SEC Enforcement

Proskauer’s Hedge Fund Trading Guide offers a concise, easy-to-read overview of the trading issues and questions we commonly encounter when advising hedge funds and their managers. It is written not only for lawyers, but also for investment professionals, support staff and others interested in gaining a quick understanding of the recurring trading issues we tackle for clients, along with the solutions and analyses we have developed over our decades-long representation of hedge funds and their managers.

Yesterday, the SEC voluntarily stayed its new ESG disclosure rules for public companies pending the outcome of several lawsuits that have been filed, which are now consolidated in the 8th Circuit US Court of Appeals. We blogged earlier about the emergence of several lawsuits filed in different federal circuits. What does this mean? We believe that it means that the SEC wanted to avoid the delay that could result from extensive briefing on a potential court injunction staying the effectiveness of the rules, and move immediately to the merits, in hopes of resolving the litigation a reasonable period before the first effective date for many companies to begin compliance for their 2025 fiscal years. If the SEC prevails and the matter is resolved on a speedy basis, then the SEC has a chance to move forward with the rules on its original schedule, but the odds of that seem 50-50 at best. 

Proskauer’s Hedge Fund Trading Guide offers a concise, easy-to-read overview of the trading issues and questions we commonly encounter when advising hedge funds and their managers. It is written not only for lawyers, but also for investment professionals, support staff and others interested in gaining a quick understanding of the recurring trading issues we tackle for clients, along with the solutions and analyses we have developed over our decades-long representation of hedge funds and their managers.

Multiple legal challenges have already been launched against the SEC’s new climate change disclosure rules. Plaintiffs include Attorneys General from several states, a large business trade organization and a private energy company. To date, these suits span across six different federal courts, and the array of these challenges is expected to trigger a lottery process in which one court would handle a consolidated case addressing all the claims.

The SEC’s recent enforcement settlement involving a fund manager highlights the SEC’s focus on an investor’s “control purpose” triggering the requirement to file on a Schedule 13D as opposed to a short-form 13G. At issue was HG Vora Capital Management’s 5% interest in a public company, and whether it had complied with its obligations to supersede its existing filing with a long-form Schedule 13D filing within 10 days of no longer being “passive.”

Two years after proposing rules on climate change disclosure, the SEC has adopted new rules, predictably by a split 3-2 vote. The adopted rules maintain the core of the original proposals, requiring that both domestic companies and foreign private issuers disclose the actual and potential impacts of climate change as well as management and governance processes to address those impacts. In the face of public comments highlighting the costs, burdens, and practicality of some aspects of the proposals, and political opposition, the SEC materially paired back the proposals, most significantly dropping the requirement to disclose Scope 3 greenhouse gas (GHG) omissions data relating to downstream and upstream sources, such as by vendors and customers. However, as described in our recent report, California’s new rules will require Scope 3 information for companies doing business in California if implemented in their current form.

On January 24, 2024, the SEC adopted new rules that apply to SPAC transactions and the adopted rules largely track the agency’s proposals with some notable exceptions.  The new rules will become effective 125 days after publication in the Federal Register and will apply to transactions that are ongoing at that time, even if they

On December 13, 2023, the Securities and Exchange Commission (“SEC”) adopted new rules that will have the effect of requiring central clearing of a broad range of cash transactions and repurchase transactions in U.S. treasury securities (“U.S. Treasuries”).[1]  The new rules will require covered clearing agencies (“CCAs”)[2] to adopt policies and procedures requiring