On April 9, the Securities and Exchange Commission acted on its proposal published in 2016 and adopted rules that are designed to simplify the scope of “covered clearing agency” in Rule 17Ad-22(a) under the Securities Exchange Act of 1934.

The author examines the decisions in SEC v. Telegram and how they may impact digital token issuers’ use of the Simple Agreement for Future Tokens model for distributing tokens.

The Southern District of New York has issued two main rulings in SEC v. Telegram—that the offer and sale of Telegram’s cryptocurrency (Grams) involved a "scheme" to distribute securities subject to 1933 Act registration requirements, and that the Court’s preliminary injunction regarding sales or resales of Grams applies to both U.S. and non-U.S. purchasers. Murphy & McGonigle’s Larry Bergmann examines both rulings and weighs the impact they might have on future issuances of digital tokens. Among other things, Bergmann believes that the decisions will make it more difficult for digital token issuers to argue that securities sold to raise capital can be transformed at a later date into "utility" digital assets that are not securities. He also raises the question of whether improvements can be made to an operational cryptocurrency platform to enhance the value of that platform’s tokens.

To read the entire article, click here.

Joseph Facciponti and Elizabeth Del Cid of the Cybersecurity, Cybercrime & Incident Response Practice will be featured speakers on a Thurs., Apr. 9 webinar, “You Transitioned to a Remote-Work Environment. Have Your Cyber and Privacy Policies and Practices Moved with You?”

Our lawyers summarize practice-by-practice legal and regulatory developments for clients in the new environment.

Corporate charter provisions that require shareholders to bring 1933 Act lawsuits in federal court are facially valid, the Delaware Supreme Court has held. See Salzberg v. Sciabacucchi, No. 346, 2019, ___ A.3d ___, 2020 WL 1280785 (Del. Mar. 18, 2020) (“Blue Apron”). The unanimous, en Banc March 18 opinion paves the way for Delaware corporations to adopt those provisions in their charters or by-laws. If widely adopted, those provisions could slow or reverse the trend of 1933 Act lawsuits’ being filed in state court, a trend that has accelerated since the U.S. Supreme Court confirmed in 2018 that investors could file such lawsuits in federal or state court. Given Delaware’s influence in corporate law, Blue Apron’s impact will likely be felt beyond Delaware, including by international companies with subsidiaries incorporated in the U.S. or considering incorporating subsidiaries in the U.S.

FINRA has issued a Regulatory Notice related to the recent outbreak of coronavirus disease, "Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief".