September 12, 2022

SEC Enforcement: Diversity and Digital Assets

SEC Enforcement Director Gurbir Grewal spoke at PLI’s SEC Speaks last Friday, and he noted the efforts that the Division has recently undertaken to diversify the workforce and improve inclusion at the agency, and how that effort can help the SEC do its job better while building trust with the investors that the agency is seeking to protect.

Grewal’s speech further noted how individual investors have been drawn to crypto in recent years, and within that broader retail cohort, recent reports have indicated that the crypto collapse may have an outsized impact on investors from lower income brackets and underrepresented racial groups. On the topic of the SEC’s enforcement of the federal securities laws in connection with digital assets, he noted:

As I have stated publicly in the past, I believe the Howey and Reves tests remain vital and accurate means of identifying instruments that fall within the jurisdiction of the securities laws. When the evidence we obtain indicates that those laws have been violated, we will continue to bring actions regardless of what label is used or technology is involved (or not). Failure to do so would constitute an abdication of our responsibilities, and an abandonment of the investors who have been harmed in those markets, including through being denied essential disclosures and protections.

One overall takeaway from the conference was certainly that the SEC continues to ramp up its already ramped up efforts in this space!

– Dave Lynn