FINRA’s Legality, Billion-Dollar Fraud Trials: Securities Cases to Watch in 2024
(Reuters) – Courts in 2024 are poised to decide challenges to the power of U.S. financial regulators, while juries in Manhattan will weigh whether two fund managers committed fraud in financial meltdowns that cost billions of dollars.
Here are some securities cases to watch in 2024:
ATTACK ON REGULATORS
An appeals court in Washington will likely rule in 2024 on whether the Financial Industry Regulatory Authority’s structure is constitutional.
Broker-dealer Alpine Securities Corp. is defending itself against FINRA allegations that it charged customers unlawful fees. The company has argued that FINRA, a private organization with the power to discipline its members, is really a governmental body that should be subject to constitutional restrictions.
U.S. securities and commodities exchanges are also classified as self-regulatory organizations, and have argued a ruling against FINRA could roil how U.S. markets operate.
The Supreme Court is also poised to decide cases over the Consumer Financial Protection Bureau’s funding source, and the U.S. Securities and Exchange Commission’s in-house tribunals.
SEC v. CRYPTO
Key rulings are likely in the coming year in the SEC’s cases against major cryptocurrency exchanges Binance and Coinbase.
The cases are the biggest on the SEC’s crypto enforcement docket, and the first against crypto exchanges to be tested in court.
Both exchanges have argued that Congress did not empower the SEC to police crypto, an argument judges have rejected in other cases over digital assets.
Meanwhile, the SEC is likely to appeal its first loss in the crypto arena in the Ripple Labs case. The judge on the case ruled in July that the blockchain company’s sales of digital assets on public cryptocurrency exchanges were not offers of securities. The SEC will be able to challenge that ruling after final judgment is entered in the case.
BILLION DOLLAR TRIALS
Big financial crime cases brought by top Wall Street prosecutor U.S. Attorney Damian Williams are scheduled to go to trial this year.
Bill Hwang, the founder of Archegos Capital Management, is scheduled to face trial on fraud charges in February over the collapse of his private investment firm which saddled big banks with $10 billion in losses. Hwang and former Archegos chief financial officer, Patrick Halligan, are accused of lying to banks in order to increase Archegos’ credit lines and use the borrowed money to manipulate the stock prices of companies including Viacom, Discovery and Tencent Music Entertainment .
Both men have pleaded not guilty and their attorneys have said in court papers that the trades were lawful even if they backfired.
Former Allianz fund manager Gregoire Tournant will go on trial in the fall. Prosecutors allege he lied about the risks involved in a set of funds that imploded in early 2020, costing investors $7 billion.
Tournant has pleaded not guilty. His attorneys have said he was scapegoated for the funds’ failure by Allianz, which faced an “existential threat” from a criminal investigation into the company. Allianz’s U.S. asset management unit pleaded guilty to securities fraud and its parent agreed to pay more than $6 billion to resolve federal probes.
(Reporting by Jody Godoy in New York)
Click here to visit The DI Wire directory page.
