah B. Yavitz, Carmen X. W. Lu, and Courtney D. Hauck

Photos of the authors

Top from left to right: William Savitt, Mark F. Veblen, and Kevin S. Schwartz.
Bottom left to right: Noah B. Yavitz, Carmen X. W. Lu, and Courtney D. Hauck. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

Corporate disclosures concerning artificial intelligence have increased dramatically in the past year, with Bloomberg reporting that nearly half of S&P 500 companies referenced AI in their most recent annual reports. And some investors are clamoring for even more, using shareholder proposals to press public companies for detailed disclosures concerning AI initiatives, policies, and practices — including, most recently, an Apple shareholder proposal that attracted significant support at a meeting last week. Regulators, meanwhile, have signaled increasing scrutiny of AI-related corporate disclosures, including in a February speech by SEC Chair Gensler cautioning against “AI washing” — the practice of overstating or misstating corporate AI activity. For the 2024 proxy season and beyond, public companies will need to balance the competing demands of regulators and investors, in order to craft effective, responsive strategies for engaging with their stockholders on AI topics. 

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The Future of ESG: Thoughts for Boards and Management in 2024

by Martin Lipton, Steven A. Rosenblum, Adam. O. Emmerich, Karessa L. Cain, Kevin S. Schwartz, and Carmen X. W. Lu

Top left to right: Martin Lipton, Steven A. Rosenblum, and Adam. O. Emmerich.
Bottom left to right: Karessa L. Cain, Kevin S. Schwartz, and Carmen X. W. Lu. (Photos courtesy of Wachtell, Lipton, Rosen & Katz).

The term “ESG” has steadily faded from the investor and corporate lexicon over the past year in the wake of cultural and political clashes over its meaning and purpose. “Anti-ESG” legislation adopted by several states has created legal and financial hurdles around the term. Institutional investors have gone quiet on ESG amid public criticism and congressional subpoenas. BlackRock has publicly disavowed the term for having become too politicized. The use of “ESG” in earnings calls has dropped precipitously. 

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White-Collar and Regulatory Enforcement: What Mattered in 2023 and What to Expect in 2024

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, David B. Anders, Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz

Photos of Authors

Top left to right: John F. Savarese, Ralph M. Levene, Wayne M. Carlin, and David B. Anders.
Bottom left to right: Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

This past year was yet another notable and intensely active one across the entire range of white-collar criminal and regulatory enforcement areas. We heard continued tough talk from law enforcement authorities, especially concerning the government’s desire to bring more enforcement actions against individuals and on the need to keep ramping up corporate fines and penalties. The government largely lived up to its talking points about increasing the numbers of individual prosecutions and proceedings, particularly with respect to senior executives in the cryptoasset industry. But there were some notable stumbles. The most striking example of this was DOJ’s failure to secure convictions in cases where it attempted to extend criminal antitrust enforcement in unprecedented areas, such as no-poach employment agreements and against certain vertical arrangements—neither of which has historically been viewed as involving per se violations of the federal antitrust laws. And, as in years past, many state attorneys general remained active throughout 2023, using broad state consumer-protection statutes to bring blockbuster cases across a wide array of industries, from ridesharing and vaping to opioids and consumer technology offerings.

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Cryptoasset Developments: Observations on the Thawing Crypto Winter

by Kevin S. Schwartz, Rosemary Spaziani, David M. Adlerstein, Samantha M. Altschuler, and Sabina M. Beleuz Neagu

Photos of the authors

Left to right: Kevin S. Schwartz, Rosemary Spaziani, David M. Adlerstein, Samantha M. Altschuler and Sabina M. Beleuz Neagu (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

The U.S. cryptoasset industry just rang in the new year with the watershed SEC approval of the first spot ETFs for a digital asset.  With the approval of the first bitcoin Spot ETFs, making possible a path for millions of Americans to have direct bitcoin exposure in retirement and other traditional investment accounts, it is an appropriate time to reflect on significant recent developments that may shape the crypto industry in the year to come.

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DOJ Ends No-Poach Prosecution of SCA

by David B. Anders, Carrie M. Reilly, Kevin S. Schwartz, and Yolanda Bustillo

Photos of the authors.

From left to right: David B. Anders, Carrie M. Reilly, Kevin S. Schwartz, and Yolanda Bustillo. Photos courtesy of Wachtell, Lipton, Rosen & Katz.

Today, almost three years after the Antitrust Division brought criminal charges against Surgical Care Affiliates (“SCA”), the District Court for the Northern District of Texas granted the government’s motion to dismiss the indictment, with prejudice, marking the latest setback in the agency’s aggressive enforcement of labor market cases.  Earlier this year, we noted that the Antitrust Division’s prosecution of criminal wage‑fixing and no-poach agreements warranted reconsideration given the many problems these cases present.  The Antitrust Division’s decision to dismiss its case against SCA signals that the agency may have done just that.

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Biden Administration Issues Sweeping Executive Order Directing Federal Agencies to Examine and Address Risks of Artificial Intelligence

by William Savitt, Mark F. Veblen, Kevin S. Schwartz, Noah B. Yavitz, and Courtney D. Hauck

Photos of the authors

From left to right: William Savitt, Mark F. Veblen, Kevin S. Schwartz, Noah B. Yavitz, and Courtney D. Hauck (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

On Monday, the Biden Administration issued a long-awaited executive order on artificial intelligence, directing agencies across the federal government to take steps to respond to the rapid expansion in AI technology. The order attempts to fill a gap in national leadership on AI issues, with Congress showing little progress on any comprehensive legislation. The order mandates regulatory action that could affect companies throughout the domestic economy, including: Continue reading →

Supreme Court Rejects Challenge to California Law Alleged to Burden Out-of-State Industry

by John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Jacob Miller

Photos of the authors

From left to right: John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Jacob Miller (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

Recently, a divided Supreme Court upheld the constitutionality of a California law banning the in-state sale of meat from pigs confined under specified “cruel” conditions. Petitioners — two industry organizations — had alleged the law violates the Commerce Clause by imposing substantial costs on out-of-state producers and impermissibly regulating the national pork market. This challenge marked an effort by the industry to expand the so-called “dormant” Commerce Clause, which polices states’ ability to enact regulations with interstate impact when Congress has chosen not to act in the field sought to be regulated by a state. That effort failed. In National Pork Producers Council v. Ross, all nine Justices rejected petitioners’ argument that there exists an “almost per se” rule forbidding enforcement of state laws that have the practical effect of imposing prescriptions on commerce outside the state.

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SEC Halts Cryptoasset “Staking-As-A-Service” Program Amidst Tightening Regulatory Enforcement Environment

by Kevin S. Schwartz, David M. Adlerstein, and David E. Kirk

Author photographs

From left to right: Kevin S. Schwartz, David M. Adlerstein, and David E. Kirk (Photos courtesy of Wachtell Lipton Rosen & Katz)

Late last week, the SEC filed and simultaneously settled charges against the Kraken cryptoasset exchange for failing to register as a security the offer and sale of its “staking-as-a-service” program. The complaint’s allegations against Kraken, coupled with statements by the SEC’s Chairman, indicate that the SEC may pursue staking-as-a-service programs that have features like Kraken’s as unregistered securities offerings, raising fundamental questions for a sector of the crypto-industry with assets most recently valued at $91.8 billion. This also represents the latest in a series of actions by regulators attempting to shape the status and availability of particular financial products through enforcement tools rather than prescriptive guidance that might aid market participants in adapting existing rules to novel financial products.
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