by T. GormanPosted on Posted in SECActions

Climate change and ESG are subjects that have been the topic of repeated comments by the SEC and other regulators this year. Perhaps these are topics whose time has come. Perhaps it is the agenda of the Biden administration which promises to move forward expeditiously in these areas, even blending climate issues into its now under development infrastructure proposals. Whatever the reason, regulators around the world are staking out positions.

Ravi Menon, Managing Director, Monetary Authority of Singapore, addressed these points in remarks titled The Future of Capital is Green, delivered as the Keynote Address at the IMAS – Bloomberg Investment Conference (March 9, 2021)(here).

Mr. Menon began by stating that there is no doubt that the future is being built on green capital. It is apparent that climate change is a risk that investors cannot ignore. It is evident that the world needs to sharply reduce greenhouse gas emissions to reach the levels reflected in the Paris agreements, the Managing Director noted. This will result in what he called a “major transformation of economies and societies – affecting how we work and how we live.” This change will impact every sector from steel, cement and mining to agriculture and others.

In view of this trend and its huge impact on global financial assets — $2.5 trillion according to the London School of Economics – there is a growing trend toward sustainable investing. This is reflected by the fact that over $30 trillion of assets are being managed in ESG investments, an increase of 34% since 2016. Over the next five years these numbers are expected to double.

Nevertheless, the financing gap to build the green economy of the future remains large. That gap is particularly apparent in areas where the outcome of the battle against climate change will be determined, according to Mr. Menon. One area is Asia since the it accounts for almost half of global greenhouse gas emissions. Asia also suffers significant economic losses from natural disasters, the impact of which will be amplified by climate change. To sustain economic development, Asia needs $1.7 trillion a year of investments in sustainable infrastructure through 2030.

While investors are beginning to mobilize capital to support Asia’s development, more needs to be done. Singapore, as a center for green financing, will play a key role. This will be done by developing green financing solutions and channeling them through Singapore.

To broaden green financing solutions three points are key. First, the development of more green financing instruments such as green bonds and green loans is important. MAS is supporting firms in Singapore and Asia to help accomplish this. Second, it is important “to innovate disaster risk products to strengthen climate risk resilience in Asia,” according to Mr. Menon. Finally, it is important to attract green funds and asset managers. MAS is facilitating this by placing $2 billion of its funds with asset managers that are committed to deepen green finance activities.

Finally, while one of the most significant challenges to sustainability investing may be a lack of agreed definitions of what is green and sustainable, MAS is addressing this point. The regulator is, for example, providing guidance for asset managers to assess, monitor and disclose environmental risks. The regulator is also promoting active stewardship by investors to promote sustainability at their firms. In addition, MAS is working with central banks and regulators around the world on these issues to promote sustainability. The hope is to make the future of green capital.

Comment

Climate issues and sustainability are key for the future. While there are clearly significant questions regarding the impact of climate and green investments, green investing can help define key issues while promoting sustainability in a way that can be beneficial for all. MAS is leading the way by taking steps from simple disclosure to investing, teaching and promoting the points in an effort to help define the future.

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by T. GormanPosted on Posted in SECActions

From “Fake News” to “Cancel Culture” it can be difficult to virtually impossible to determine what to believe and what not to believe. Careful evaluation, due diligence and other tools can help evaluate what to believe and what to reject — but not always and there are no guarantees.

In contrast, consider those who troll the “Dark Web.” That is the large, vast trove of material available on the internet, excluding the small portions indexed by Google and other search engines. So, what is on the “Dark Web” and why would anyone care other than perhaps as a curiosity? One site claims to have MNPI. If you are a stock trader, and if you believe in these kinds of sites, and if you don’t have scruples about the sources of the information, trading on this information could be an option.

So it was in the Commission’s latest insider trading case. SEC v. Jones, Civil Action No. 1:21-cv-00659 (S.D. Ind. Filed March 18, 2021). James Roland Jones trolled the Dark Web. All sorts of items were available for sale – illegal drugs, firearms, counterfeit goods and malicious software to name a few.

In 2016 Mr. Jones discovered a site that claimed to provide material non-public information. Access to the site was not for everyone. To enter a potential user had to demonstrate that they had genuine inside information about a publicly traded stock. Mr. Jones, lacking actual inside information, created MNPI – a lie. He failed to gain entry. He tried again. He failed. He tried again, but only after carefully studying a stock. Success at last! His guess was right and won him entry. Moderators of the site were told the supposed illegal tip came from a friend.

Nothing lasts forever. To stay in the club Mr. Jones and others had to provide a continuing stream of illegal tips. His membership was only for three months.

Undeterred, Mr. Jones devised a new scheme. If he could not stay in the Dark Web Insider Trading Club, he would create his own. In the spring of 2017 Mr. Jones listed “inside tips” for sale on one of the Dark Web marketplaces. Defendant claimed that his information came from the Dark Web Insider Trading Forum and/or corporate insiders.

Mr. Jones’ information was typically general predictions that the shares would go up or down. Sometimes his tips for the same stock went both ways – he predicted the shares would go up for some customers and down for others. In some instances he agreed with a customer to split the trading profits. Payments for the information were in bitcoin.

The tips provided by Mr. Jones were false. In many instances they were vague enough that buyers might have questioned if the information was material. The complaint alleges violations of Exchange Act Section 10(b). The case is pending. The U.S. Attorney’s Office for the Middle District of Florida filed parallel criminal charges. U.S. v. Jones, No. 8:21-cr-33 (MD. Fla.).

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