los angeles – Expo Monet http://expo-monet.com/ Fri, 25 Feb 2022 23:24:04 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://expo-monet.com/wp-content/uploads/2021/10/icon-63-120x120.png los angeles – Expo Monet http://expo-monet.com/ 32 32 ESSEX PROPERTY TRUST, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K) https://expo-monet.com/essex-property-trust-inc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-k/ Fri, 25 Feb 2022 23:24:04 +0000 https://expo-monet.com/essex-property-trust-inc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-k/ The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto. These consolidated financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results and all such adjustments are of a normal recurring nature. OVERVIEW Essex is […]]]>
The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and notes thereto. These
consolidated financial statements include all adjustments which are, in the
opinion of management, necessary to reflect a fair statement of the results and
all such adjustments are of a normal recurring nature.

                                    OVERVIEW

Essex is a self-administered and self-managed REIT that acquires, develops,
redevelops, and manages apartment communities in selected residential areas
located on the West Coast of the United States. Essex owns all of its interests
in its real estate investments, directly or indirectly, through the Operating
Partnership. Essex is the sole general partner of the Operating Partnership and,
as of December 31, 2021, had an approximately 96.6% general partner interest in
the Operating Partnership.

The Company's investment strategy has two components: constant monitoring of
existing markets, and evaluation of new markets to identify areas with the
characteristics that underlie rental growth. The Company's strong financial
condition supports its investment strategy by enhancing its ability to quickly
shift acquisition, development, redevelopment, and disposition activities to
markets that will optimize the performance of the Company's portfolio.

As of December 31, 2021, the Company owned or had ownership interests in 252
operating apartment communities, comprising 61,911 apartment homes, excluding
the Company's ownership in preferred equity co-investments, loan investments,
three operating commercial buildings, and a development pipeline comprised of
one consolidated project and one unconsolidated joint venture project.

The Company’s apartment communities are primarily located in the following major regions:


Southern California (primarily Los Angeles, Orange, San Diego, and Ventura
counties)
Northern California (the San Francisco Bay Area)
Seattle Metro (Seattle metropolitan area)

As of December 31, 2021, the Company's development pipeline was comprised of one
consolidated project under development, one unconsolidated joint venture project
under development, and various predevelopment projects aggregating 371 apartment
homes, with total incurred costs of $156.0 million, and estimated remaining
project costs of approximately $61.0 million, $32.6 million of which represents
the Company's estimated remaining costs, for total estimated project costs of
$217.0 million.

From December 31, 2021the Company also had an interest in three commercial properties in operation (totalling approximately 281,000 square feet).


By region, the Company's operating results for 2021 and 2020 and projection for
2022 new housing supply (defined as new multifamily apartment homes and single
family homes, excluding developments with fewer than 50 apartment homes as well
as student, senior and 100% affordable housing), projection for 2022 job growth,
and 2022 estimated Same-Property revenue growth are as follows:

Southern California Region:  As of December 31, 2021, this region represented
43% of the Company's consolidated operating apartment homes. Revenues for "2021
Same-Properties" (as defined below), or "Same-Property revenues," increased 3.2%
in 2021 as compared to 2020. In 2022, the Company projects new residential
supply of 31,750 apartment homes and single family homes, which represents 0.5%
of the total housing stock. The Company projects an increase of 310,000 jobs or
4.0% in the Southern California region.

Northern California Region:  As of December 31, 2021, this region represented
37% of the Company's consolidated operating apartment homes. Same-Property
revenues decreased 5.6% in 2021 as compared to 2020. In 2022, the Company
projects new residential supply of 18,250 apartment homes and single family
homes, which represents 0.8% of the total housing stock. The Company projects an
increase of 157,000 jobs or 4.7% in the Northern California region.

Seattle Metro Region: As of December 31, 2021, this region represented 20% of
the Company's consolidated operating apartment homes. Same-Property revenues
decreased 1.7% in 2021 as compared to 2020. In 2022, the Company projects new
residential supply of 14,800 apartment homes and single family homes, which
represents 1.1% of the total housing stock. The Company projects an increase of
63,000 jobs or 3.6% in the Seattle Metro region.

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In total, the Company projects an increase in 2022 Same-Property revenues of
between 7.0% to 8.5%. Same-Property operating expenses are projected to increase
in 2022 by 3.5% to 4.5%.

The Company’s consolidated operating communities are as follows:

                                                               As of                                         As of
                                                         December 31, 2021                             December 31, 2020
                                                Apartment Homes               %               Apartment Homes               %
Southern California                                     22,190                  43  %                 22,560                  43  %
Northern California                                     19,123                  37  %                 19,319                  37  %
Seattle Metro                                           10,341                  20  %                 10,217                  20  %
Total                                                   51,654                 100  %                 52,096                 100  %



Co-investments, including Wesco I, Wesco III, Wesco IV, Wesco V, Wesco VI,
BEXAEW, BEX II, BEX IV, and 500 Folsom communities, developments under
construction, and preferred equity interest co-investment communities are not
included in the table presented above for both periods. A community previously
held in the BEX III co-investment was consolidated in the second quarter of 2021
and is excluded from the December 31, 2020 table but included in the December
31, 2021 table.

The COVID-19 Pandemic

The United States and other countries around the world are continuing to
experience impacts related to the COVID-19 pandemic and its related variants
which has created considerable instability, disruption, and uncertainty.
Governmental authorities in impacted regions are taking extraordinary steps in
an effort to slow down the spread of the viruses and mitigate its impact on
affected populations. Federal, state and local jurisdictions have implemented
varying forms of requirements related to sponsors and patrons of public
gatherings and required businesses to make changes to their operations in a
manner that negatively affects profitability, resulting in job losses and
related financial impacts that may affect future operations to an unknown
extent. While the California eviction moratorium sunsetted during the third
quarter of 2021, other state and local eviction moratoriums and laws that limit
rent increases during times of emergency and prohibit the ability to collect
unpaid rent during certain timeframes continue to be in effect in various
formats at various regions in which Essex's communities are located, impacting
Essex and its properties. The Company is working to comply with the stated
intent of local, county, state and federal laws. In that regard, the Company has
implemented a wide range of practices to protect and support its employees and
residents. Such measures include instituting a hybrid work model for corporate
associates to work at the Company's corporate offices and remotely, and
transitioning many public interactions with leasing staff to on-line and
telephonic communications;

Due to the COVID-19 pandemic, some of the Company's residents, their health,
their employment, and, thus, their ability to pay rent, have been and may
continue to be impacted. To support residents, the Company has implemented the
following steps, including, but not limited to:
•assembling a Resident Response Team to effectively and efficiently respond to
resident needs and concerns with respect to the pandemic;
•structuring payment plans for residents who are unable to pay their rent as a
result of the outbreak and waiving late fees where required or applicable for
those residents; and
•establishing the Essex Cares fund for the purpose of supporting the Company's
residents and communities that are experiencing financial hardships caused by
the COVID-19 pandemic.

The impact of the COVID-19 pandemic on the U.S. and world economies generally,
and on the Company's results in particular, has been, and may continue to be
significant. The long-term impact will largely depend on future developments,
which are highly uncertain and cannot be predicted, including, but not limited
to, whether employees and employers will continue to promote remote work if and
when the pandemic concludes. This includes new information which may emerge
concerning the severity of COVID-19 and related variants, the success of actions
taken to contain or treat COVID-19, future laws that may be enacted, the impact
on job growth and the broader economy, and reactions by consumers, companies,
governmental entities and capital markets. The labor shortage due partly to
various government mandates and vaccine requirements implemented during the
COVID-19 pandemic and supply chain disruptions may negatively impact the
Company's results of operations.

Primarily as a result of the impact of the COVID-19 pandemic, the Company's cash
delinquencies as a percentage of scheduled rental income for the Company's
stabilized apartment communities or "Same-Property" (stabilized properties
consolidated by the Company for the years ended December 31, 2021 and 2020)
remained higher than the pre-pandemic period but improved from 2.5% for 2020 to
1.9% for 2021. The Company has executed some payment plans and will continue to
work with residents
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to collect such cash delinquencies. As a result of continued analysis of the
collectability of delinquencies, reported delinquencies as a percentage of
scheduled rent for the Company's Same-Property portfolio was 2.0% for the year
ended December 31, 2021. As of December 31, 2021, the delinquencies have not had
a material adverse impact to the Company's liquidity position.

The COVID-19 pandemic has not negatively impacted the Company's ability to
access traditional funding sources on the same or reasonably similar terms as
were available in recent periods prior to the pandemic, as demonstrated by the
Company's financing activity during the year ended December 31, 2021 discussed
in the "Liquidity and Capital Resources" section below. The Company is not at
material risk of not meeting the covenants in its credit agreements and is able
to timely service its debt and other obligations.

                             RESULTS OF OPERATIONS

Year Ended Comparison December 31, 2021 to the year ended December 31, 2020


The Company's average financial occupancy for the Company's stabilized apartment
communities or "2021 Same-Property" (stabilized properties consolidated by the
Company for the years ended December 31, 2021 and 2020) increased 40 basis
points to 96.4% in 2021 from 96.0% in 2020. Financial occupancy is defined as
the percentage resulting from dividing actual rental income by total scheduled
rental income. Actual rental income represents contractual rental income
pursuant to leases without considering delinquency and concessions. Total
scheduled rental income represents the value of all apartment homes, with
occupied apartment homes valued at contractual rental rates pursuant to leases
and vacant apartment homes valued at estimated market rents. The Company
believes that financial occupancy is a meaningful measure of occupancy because
it considers the value of each vacant apartment home at its estimated market
rate.

Market rates are determined using the recently signed effective rates on new
leases at the property and are used as the starting point in the determination
of the market rates of vacant apartment homes. The Company may increase or
decrease these rates based on a variety of factors, including overall supply and
demand for housing, concentration of new apartment deliveries within the same
submarket which can cause periodic disruption due to greater rental concessions
to increase leasing velocity, and rental affordability. Financial occupancy may
not completely reflect short-term trends in physical occupancy and financial
occupancy rates, and the Company's calculation of financial occupancy may not be
comparable to financial occupancy disclosed by other REITs.

The Company does not take into account delinquency and concessions to calculate
actual rent for occupied apartment homes and market rents for vacant apartment
homes. The calculation of financial occupancy compares contractual rates for
occupied apartment homes to estimated market rents for unoccupied apartment
homes, and thus the calculation compares the gross value of all apartment homes
excluding delinquency and concessions. For apartment communities that are
development properties in lease-up without stabilized occupancy figures, the
Company believes the physical occupancy rate is the appropriate performance
metric. While an apartment community is in the lease-up phase, the Company's
primary motivation is to stabilize the property, which may entail the use of
rent concessions and other incentives, and thus financial occupancy, which is
based on contractual income is not considered the best metric to quantify
occupancy.

The regional breakdown of the Company's 2021 Same-Property portfolio for
financial occupancy for the years ended December 31, 2021 and 2020 is as
follows:
                             Years ended
                            December 31,
                          2021           2020
Southern California         96.8  %     96.0  %
Northern California         96.2  %     96.1  %
Seattle Metro               96.2  %     96.0  %



The following table provides a breakdown of revenue amounts, including revenue attributable to 2021 comparable properties.

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                                                                                         Years Ended
                                                 Number of Apartment                    December 31,                      Dollar              Percentage
Property Revenues ($ in thousands)                      Homes                     2021                 2020               Change                Change
2021 Same-Properties:
Southern California                                    20,800                $   557,906          $   540,771          $  17,135                      3.2  %
Northern California                                    16,072                    490,513              519,746            (29,233)                    (5.6) %
Seattle Metro                                          10,218                    239,819              243,900             (4,081)                    (1.7) %
Total 2021 Same-Property Revenues                      47,090                  1,288,238            1,304,417            (16,179)                    (1.2) %
2021 Non-Same Property Revenues                                                  143,180              181,733            (38,553)                   (21.2) %
Total Property Revenues                                                      $ 1,431,418          $ 1,486,150          $ (54,732)                    (3.7) %



2021 Same-Property Revenues decreased by $16.2 million or 1.2% to $1.3 billion
for 2021. The decrease was primarily attributable to an additional $5.3 million
of cash concessions and $1.2 million in delinquencies compared to the prior year
and due to a decrease of 1.5% in average rental rates from $2,349 for 2020 to
$2,313 for 2021.

2021 Non-Same Property Revenues decreased by $38.6 million or 21.2% to $143.2
million in 2021 compared to $181.7 million in 2020. The decrease was primarily
due to property dispositions in 2020 and the sale of Hidden Valley, Axis 2300,
Park 20, and Devonshire Apartments in 2021 partially offset by the acquisition
of The Village at Toluca Lake.

Management and other fees from affiliates decreased by $0.5 million or 5.2% to
$9.1 million in 2021 from $9.6 million in 2020. The decrease was primarily due
to a decrease in revenues used to calculate management fees as well as a
decrease of the management fee rate for one of the joint ventures.

Property operating expenses, excluding real estate taxes increased by $1.5
million or 0.6% to $264.9 million in 2021 compared to $263.4 million in 2020,
primarily due to an increase of $3.8 million in utilities expenses offset by a
$2.4 million decrease in administrative expenses. 2021 Same-Property operating
expenses, excluding real estate taxes, increased by $5.3 million or 2.2% to
$241.8 million in 2021 compared to $236.5 million in 2020, primarily due to
increases of $4.1 million in utilities expenses, $2.2 million in insurance and
other expenses, and $1.2 million in maintenance and repairs expenses, offset by
a decrease of $2.2 million in administrative expenses.

Real estate taxes increased by $3.4 million or 1.9% to $180.4 million in 2021
compared to $177.0 million in 2020, primarily due to increases in assessed
valuations and tax rates. 2021 Same-Property real estate taxes increased by $3.6
million or 2.4% to $155.0 million in 2021 compared to $151.4 million in 2020
primarily due to increases in assessed valuations and tax rates.

Enterprise-level property management spending increased by $1.6 million i.e. 4.6% to $36.2 million in 2021 compared to $34.6 million in 2020 due to the costs of centralizing certain functions at the building level.


Depreciation and amortization expense decreased by $5.4 million or 1.0% to
$520.1 million in 2021 compared to $525.5 million in 2020, primarily due to a
decrease in amortization expense resulting from certain lease intangibles
becoming fully amortized during 2020 and the sale of Hidden Valley, Axis 2300,
Park 20, and Devonshire Apartments during 2021.

Gain on sale of real estate and land of $143.0 million in 2021 was attributable
to the sale of Hidden Valley, Axis 2300, Park 20, and Devonshire Apartments
during 2021. The Company's $65.0 million gain on sale of real estate and land in
2020 was primarily attributable to the portfolio sale of One South Market and
Museum Park, and the sales of Delano and 416 on Broadway during 2020.

Interest expense decreased by $17.5 million or 7.9% to $203.1 million in 2021
compared to $220.6 million in 2020, primarily due to various debt that was paid
off, matured, or regular principal payments during and after 2020, and lower
average interest rates, which resulted in a decrease in interest expense of
$49.8 million for 2021. These decreases in interest expense were partially
offset by the issuance of new senior unsecured notes which resulted in an
increase of $23.8 million interest expense for 2021 as compared to 2020.
Additionally, there was a $8.5 million decrease in capitalized interest in 2021,
due to a decrease in development activity as compared to the same period in
2020.

Total income from yield swaps of $10.8 million in 2021 consists of monthly settlements related to the Company’s four total return swap contracts with an aggregate notional amount of $224.4 million.

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Interest and other income increased by $57.7 million or 140.7% to $98.7 million
in 2021 compared to $41.0 million in 2020, primarily due to increases of $34.3
million in insurance reimbursements, legal settlements and other driven by a
one-time legal settlement claim, $20.6 million in unrealized gains on marketable
securities, $7.9 million in marketable securities and other income, $4.9 million
in income from early redemption of notes receivable, and $1.3 million in gain on
sale of marketable securities. These increases were offset by a $11.8 million
decrease in interest income resulting from the maturity of a mortgage backed
security investment in 2020.

Equity income from co-investments increased by $45.2 million or 68.0% to $111.7
million in 2021 compared to $66.5 million in 2020, primarily due to increases of
$50.3 million in equity income from non-core co-investments and $11.6 million in
income from preferred equity investments including income from early
redemptions. These increases were offset by decreases of $8.8 million in equity
income from co-investments and $6.5 million in co-investment promote income.

Deferred tax expense on unrealized gain on unconsolidated co-investment of $15.7
million in 2021 resulted from a net unrealized gain of $53.7 million from an
unconsolidated co-investments.

Loss on early retirement of debt, net of $19.0 million in 2021 was primarily due
to the early termination of the Company's
five interest rate swap contracts in conjunction with the partial repayment of
the Company's unsecured term debt and the early repayment of $300.0 million of
senior unsecured notes.

Gain on remeasurement of co-investment of $2.3 million in 2021 resulted from the
Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake
community in the second quarter of 2021. Gain on remeasurement of $234.7 million
in 2020 resulted from the Company's purchase of Canada Pension Plan Investment
Board's ("CPPIB") 45.0% co-investment interests during the first quarter of
2020.

Year Ended Comparison December 31, 2020 to the year ended December 31, 2019


For the comparison of the years ended December 31, 2020 and December 31, 2019,
refer to Part II, Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on Form 10-K for the fiscal year ended
December 31, 2020, filed with the SEC on February 19, 2021 under the subheading
"Comparison of Year Ended December 31, 2020 to the Year Ended December 31,
2019."

Cash and capital resources


The following table sets forth the Company's cash flows for 2021, 2020 and 2019
($ in thousands):
                                             For the year ended December 31,
                                          2021             2020            2019
Cash flow provided by (used in):
Operating activities                  $   905,259      $  803,108      $  919,079
Investing activities                  $  (397,397)     $ (416,900)     $ (527,691)
Financing activities                  $  (533,265)     $ (383,261)     $ (461,689)



Essex's business is operated primarily through the Operating Partnership. Essex
issues public equity from time to time, but does not otherwise generate any
capital itself or conduct any business itself, other than incurring certain
expenses from operating as a public company which are fully reimbursed by the
Operating Partnership. Essex itself does not hold any indebtedness, and its only
material asset is its ownership of partnership interests of the Operating
Partnership. Essex's principal funding requirement is the payment of dividends
on its common stock and preferred stock. Essex's sole source of funding for its
dividend payments is distributions it receives from the Operating Partnership.

From December 31, 2021, Essex held a 96.6% general partner interest and the limited partners held the remaining 3.4% interest in the Operational partnership.


The liquidity of Essex is dependent on the Operating Partnership's ability to
make sufficient distributions to Essex. The primary cash requirement of Essex is
its payment of dividends to its stockholders. Essex also guarantees some of the
Operating Partnership's debt, as discussed further in Notes 7 and 8 to our
consolidated financial statements included in Part IV, Item 15 of this Annual
Report on Form 10-K. If the Operating Partnership fails to fulfill certain of
its debt requirements, which trigger Essex's guarantee obligations, then Essex
will be required to fulfill its cash payment commitments under such guarantees.
However, Essex's only significant asset is its investment in the Operating
Partnership.
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For Essex to maintain its qualification as a REIT, it must pay dividends to its
stockholders aggregating annually at least 90% of its REIT taxable income,
excluding net capital gains. While historically Essex has satisfied this
distribution requirement by making cash distributions to its stockholders, it
may choose to satisfy this requirement by making distributions of other
property, including, in limited circumstances, Essex's own stock. As a result of
this distribution requirement, the Operating Partnership cannot rely on retained
earnings to fund its ongoing operations to the same extent that other companies
whose parent companies are not REITs can. Essex may need to continue to raise
capital in the equity markets to fund the Operating Partnership's working
capital needs, acquisitions and developments.

At December 31, 2021, the Company had $48.4 million of unrestricted cash and
cash equivalents and $191.8 million in marketable securities. The Company
believes that cash flows generated by its operations, existing cash and cash
equivalents, marketable securities balances and availability under existing
lines of credit are sufficient to meet all of its anticipated cash needs during
2022. Additionally, the capital markets continue to be available and the Company
is able to generate cash from the disposition of real estate assets to finance
additional cash flow needs, including continued development and select
acquisitions. In the event that conditions become further exacerbated due to the
COVID-19 pandemic and related economic disruptions or otherwise, the Company may
further utilize other resources such as its cash reserves, lines of credit, or
decreased investment in redevelopment activities to supplement operating cash
flows. The Company is carefully monitoring and managing its cash position in
light of ongoing conditions and levels of operations. The timing, source and
amounts of cash flows provided by financing activities and used in investing
activities are sensitive to changes in interest rates and other fluctuations in
the capital markets environment, which can affect the Company's plans for
acquisitions, dispositions, development and redevelopment activities.

As of December 31, 2021, the Company had $5.4 billion of fixed rate public bonds
outstanding at an average interest rate of 3.3% with maturity dates ranging from
2023 to 2050.

As of December 31, 2021, the Company's mortgage notes payable totaled $639.0
million, net of unamortized premiums and debt issuance costs, which consisted of
$415.4 million in fixed rate debt at an average interest rate of 3.5% and
maturity dates ranging from 2022 to 2028 and $223.6 million of tax-exempt
variable rate demand notes with a weighted average interest rate of 1.1%. The
tax-exempt variable rate demand notes have maturity dates ranging from 2027 to
2046. $224.4 million is subject to total return swaps.

As of December 31, 2021, the Company had two unsecured lines of credit
aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and
a $35.0 million working capital unsecured line of credit. As of December 31,
2021, there was $340.0 million amount outstanding on the $1.2 billion unsecured
line of credit. The interest rate is based on a tiered rate structure tied to
the Company's credit ratings and was LIBOR plus 0.775% as of December 31,
2021. There was $1.3 million outstanding on the Company's $35.0 million working
capital unsecured line of credit as of December 31, 2021. The interest rate on
the amended line is based on a tiered rate structure tied to the Company's
credit ratings and is currently at LIBOR plus 0.775%.

The Company's unsecured lines of credit and unsecured debt agreements contain
debt covenants related to limitations on indebtedness and liabilities and
maintenance of minimum levels of consolidated earnings before depreciation,
interest and amortization. The Company was in compliance with the debt covenants
as of December 31, 2021 and 2020.

The Company pays quarterly dividends from cash available for distribution. Until
it is distributed, cash available for distribution is invested by the Company
primarily in investment grade securities held available for sale or is used by
the Company to reduce balances outstanding under its lines of credit.

Spin-off activity


The Company uses interest rate swaps, interest rate caps, and total return swap
contracts to manage certain interest rate risks. The valuation of these
instruments is determined using widely accepted valuation techniques including
discounted cash flow analysis on the expected cash flows of each derivative.
This analysis reflects the contractual terms of the derivatives, including the
period to maturity, and uses observable market-based inputs, including interest
rate curves. The fair values of interest rate swaps and total return swaps are
determined using the market standard methodology of netting the discounted
future fixed cash receipts (or payments) and the discounted expected variable
cash payments (or receipts). The variable cash payments (or receipts) are based
on an expectation of future interest rates (forward curves) derived from
observable market interest rate curves. The Company incorporates credit
valuation adjustments to appropriately reflect both its own nonperformance risk
and the respective counterparty's nonperformance risk in the fair value
measurements.

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The Company has four total return swap contracts, with an aggregate notional
amount of $224.4 million, that effectively converts $224.4 million of mortgage
notes payable to a floating interest rate based on the Securities Industry and
Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. The
total return swaps provide fair market value protection on the mortgage notes
payable to our counterparties during the initial period of the total return swap
until the Company's option to call the mortgage notes at par can be exercised.
The Company can currently call all four of the total return swaps, with $224.4
million of the outstanding debt at par. These derivatives do not qualify for
hedge accounting.

As of December 31, 2021 and 2020, the aggregate carrying value of the interest
rate swap contracts was a liability of zero and $2.4 million, respectively. As
of December 31, 2021 and 2020, the swap contracts were presented in the
consolidated balance sheets as a liability of zero and $2.4 million,
respectively, and were included in other liabilities on the consolidated balance
sheets. The aggregate carrying and fair value of the total return swaps was zero
at both December 31, 2021 and 2020.

Hedge ineffectiveness related to cash flow hedges, which is reported in current
year income as interest expense, net was zero, zero, and a loss of $0.2 million,
for the years ended December 31, 2021, 2020, and 2019, respectively.

Issue of common shares


In September 2021, the Company entered into the 2021 ATM Program, a new equity
distribution agreement pursuant to which the Company may offer and sell shares
of its common stock having an aggregate gross sales price of up to $900.0
million. In connection with the 2021 ATM Program, the Company may also enter
into related forward sale agreements, and may sell shares of its common stock
pursuant to these agreements. The use of a forward sale agreement would allow
the Company to lock in a share price on the sale of shares of its common stock
at the time the agreement is executed, but defer receipt of the proceeds from
the sale of shares until a later date should the Company elect to settle such
forward sale agreement, in whole or in part, in shares of common stock.

The 2021 ATM Program replaces the prior equity distribution agreement entered
into in September 2018 (the "2018 ATM Program"), which was terminated upon the
establishment of the 2021 ATM Program. For the year ended December 31, 2021, the
Company did not sell any shares of its common stock through the 2021 ATM Program
or through the 2018 ATM Program. As of December 31, 2021, there were no
outstanding forward purchase agreements, and $900.0 million of shares remain
available to be sold under the 2021 ATM Program. For the year ended December 31,
2020, the Company did not issue any shares of its common stock through the 2018
ATM Program. For the year ended December 31, 2019, the Company issued 228,271
shares of common stock through the 2018 ATM Program at an average price of
$321.56 per share for proceeds of $73.4 million.

Capital expenditure


Non-revenue generating capital expenditures are improvements and upgrades that
extend the useful life of the property. For the year ended December 31, 2021,
non-revenue generating capital expenditures totaled approximately $1,914 per
apartment home. These expenditures do not include expenditures for deferred
maintenance on acquisition properties, expenditures for property renovations and
improvements which are expected to generate additional revenue or cost savings,
and do not include expenditures incurred due to changes in government
regulations that the Company would not have incurred otherwise, costs related to
the COVID-19 pandemic, retail, furniture and fixtures, or expenditures for which
the Company expects to be reimbursed. The Company expects that cash from
operations and/or its lines of credit will fund such expenditures.

Development and pre-development pipeline


The Company defines development projects as new communities that are being
constructed, or are newly constructed and are in a phase of lease-up and have
not yet reached stabilized operations. As of December 31, 2021, the Company's
development pipeline was comprised of one consolidated project under
development, one unconsolidated joint venture project under development and
various consolidated predevelopment projects, aggregating 371 apartment homes,
with total incurred costs of $156.0 million, and estimated remaining project
costs of approximately $61.0 million, $32.6 million of which represents the
Company's estimated remaining costs, for total estimated project costs of $217.0
million.

The Company defines predevelopment projects as proposed communities in
negotiation or in the entitlement process with an expected high likelihood of
becoming entitled development projects. The Company may also acquire land for
future development purposes or sale.

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The Company expects to fund the development and predevelopment communities by
using a combination of some or all of the following sources: its working
capital, amounts available on its lines of credit, construction loans, net
proceeds from public and private equity and debt issuances, and proceeds from
the disposition of assets, if any.

Other sources of capital


The Company utilizes co-investments as an alternative source of capital for
acquisitions of both operating and development communities. As of December 31,
2021, the Company had an interest in 264 apartment homes in communities actively
under development with joint ventures for total estimated costs of $102.0
million. Total estimated remaining costs total approximately $58.0 million, of
which the Company estimates that its remaining investment in these development
joint ventures will be approximately $29.6 million. In addition, the Company had
an interest in 10,257 apartment homes in operating communities with joint
ventures and other investments for a total book value of $565.3 million.

Real estate and other liabilities

The following table summarizes the Company’s unfunded real estate and other future commitments as of December 31, 2021 (in thousands of dollars):

                                                                                                                    Remaining
                                                               Number of Properties           Investment           Commitment
Joint ventures (1):
Preferred equity investments                                               4                $   128,000          $     27,867
Mezzanine loans                                                            2                    140,000                52,734
Non-core co-investments                                                    -                     37,000                16,020

Consolidated:
Real estate under development                                              1                     91,162                 3,000
                                                                                            $   396,162          $     99,621


(1) Excludes approximately $29.6 million from the Corporation of the estimated project costs for Scripps Mesa Apartments which were fully funded.

AT December 31, 2021the Company had operating lease commitments of $167.4 million for land, construction and garage leases expiring from 2025 to 2083. $7.0 million of this commitment is due within the next twelve months.

Variable interest entities


In accordance with accounting standards for consolidation of variable interest
entities ("VIEs"), the Company consolidates the Operating Partnership, 18
DownREIT entities (comprising nine communities) and six co-investments as of
December 31, 2021. As of December 31, 2020, the Company consolidated the
Operating Partnership, 17 DownREIT entities (comprising nine communities), and
five co-investments. The Company consolidates these entities because it is
deemed the primary beneficiary. Essex has no assets or liabilities other than
its investment in the Operating Partnership. The consolidated total assets and
liabilities related to the above consolidated co-investments and DownREIT
entities, net of intercompany eliminations, were approximately $909.3 million
and $320.1 million, respectively, as of December 31, 2021, and $898.5 million
and $326.8 million, respectively, as of December 31, 2020. Noncontrolling
interests in these entities were $122.4 million and $120.8 million as of
December 31, 2021 and 2020, respectively. The Company's financial risk in each
VIE is limited to its equity investment in the VIE. As of December 31, 2021, the
Company did not have any other VIEs of which it was deemed to be the primary
beneficiary and did not have any VIEs of which it was not deemed to be the
primary beneficiary.

Critical accounting estimates


The preparation of consolidated financial statements, in accordance with U.S.
GAAP, requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and related
disclosures of contingent assets and liabilities. The Company defines critical
accounting estimates as those estimates that involve a significant level of
estimation uncertainty and have had or are reasonably likely to have a material
impact on the financial condition or results of operations of the Company.  The
Company's critical accounting estimates relate principally to the following key
areas: (i) accounting for the acquisition of investments in real estate
(specifically, the allocation between land and buildings during the
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Table of contents year completed December 31, 2020); and (ii) the assessment of events and changes in circumstances indicating whether the Company’s rental properties may be impaired. The Company bases its estimates on historical experience, current market conditions and various other assumptions believed to be reasonable under the circumstances. Actual results may differ from estimates made by management.


The Company accounts for its acquisitions of investments in real estate by
assessing each acquisition to determine if it meets the definition of a business
or if it qualifies as an asset acquisition. We expect that acquisitions of
individual operating communities will generally be viewed as asset acquisitions,
and result in the capitalization of acquisition costs, and the allocation of
purchase price to the assets acquired and liabilities assumed based on the
relative fair value of the respective assets and liabilities.

In making estimates of fair values for purposes of allocating purchase price,
the Company utilizes a number of sources, including independent land appraisals
which consider comparable market transactions, its own analysis of recently
acquired or developed comparable properties in our portfolio for land
comparables and building replacement costs, and other publicly available market
data. In calculating the fair value of identified intangible assets of an
acquired property, the in-place leases are valued based on in-place rent rates
and amortized over the average remaining term of all acquired leases. The
allocation of the total consideration exchanged for a real estate acquisition
between the identifiable assets and liabilities and the depreciation we
recognize over the estimated useful life of the asset could be impacted by
different assumptions and estimates used in the calculation. The reasonable
likelihood that the estimate could have a material impact on the financial
condition of the Company is based on the total consideration exchanged for real
estate during any given year. The allocation of the value between land and
building was a critical accounting estimate during the year ended December 31,
2020 as result of the potential material impact of the Company's acquisition of
a land parcel and six communities for a total purchase price of $463.4 million.

The Company periodically assesses the carrying value of its real estate
investments for indicators of impairment. The judgments regarding the existence
of impairment indicators are based on monitoring investment market conditions
and performance for operating properties including the net operating income for
the most recent 12 month period, monitoring estimated costs for properties under
development, the Company's ability to hold and its intent with regard to each
asset, and each property's remaining useful life. Although each of these may
result in an impairment indicator, the shortening of an expected holding period
due to the potential sale of a property is the most likely impairment indicator.
Whenever events or changes in circumstances indicate that the carrying amount of
a property held for investment may not be fully recoverable, the carrying amount
is evaluated. If the sum of the property's expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the property, then the Company will recognize an impairment loss equal to the
excess of the carrying amount over the fair value of the property. Changes in
operating and market conditions may result in a change of our intent to hold the
property through the end of its useful life and may impact the assumptions
utilized to determine the future cash flows of the real estate investment.

The Company bases its accounting estimates on historical experience and various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates and these estimates may differ under different assumptions or conditions.

Funds from operations


Funds from Operations ("FFO") is a financial measure that is commonly used in
the REIT industry. The Company presents FFO and FFO excluding non-core items
(referred to as "Core FFO") as supplemental operating performance measures. FFO
and Core FFO are not used by the Company as, nor should they be considered to
be, alternatives to net income computed under U.S. GAAP as an indicator of the
Company's operating performance or as alternatives to cash from operating
activities computed under U.S. GAAP as an indicator of the Company's ability to
fund its cash needs.

FFO and Core FFO are not meant to represent a comprehensive system of financial
reporting and do not present, nor do they intend to present, a complete picture
of the Company's financial condition and operating performance. The Company
believes that net income computed under U.S. GAAP is the primary measure of
performance and that FFO and Core FFO are only meaningful when they are used in
conjunction with net income. The Company considers FFO and Core FFO to be useful
financial performance measurements of an equity REIT because, together with net
income and cash flows, FFO and Core FFO provide investors with additional bases
to evaluate operating performance and ability of a REIT to incur and service
debt and to fund acquisitions and other capital expenditures and to pay
dividends. By excluding gains or losses related to sales of depreciated
operating properties and excluding real estate depreciation (which can vary
among owners of identical assets in similar condition based on historical cost
accounting and useful life estimates), FFO can help investors compare the
operating performance of a real estate company between periods or as compared to
different companies. By further adjusting for items that are not considered part
of the Company's core business operations, Core FFO allows investors to compare
the core
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operating performance of the Company to its performance in prior reporting
periods and to the operating performance of other real estate companies without
the effect of items that by their nature are not comparable from period to
period and tend to obscure the Company's actual operating results. The Company
believes that its consolidated financial statements, prepared in accordance with
U.S. GAAP, provide the most meaningful picture of its financial condition and
its operating performance.

In calculating FFO, the Company follows the definition of this measure published by NAREIT, which is the leading association for the REIT industry. The Company believes that, under the NAREIT FFO definition, the two most significant adjustments to net income are (i) the exclusion of amortization at historical cost and (ii) the exclusion of gains and losses from sale of previously depreciated properties. The Company agrees that these two NAREIT adjustments are useful to investors for the following reasons:


(a)historical cost accounting for real estate assets in accordance with U.S.
GAAP assumes, through depreciation charges, that the value of real estate assets
diminishes predictably over time. NAREIT stated in its White Paper on Funds from
Operations "since real estate asset values have historically risen or fallen
with market conditions, many industry investors have considered presentations of
operating results for real estate companies that use historical cost accounting
to be insufficient by themselves." Consequently, NAREIT's definition of FFO
reflects the fact that real estate, as an asset class, generally appreciates
over time and depreciation charges required by U.S. GAAP do not reflect the
underlying economic realities.

(b)REITs were created as a legal form of organization in order to encourage
public ownership of real estate as an asset class through investment in firms
that were in the business of long-term ownership and management of real estate.
The exclusion, in NAREIT's definition of FFO, of gains and losses from the sales
of previously depreciated operating real estate assets allows investors and
analysts to readily identify the operating results of the long-term assets that
form the core of a REIT's activity and assists in comparing those operating
results between periods.

Management believes that it has consistently applied the NAREIT definition of
FFO to all periods presented. However, there is judgment involved and other
REITs' calculation of FFO may vary from the NAREIT definition for this measure,
and thus their disclosure of FFO may not be comparable to the Company's
calculation.

The table below is a reconciliation of net income available to common shareholders to FFO and base FFO for the years ended December 31, 20212020 and 2019.

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Contents

                                                                       As 

from and for the years ended the 31st of December,

                                                                      2021                  2020                2019
                                                                       ($ in thousands, except per share amounts)
OTHER DATA:
Funds from operations attributable to common
stockholders and unitholders:
Net income available to common stockholders                    $       488,554          $  568,870          $  439,286
Adjustments:
Depreciation and amortization                                          520,066             525,497             483,750
Gains not included in FFO attributable to common
stockholders and unitholders                                          (145,253)           (301,886)            (79,468)
Impairment loss                                                              -               1,825               7,105
Impairment loss from unconsolidated co-investments                           -                   -              11,484

Depreciation and amortization from unconsolidated
co-investments                                                          61,059              51,594              60,655

Minority interests related to Operational partnership
units

                                                                   17,191              19,912              15,343

Depreciation attributable to third-party ownership and other

                                                                     (571)               (539)             (1,805)
Funds from operations attributable to common
stockholders and unitholders                                   $       941,046          $  865,273          $  936,350
Non-core items:

Expensed acquisition and investment related costs                          203               1,591                 168
Deferred tax expense on unrealized gain on
unconsolidated co-investment (1)                                        15,668               1,531               1,457
Gain on sale of marketable securities                                   (3,400)             (2,131)             (1,271)
Unrealized gains on marketable securities                              (33,104)            (12,515)             (5,710)
Provision for credit losses                                                141                 687                   -
Equity income from non-core co-investment (2)                          (55,602)             (5,289)             (4,143)
Interest rate hedge ineffectiveness                                          -                   -                 181
 Loss (gain) on early retirement of debt, net                           19,010              22,883              (3,717)
Loss (gain) on early retirement of debt from
unconsolidated co-investment                                                25                 (38)                  -
Co-investment promote income                                                 -              (6,455)               (809)
Income from early redemption of preferred equity
investments                                                             (8,469)               (210)             (3,562)

Accelerated interest income from the maturity of the investment in mortgage-backed securities

                                                  -             (11,753)             (7,032)

General and administrative and other, net                                1,026              14,958               1,181

Insurance reimbursements, legal and other settlements, net

                                                                    (35,234)                (81)               (858)
Core funds from operations attributable to common
stockholders and unitholders                                   $       

841 310 $868,451 $912,235
Weighted average number of shares outstanding, diluted (FFO) (3)

                                                               67,335              67,726              68,199
Funds from operations attributable to common
stockholders and unitholders per share - diluted               $         13.98          $    12.78          $    13.73
Core funds from operations attributable to common
stockholders and unitholders per share - diluted               $         

12:49 $12.82 $13.38




(1)Represents deferred tax expense related to net unrealized gains on technology
co-investments.
(2)Represents the Company's share of co-investment income from technology
co-investments.
(3)Assumes conversion of all outstanding OP Units into shares of the Company's
common stock and excludes DownREIT units.

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Net Operating Income

Net operating income ("NOI") and Same-Property NOI are considered by management
to be important supplemental performance measures to earnings from operations
included in the Company's consolidated statements of income. The presentation of
Same-Property NOI assists with the presentation of the Company's operations
prior to the allocation of depreciation and any corporate-level or
financing-related costs. NOI reflects the operating performance of a community
and allows for an easy comparison of the operating performance of individual
communities or groups of communities. In addition, because prospective buyers of
real estate have different financing and overhead structures, with varying
marginal impacts to overhead by acquiring real estate, NOI is considered by many
in the real estate industry to be a useful measure for determining the value of
a real estate asset or group of assets. The Company defines Same-Property NOI as
Same-Property revenues less Same-Property operating expenses, including property
taxes. Please see the reconciliation of earnings from operations to NOI and
Same-Property NOI, which in the table below is the NOI for stabilized properties
consolidated by the Company for the periods presented ($ in thousands):
                                                       2021            2020            2019
Earnings from operations                            $ 529,995      $  491,441      $  481,112
Adjustments:
Corporate-level property management expenses           36,188          34,573          34,067
Depreciation and amortization                         520,066         525,497         483,750
Management and other fees from affiliates              (9,138)         (9,598)         (9,527)
General and administrative                             51,838          65,388          54,262
Merger and integration expenses                             -               -               -

Acquisition and investment costs expensed 203 1,591

             168
Impairment loss                                             -           1,825           7,105
(Gain) Loss on sale of real estate and land          (142,993)        (64,967)          3,164
NOI                                                   986,159       1,045,750       1,054,101
Less: Non Same-Property NOI                           (94,755)       (129,158)        (77,204)
Same-Property NOI                                   $ 891,404      $  916,592      $  976,897



Forward-Looking Statements

Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and elsewhere in this Annual Report on
Form 10-K which are not historical facts may be considered forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the Securities Act") and Section 21E of the Exchange Act, including
statements regarding the Company's expectations, estimates, assumptions, hopes,
intentions, beliefs and strategies regarding the future. Words such as
"expects," "assumes," "anticipates," "may," "will," "intends," "plans,"
"projects," "believes," "seeks," "future," "estimates," and variations of such
words and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, among other things,
statements regarding the Company's expectations related to the continued impact
of the COVID-19 pandemic and related variants on the Company's business,
financial condition and results of operations and the impact of any additional
measures taken to mitigate the impact of the pandemic, the Company's intent,
beliefs or expectations with respect to the timing of completion of current
development and redevelopment projects and the stabilization of such projects,
the timing of lease-up and occupancy of its apartment communities, the
anticipated operating performance of its apartment communities, the total
projected costs of development and redevelopment projects, co-investment
activities, qualification as a REIT under the Internal Revenue Code of 1986, as
amended, 2022 Same-Property revenue and operating expenses generally and in
specific regions, the real estate markets in the geographies in which the
Company's properties are located and in the United States in general, the
adequacy of future cash flows to meet anticipated cash needs, its financing
activities and the use of proceeds from such activities, the availability of
debt and equity financing, general economic conditions including the potential
impacts from such economic conditions, including as a result of the COVID-19
pandemic and governmental measures intended to prevent its spread, trends
affecting the Company's financial condition or results of operations, changes to
U.S. tax laws and regulations in general or specifically related to REITs or
real estate, changes to laws and regulations in jurisdictions in which
communities the Company owns are located, and other information that is not
historical information.

While the Company's management believes the assumptions underlying its
forward-looking statements are reasonable, such forward-looking statements
involve known and unknown risks, uncertainties and other factors, many of which
are beyond the Company's control, which could cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. The
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  Table of     Contents
Company cannot assure the future results or outcome of the matters described in
these statements; rather, these statements merely reflect the Company's current
expectations of the approximate outcomes of the matters discussed. Factors that
might cause the Company's actual results, performance or achievements to differ
materially from those expressed or implied by these forward-looking statements
include, but are not limited to, the following: the continued impact of the
COVID-19 pandemic and related variants, which remains inherently uncertain as to
duration and severity, and any additional governmental measures taken to limit
its spread, and other potential future outbreaks of infectious diseases or other
health concerns, which could continue to adversely affect the Company's business
and its tenants, and cause a significant downturn in general economic
conditions, the real estate industry, and the markets in which the Company's
communities are located; uncertainty regarding ongoing hostility between Russia
and the Ukraine and the related impact on macroeconomic conditions as a result
of such conflict; the Company may fail to achieve its business objectives; the
actual completion of development and redevelopment projects may be subject to
delays; the stabilization dates of such projects may be delayed; the Company may
abandon or defer development or redevelopment projects for a number of reasons,
including changes in local market conditions which make development less
desirable, increases in costs of development, increases in the cost of capital
or lack of capital availability, resulting in losses; the total projected costs
of current development and redevelopment projects may exceed expectations; such
development and redevelopment projects may not be completed; development and
redevelopment projects and acquisitions may fail to meet expectations; estimates
of future income from an acquired property may prove to be inaccurate; occupancy
rates and rental demand may be adversely affected by competition and local
economic and market conditions; there may be increased interest rates and
operating costs; the Company may be unsuccessful in the management of its
relationships with its co-investment partners; future cash flows may be
inadequate to meet operating requirements and/or may be insufficient to provide
for dividend payments in accordance with REIT requirements; changes in laws or
regulations; the terms of any refinancing may not be as favorable as the terms
of existing indebtedness; unexpected difficulties in leasing of development
projects; volatility in financial and securities markets; the Company's failure
to successfully operate acquired properties; unforeseen consequences from
cyber-intrusion; the Company's inability to maintain our investment grade credit
rating with the rating agencies; government approvals, actions and initiatives,
including the need for compliance with environmental requirements; and those
further risks, special considerations, and other factors discussed in Item 1A,
Risk Factors, of this Form 10-K, and those risk factors and special
considerations set forth in the Company's other filings with the SEC which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Additionally, the
risks, uncertainties and other factors set forth above or otherwise referred to
in this Annual Report on Form 10-K and the other reports that the Company has
filed with the SEC may be further amplified by the global impact of the COVID-19
pandemic and related variants. All forward-looking statements are made as of the
date hereof, the Company assumes no obligation to update or supplement this
information for any reason, and therefore, they may not represent the Company's
estimates and assumptions after the date of this report.

© Edgar Online, source Previews

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Monica Lundy paints forgotten stories and overlooked individuals https://expo-monet.com/monica-lundy-paints-forgotten-stories-and-overlooked-individuals/ Tue, 22 Feb 2022 18:43:34 +0000 https://expo-monet.com/monica-lundy-paints-forgotten-stories-and-overlooked-individuals/ “I remember many times when I was little adults would watch me draw and ask me, ‘Are you going to be an artist when you grow up?’ said painter Monica Lundy. “I hated that question. I thought being an artist would be a terrible career choice. She imagined that she would become a scientist or […]]]>

“I remember many times when I was little adults would watch me draw and ask me, ‘Are you going to be an artist when you grow up?’ said painter Monica Lundy. “I hated that question. I thought being an artist would be a terrible career choice.

She imagined that she would become a scientist or a biologist. But in the end, she just didn’t want to give up her true creative nature to become something or someone else.

This resolve was perhaps related to the contrasting effects of the visual backgrounds in his biography. Born in Portland, Oregon, Lundy moved to Saudi Arabia when she was eight years old. She then traveled the world, experiencing various cultures.

As a small child, Lundy’s parents kept her occupied while they worked by placing her on the floor of their home office, surrounded by pencils, crayons, pens and paper. When she started drawing on the walls, her father lined them with butcher paper so she could draw as she pleased.

Monica Lundy, ‘Elizabeth (West Riding Lunatic Asylum, UK),’ 2021. From the series ‘Physiognomy of the Abandoned’. Photo by Daniele Puppi

As a teenager, she attended the Idyllwild School of Music and the Arts in Los Angeles, a boarding school for young artists. Afterwards, she moved again to study at the School of the Art Institute of Chicago, where she obtained her BFA in 1996. In 2001, Lundy spent a year in Florence, Italy, studying at Studio Art Centers International before landing in the Bay Area. where she lived the longest of her life.

Lundy is inspired by challenges. In her studio practice, she draws inspiration from rare historical images, which she finds through numerous trips to archives and museums around the world. The process serves as a pilgrimage, to get closer to its subject, and has included a deep dive into San Francisco’s history, with Lundy portraying its sex workers and people throughout history who have been incarcerated at Alcatraz and San Quentin.

“There’s a special connection that happens onsite that just doesn’t happen online,” Lundy said. “Talking with archivists and learning about different stories really ignites my curiosity and passion for the work.”

This historical curiosity finds an echo in its methods and techniques. His intuitive works, rendered in muted tones resembling old sepia-tinted photographs, used coffee, burnt paper, terracotta and white gold. They capture the feeling of a story that fades once left in the shadows.

Monica Lundy, ‘Patient with Leaves (Surrey County Lunatic Asylum, UK),’ 2021

The artist is also motivated by conversations with other creators, writers and historians, including her former mentor and beloved friend Hung Liu, who died in August. Lundy and Liu have created works that delve into the hidden stories of the past, exploring the world that has emerged from these often tumultuous histories. It was a shared fascination.

“I first met her as a professor at Mills College where I started the MFA program in 2008, specifically to study with her,” Lundy said. “We have spent so much time together talking about life, art and inspiration. For both of us, the key to inspiration is a process of seeking and maintaining an open curiosity about life. and history.

Lundy’s curious and experimental practice begins with a considerable amount of time spent reflecting on the source material, a process that, minute by minute, equals the time she actually spends painting. Until four years ago, she worked exclusively from her studio in Oakland. But in 2017, during a residency at the American Academy in Rome, she fell in love with Italian life. Lundy now has two additional studios in Italy: a gigantic warehouse in the Agricultural region of Pordenone north of Venice where she makes large-scale installations on several panels, and a second studio in the Prati district of Rome, the historic heart of the city which is close to the Tiber, the Piazza d’ Spain, Piazza Navona and the Vatican.

The artist with ‘Padiglione IV’, 2021. Photo by Daniele Puppi

“Situated between a music school and a church, there is often beautiful piano or choir music drifting through the windows,” she said. “And I cherish a routine walk to the art store that takes me right by the Pantheon and Bernini’s statue, ‘The Elephant and the Obelisk’.”

She also plans to open a studio on the family farm in Los Padres de Santa Barbara National Forest. Thanks to several studios, Lundy can indulge his passion for travel while continuing to work.

Interested in the cultural and societal perceptions surrounding characters who have existed on the periphery, Lundy explores how perceptions change over time. The simple fact of walking down a street can be an opportunity to perceive color, composition and history.

The pandemic has altered Lundy’s work in subtle ways. Previously, his paintings consisted almost entirely of portraits. During the COVID-19 epidemic, she began to think more about the spaces we inhabit: architecture, interiors, gardens. Each space, she realized, has its own personality, history and mysteries.

Lundy recently began a new series of liquid porcelain and mixed media paintings she calls “Portraits of Place”, which consist of psychologically charged landscapes, including the exterior and interior spaces of abandoned mental hospitals. Additionally, she worked on small “painting sketches,” formal studies for what would become larger multi-panel painting installations.

His most recent exhibitions include a solo exhibition at the Turner Carroll Gallery in Santa Fe entitled “Physiognomy of the Abandoned” and an installation in Rome of a 72-hour site-specific exhibition curated by Giuliana Benassi entitled “There is No Place Like Home / Roma.” Her work is represented by the Turner Carroll Gallery and Nancy Toomey Fine Art.

For more information, visit his Instagram page or www.monicalundy.com.

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Connection, Contemplation, and Contested Stories in Contemporary Native American and Indigenous Art https://expo-monet.com/connection-contemplation-and-contested-stories-in-contemporary-native-american-and-indigenous-art/ Thu, 17 Feb 2022 22:56:00 +0000 https://expo-monet.com/connection-contemplation-and-contested-stories-in-contemporary-native-american-and-indigenous-art/ LOS ANGELES — The rattling of horses echoes down the long, narrow hallway that leads to the entrance of Various Small Fires. The sound conjures up images of dusty paths, while the rhythm of the horses’ march accentuates your own footsteps, creating an overwhelming feeling of being penned between two walls. At the end of […]]]>

LOS ANGELES — The rattling of horses echoes down the long, narrow hallway that leads to the entrance of Various Small Fires. The sound conjures up images of dusty paths, while the rhythm of the horses’ march accentuates your own footsteps, creating an overwhelming feeling of being penned between two walls. At the end of the hall is the gallery’s gravel court, an oversized yellow ball swinging at its center. The ball, while exuberant as it bounces in the wind, also suggests something more serious: a pattern of concentric red, blue and black circles recalls a target or an evil eye. Both the balloon and the sound piece are from the Indigenous art collective Postcommodity. The balloon — originally part of the collective’s 2015 land art installation delineating the US-Mexico border, titled Repellent fence – draws attention to the history of the frontier itself as a product of settler colonialism, reminding viewers of the Indigenous communities that were and continue to be impacted by its policies.

These two pieces create an entry point to approach the rest of the exhibition Serpent whiskey still life and other stories by first acknowledging the literal earth on which the exhibition is staged, and then reminding viewers of all the stories, contested narratives and meanings that the earth holds. This recognition takes on particular resonance when one considers that the exhibition, curated by Todd Bockley of the Bockley Gallery in Minneapolis, brings together an intergenerational group of 11 Native American and Indigenous artists.

Installation view of works by Eric-Paul Riege. From left to right: ‘my god, YE’ii [1]» (2018-21), inkjet print, mixed fiber frame, 53 x 41 x 4 inches; “Let the saint watch over you and me [2](2018-19), mixed media and fiber installation, 36 x 78 x 4 inches; “my god, YE’ii [2]” (2018-21), inkjet print, mixed fiber frame, 53 x 41 x 4 inches (photo by author)

The exhibition addresses the stereotypes, misrepresentations and appropriation of Indigenous cultures, beautifully conveyed through a number of paintings and drawings dealing with mythology – such as the large-scale work “The Nourished” (2019) by Julie Buffalohead – or through a jingle-and-pow -wow-bell sculpture like Brad Kahlhamer’s “Super Catcher” (2021), which uses the shape of the dreamcatcher to merge the formal elements of a modernist Bertoia sound sculpture – esque or Ruth Asawa wire work with a post-punk critique of the commodification of identity.

Interestingly, the exhibit also includes several photographs by artists such as Cara Romero, Tom Jones, and Pao Houa Her, all of whom engage in highly staged takes on documentary-style photography. American Hmong artist Pao Houa Her, whose work “Still Life with Snake Whiskey” is the title of the exhibition, presents a painting-style image of a snake whiskey bottle and a pair of mangoes in a plastic bag under a bouquet of artificial flowers. Although these objects exude a sense of intimacy and domesticity, the careful arrangement and dramatic lighting of the photograph belies any sense of spontaneity. By reinforcing the sense of theater in documentary photography – a genre that has historically been closely tied to the Western lens of “objectivity” documenting the Other – these artists draw attention to the fallacy of objective representation and underscore the shift between the performance of identity and its embodiment.

The absence of a coherent narrative in the exhibition in favor of a more open inquiry reminds us that, like earth, art too is a space of contested meaning – that of commentary, criticism and commodity, of course – but also as a method of contemplation, a material connection to one’s heritage, and as a means of forging a new set of relationships with the world.

Lauren Roche, “Lost Memory” (2021), ink and pigmented acrylic wash on paper, 22 1/2 x 30 inches, 27 x 34 inches framed (photo by Patrick Friedman Schaffer)
Brad Kahlhamer, “Ugh x 4 / 4 x Ugh” (2021), wire, jingles, pow wow bells, 80 x 64 1/2 x 6 inches (photo by author)
Detail of Julie Buffalohead, “The Nourished” (2019), acrylic, graphite and collage on Lokta paper, 52 x 136 inches (photo by Patrick Friedman Schaffer)

Serpent whiskey still life and other stories continues at Various Small Fires (812 North Highland Avenue, Los Angeles, CA) through February 20. The exhibition was curated by Todd Bockley.

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Troy Montes-Michie on Mining Stories of Violence Using Collage – ARTnews.com https://expo-monet.com/troy-montes-michie-on-mining-stories-of-violence-using-collage-artnews-com/ Wed, 16 Feb 2022 15:00:00 +0000 https://expo-monet.com/troy-montes-michie-on-mining-stories-of-violence-using-collage-artnews-com/ There is a long line of artists working with collage, although it can sometimes seem that all roads lead to the early experimentations of Cubist artists which were later refined by members of the Dada movement, who began to recycle and recombining materials in response to absurdity. of the First World War. “Revolted by the […]]]>

There is a long line of artists working with collage, although it can sometimes seem that all roads lead to the early experimentations of Cubist artists which were later refined by members of the Dada movement, who began to recycle and recombining materials in response to absurdity. of the First World War. “Revolted by the butchery of the 1914 World War, we in Zurich dedicated ourselves to the arts,” wrote Hans Arp. “While the cannons rumbled in the distance, we sang, painted, made collages and wrote poems with all our might.” Latent throughout was a kind of violence that was sort of a reflection of the carnage that surrounded these artists.

About a century later, artist Troy Montes-Michie began searching for a less violent form of collage, which could, in its own unusual way, be generative. He began to reflect on his childhood in El Paso, Texas, where he was born in 1985, and the real proximity of this border town to Mexico. “There was such an overlap with Mexico, and I always remember feeling that at a young age, that there was this division,” he said in a recent Zoom interview. “I could see Mexico, the river and the bridges. It’s literally right there, less than a mile away. As he matured as an artist, he began to think of a collage as a way to reflect this lived experience. “For me, the cut is not about violence, but more about reflecting on our own contours,” he continued.

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The fruits of Montes-Michie’s experiments were memorably seen at the 2019 Whitney Biennial, in works such as Los Atravesados ​​/ The skin of the earth is seamless (2019), in which photographs of reclining men in striped clothing are cropped so that they appear cross-hatched, their images receding and emerging from the background. (Its title refers to Gloria Anzaldúa’s 1987 book Borderlands/La Fronteraa formative text for Montes-Michie.) Works from the same series as Los Atravesados are now included in the artist’s first major survey.

Titled “Rock of Eye,” the exhibit opens Wednesday at the California African American Museum, which curated it in collaboration with the Rivers Institute for Contemporary Art & Thought in New Orleans, where the New York-based artist was a research resident (albeit a virtual one, given the pandemic). The name of this exhibit refers to a tailoring term used to refer to when a garment is cut without careful measurement – ​​an apt name, given that Montes-Michie considers her own process to be “intuitive”.

“It wasn’t always like this,” he said, “but I think now that I’ve been in this medium for so long, I kind of know what needs to happen with my process.”

Many of Montes-Michie’s collages use images of black men found in magazines from bygone eras. In some of his early works, images of naked men that appear to be taken from pornographic publications were mixed and matched to a point where the human form borders on abstraction. These images were produced by photographers who “objectified men of color, bodies of color,” Montes-Michie said. In the hands of the artist, the characters in the images are made more complex by elisions and additions that make them double and seem slightly imperceptible.

Dense collage featuring an array of images whose images are hatched to a point where they are abstract.  In the center is an orange circle.

Troy Montes-Michie, Foreground as background2018.
Courtesy of the artist and Company Gallery, New York

By the time of the 2016 US presidential election, Montes-Michie’s methods began to change. In response to Donald Trump’s rhetoric, he began to think back to his own family history. He spoke to his stepfather, who claimed that the zoot suit – a high-waisted form of dress popularized primarily by African Americans, Mexican Americans, Filipino Americans and Native Americans Italian at the beginning of the 20th century – originated in Mexico. Puzzled by this misunderstanding, Montes-Michie delved into the archives to try to unravel the lineage of the zoot costume and discovered that it came from Harlem. “I didn’t know that was the first American costume,” Montes-Michie said. “I didn’t know it was worn by men of color, and also by women.”

Vintage photograph of a black man in a field.  He looks down and wears a white undershirt and high-waisted black striped pants.  Surrounding the photograph is an abstract pattern.

Troy Montes-Michie, Untitled (stripes)2019
Courtesy of the artist and Company Gallery, New York

His research confronted him with a long history of racism in the United States. In 1943, a series of riots began when a member of the Los Angeles City Council attempted to ban suits, allegedly in response to fabric shortages resulting from World War II. But the ban was implicitly, if not explicitly, racist, given that the zoot costume was considered by many to be a “badge of delinquency” for the groups that wore it, such as the Los Angeles Times written that year. White military men began attacking Mexican Americans and Filipino Americans in the streets, making national headlines in the process in what was dubbed the Zoot Suit Riots.

The resulting work Montes-Michie did on the zoot suits, now on display at CAAM, took him deep into the holdings of the New York Public Library and far beyond, and brought him into contact with the camouflage theory, on which the soldiers relied. blur the senses of enemies. “It’s supposed to cause confusion,” he said. “I sort of equated it to the confusion of white Americans watching these insiders who are just trying to create a new identity.”

Blending images that Montes-Michie found, he also began to rely on stitching techniques he learned himself. In some cases, fabrics are even affixed to the works. Stitches look like sutures that repair a healing wound. For example, in Untitled (Feeling Blue), a 2020 collage included in the CAAM show, two naked men’s bodies merge in such a way that one of their legs emerges from the back of the other. They are crossed by vertical lines of zigzag thread, its fibers neatly tied together, just like these two figures.

“I don’t view the Troy collages as sites of violence, even though they do charge historical violence. That’s not the job they do,” said Andrea Andersson, the founder of the Rivers Institute who organized the Montes-Michie survey with New Orleans space curator Jordan Amirkhani and Taylor. Renee Aldridge, curator at CAAM. “The work they do is also about building a relationship, and part of that is sometimes an entirely formal relationship – just pure beauty.”

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2021 Year-End Securities Enforcement Update https://expo-monet.com/2021-year-end-securities-enforcement-update/ Thu, 03 Feb 2022 06:17:51 +0000 https://expo-monet.com/?p=965 January 19, 2022 Click for PDF I.  Introduction: Themes and Notable Developments A.  A New Administration Leverages a Traditional Playbook With the confirmation of Chair Gary Gensler in April and the appointment of Enforcement Division Director Gurbir Grewal in June, the latter half of 2021 provided greater insight into the ways in which heightened enforcement under this […]]]>

January 19, 2022

Click for PDF

I.  Introduction: Themes and Notable Developments

A.  A New Administration Leverages a Traditional Playbook

With the confirmation of Chair Gary Gensler in April and the appointment of Enforcement Division Director Gurbir Grewal in June, the latter half of 2021 provided greater insight into the ways in which heightened enforcement under this Administration will impact market participants and the implications for clients going forward.  In speeches in the latter half of 2021, Director Grewal and Chair Gensler outlined their enforcement priorities.  While many of their themes echo the messages of prior Democratic administrations, certain points this Commission has chosen to emphasize could have outsized impact on public companies, SEC-registered firms and their executives and outside professionals.

  • Remedies – Director Grewal expressed the intention to escalate the sanctions the Commission would demand in both negotiated resolutions and litigated enforcement actions. While the remedies are not new, the focus on expanding the magnitude and frequency of sanctions reflects not just desire to increase the amount of particular sanctions, but also the breadth of parties and circumstances that would trigger a demand for certain sanctions.
    • Penalties – Picking up on a theme articulated by then-Acting Chair Caroline Crenshaw earlier this year (and discussed in our Mid-Year Alert [link: https://www.gibsondunn.com/2021-mid-year-securities-enforcement-update/]), Director Grewal warned of the likelihood of increased penalties generally, and in particular, in circumstances where, in the Commission’s view, penalties have been insufficient to deter perceived misconduct based in part on previous enforcement actions against other actors in the same industry. Director Grewal was particularly pointed on the diminished relevance of prior settlements when negotiating current settlements.  As Director Grewal bluntly stated, “You should not expect comparable cases to be the beginning and end of our analysis.”[1]
    • Bars – Director Grewal has also signaled an intention to pursue officer and director bars, including in cases in which an individual defendant was not an officer or director of a public company. As Grewal explained, in determining whether to recommend pursuing a bar, the Enforcement Division would consider whether the individual is simply “likely to have an opportunity to become an officer and director of a public company in the future.”[2] In at least one recent example, in a litigated enforcement case, the Commission is seeking officer and director bars against individuals who are, according to the complaint, not employed by public companies.[3]
    • Admissions – In Director Grewal’s words, “When it comes to accountability, few things rival the magnitude of wrongdoers admitting that they broke the law. . . . Admissions, given their attention-getting nature, also serve as a clarion call to other market participants to stamp out and self-report the misconduct to the extent it is occurring in their firm.”[4] Not long after that speech, the Commission announced a settled enforcement action that contained admissions to regulatory recordkeeping violations.[5]  Notably, violation of such regulatory provisions does not give rise to private rights of action.  It will remain to be seen to what extent the Commission seeks admissions in other circumstances.
  • Recidivism – Director Grewal emphasized that “recidivism” would be a potentially significant factor in the assessment of appropriate resolutions. In Grewal’s words, “When a firm repeatedly violates our laws or rules, they should expect to be penalized more harshly than a first-time offender might be for the same conduct.”[6]  As discussed below, this position raises significant concerns about the applicability of the term “recidivist” in the context of securities enforcement.
  • Gatekeepers – In separate speeches, both Chair Gensler and Director Grewal emphasized a focus on gatekeepers – lawyers, auditors, accountants, bankers and investment advisers – who play a variety of roles in the securities industry, capital markets, and public company financial reporting and disclosure. As Chair Gensler articulated his perspective in a message to such gatekeepers, “You occupy positions of trust.  Though you represent your clients, you also have an important role in upholding the law, which protects investors and our markets.  You can often be the first lines of defense.  That’s particularly true when a client is getting close to crossing the line.”[7]  Director Grewal made a similar point in separate remarks, “Encouraging your clients to play in the grey areas or walk right up to the line creates significant risk.  It’s when companies start testing those lines that problems emerge and rules are broken. . . .  That’s why gatekeepers will remain a significant focus for the Enforcement Division, as evidenced by some of our recent actions.”[8]

Our Take – It is not surprising that the Enforcement Division under this Administration would emphasize seeking greater sanctions, particularly penalties, in enforcement actions.  Perhaps notable is that this Administration has not articulated new remedies, just more of the existing ones without any guiding principles.  The lack of transparency regarding when admissions will be demanded, whether voluntary disclosure or cooperation will impact that determination, or even why admissions are needed, is notable.  An absence of guidelines may very well lead to a lack of consistency.  It remains to be seen whether the Enforcement Division is able to execute on such vision if the demand for such sanctions also results in an increase in the Commission’s litigation caseload.  While remedies such as penalties can often be negotiated to a resolution, other remedies, such as bars and admissions, can be far more consequential for individuals and entities.  As a result, an effort to flex a regulatory muscle by demanding greater remedies may ultimately run up against a resource constraint on the ability to litigate cases.

Arguably of greater potential impact is the emphasis on conceptual themes, such as recidivism and gatekeepers.  The concept of recidivism, for example, can easily be misapplied in the regulatory context.  In any large, diversified enterprise with thousands of employees engaged in a highly regulated business, it is almost inevitable that over time a number of securities law violations will occur, often comprised of unintentional mistakes.  Violations can arise for an unlimited number of different reasons, including individual misconduct, growth and diversification of the business, prevailing industry practice, emerging risks, acquisitions, and evolving regulatory interpretations and standards of enforcement.  Trying to apply a label such as “recidivist” in this context can not only be inappropriate, but also leave parties exposed to the rhetorical judgments of regulators as to what constitutes recidivism.

Similarly, defining a wide range of professionals as “gatekeepers” and then cautioning them on the risks of advising clients acting in the “grey areas” suggests a vision of advisers (lawyers, accountants, financial advisers) that is inconsistent with their roles.  Many areas of the law are grey, especially those subject to agency discretion and interpretation, and it is precisely in the grey areas that clients should be reaching out to their advisers and most need advice.  The Commission has long articulated a position of not pursuing enforcement actions against professional advisers, particularly counsel, on the basis of advice, but rather only for participation in misconduct that rises to the level of a direct or secondary violation.  One hopes that the recent rhetoric about the focus on gatekeepers does not signal a departure from decades of Commission practice in this area.

B.  A Look at – and Behind – the Numbers

The enforcement statistics for fiscal 2021 reflected a 7% year-over-year increase in standalone actions, from 405 in 2020 to 434 in 2021.  However, to put this number in perspective, 2020 saw a substantial decrease in enforcement actions due to the pandemic.  Thus, the 434 standalone enforcement actions for fiscal 2021 represented a decline of more than 17% from the 526 enforcement actions in 2019.  The distribution of actions was consistent with prior years, with the majority of cases involving broker-dealers and investment advisers, securities offerings, and public company financial reporting.  Financial remedies ordered in fiscal 2021 represented an increase in penalties (from $1.09 billion in 2020 to $1.46 billion in 2021), but a decrease in disgorgement ordered (from $3.59 billion in 2020 to $2.40 in 2021).[9]

One must always exercise caution when drawing conclusions about enforcement trends from such metrics, particularly in light of the pandemic and in a year of transition in administrations.  In particular, given the close of the fiscal year on September 30 and the extended pipeline through which enforcement actions ultimately receive formal approval, the impact of this administration on metrics such as the number of cases and size of financial remedies are more likely to be measurable in future years.  With that in mind, below are graphical representations of the metrics over recent years.

C.  SPACs

The SEC continued its focus on Special Purpose Acquisition Companies (“SPACs”) in the second half of 2021.  Multiple enforcement actions came on the heels of pronouncements by senior SEC officials earlier last year concerning the risks posed by the explosion of SPAC initial public offerings, including a potential misalignment of interests and incentives between SPAC sponsors and shareholders.  For example, in July, the SEC announced a partially settled enforcement action against a SPAC, the SPAC sponsor, and the CEO of the SPAC, as well as the proposed merger target and the former CEO of the target for misstatements in a registration statement and amendments concerning the target’s technology and business risks.[10]  Please see our prior client alert [link: https://www.gibsondunn.com/sec-fires-shot-across-the-bow-of-spacs/] on this subject for an analysis of the lessons learned from the matter.

In December, the SEC also provided an update to an action originally filed in July[11] against a publicly traded company’s founder and former CEO.[12]  The Commission’s complaint filed in July alleged that the company’s former CEO encouraged investors to follow him on social media to get “accurate information” about the company “faster than anywhere else,” but, instead, he allegedly misled investors about the company’s technological advancements, products, in-house production capabilities, and commercial achievements.  In its December update, the SEC announced that the company agreed to settle the action.  Without admitting or denying the SEC’s findings, the company agreed to cease and desist from future violations, to certain voluntary undertakings, to pay $125 million in penalties, and to continue cooperating with the SEC’s ongoing litigation and investigation.

D.  Commissioner and Senior Staffing Update

In the waning days of 2021, one of the two Republican-appointed members of the Commission, Commissioner Elad Roisman, announced that he would leave the SEC by the end of January 2022.[13]  The departure will reduce the normally five-member Commission to four members until a replacement is appointed, and will leave Commissioner Hester Peirce as the lone Republican-appointed Commissioner for the time being.  Commissioners Roisman and Peirce have been reliable dissenting voices at the Commission in the last year, and we would expect to see continued dissent from Commissioner Peirce notwithstanding the loss of her fellow-Republican Commissioner ally.

In the second half of 2021, Chair Gensler and Enforcement Director Grewal continued building out the senior staff of the Commission.  Notable appointments included:

  • In July, Daniel Kahl was appointed Acting Director of the Division of Examinations, succeeding Peter Driscoll.[14] Kahl joined the SEC in 2001 as a staff attorney, and most recently served as Deputy Director for Division of Examinations.  He also served as an attorney for FINRA, the Investment Adviser Association, and the North American Securities Administrators Association.
  • In August, Sanjay Wadhwa was named Deputy Director of the Division of Enforcement.[15] Wadhwa has worked for the SEC for 18 years, most recently as the Senior Associate Director of Enforcement for the New York Regional Office.
  • In September, Dan Berkovitz was appointed SEC General Counsel, succeeding John Coates.[16] Berkovitz was previously a Commissioner of the Commodity Futures Trading Commission (CFTC).  Mr. Berkovitz has previous experience in private practice and an extensive public service career, including as General Counsel for the CFTC, a senior staff attorney for the U.S. Senate Permanent Subcommittee on Investigations, and Deputy Assistant Secretary in the Department of Energy’s Office of Environmental Management.
  • In early November, Nicole Creola Kelly was named Chief of the SEC Office of the Whistleblower.[17] Kelly is a 20-year veteran of the SEC, most recently serving as Senior Special Counsel in the Office of General Counsel.  She was also previously Counsel to SEC Chair Mary Jo White and former SEC Commissioner Kara M. Stein.
  • In November, Daniel Gregus was appointed Director of the Chicago Regional Office.[18] He had previously served as acting co-director of the Chicago office.  Gregus has spent 28 years with the SEC in varying roles, including as Associate Director of the National Clearance and Settlement Examination Program and Associate Regional Director for the Broker-Dealer and Exchange Examination Program in the Chicago office.  Prior to joining the SEC, Mr. Gregus was in private practice.
  • Also in November, the SEC announced the appointment of Haoxiang Zhu as Director of Division of Trading and Markets.[19] Zhu joins the SEC from academia, most recently holding the post of Professor at the MIT Sloan School of Management.  He also previously served as an academic expert for the CFTC and Bank for International Settlements.  Mr. Zhu is a member of the Federal Reserve Bank of Chicago’s Working Group on financial markets.
  • In December, Judge James Grimes was named the SEC’s Chief Administrative Law Judge, succeeding Brenda Murray.[20] Judge Grimes previously spent 13 years at the Department of Justice, serving as a trial attorney and senior litigation counsel in the Civil Division.  He previously served with the Navy Judge Advocate General (JAG) Corps, representing service members in courts-martial and representing the government before military appellate courts.
  • Also in December, William Birdthistle was appointed Director of Division of Investment Management.[21] Before joining the SEC, Mr. Birdthistle was a Professor of Law at Chicago-Kent College of Law, where his research focused on investment funds, securities regulation, and corporate governance.  He also previously worked in private practice as a corporate associate for five years.

E.  Whistleblower Awards

The SEC’s whistleblower program remains a significant source of incoming information for the SEC and, as has been true for many years, the significant recovery associated with whistleblower awards continues to grow.  As of year-end 2021, the SEC has awarded approximately $1.2 billion to 236 individuals since issuing its first award in 2012.

In August, Chair Gensler responded to criticism regarding amendments to the whistleblower rules that were previously adopted in September 2020 and acknowledged that there were concerns regarding whether the amendments would have the effect of chilling whistleblowers from coming forward.[22]  In response, Chair Gensler directed his staff to prepare potential revisions to the rules to address those concerns.  Interim rules were instituted in order to ensure that whistleblowers “with claims pending” while the amended rules are being considered “are not disadvantaged.”[23]  In response, Commissioners Peirce and Roisman issued a strongly worded statement disagreeing with the Commission’s action to “substantively ignore [Commission rules] while proposed amendments are formulated and considered,” calling the course of action “unwise and . . . a troubling and counterproductive precedent.”[24]  As of the end of 2021, the interim rules remain in place and the Commission is moving forward with proposed revisions to the whistleblower rules.

Also in the second half of the year, the Commission announced that not all tips are good tips.  In September, the SEC barred two individuals from the whistleblower award program, each of whom had filed hundreds of award applications that the SEC described as “frivolous” and did not contribute to any successful enforcement action.[25]  The bars were issued pursuant to the 2020 amendments to the Whistleblower Program Rules, which were designed to allow the whistleblower program to operate more effectively and efficiently and to focus on good faith whistleblower submissions.

Significant whistleblower awards granted during the second half of this year included:

  • Two awards in July, including a payment of more than $1 million to a whistleblower who provided “valuable” information and ongoing assistance, which led to an SEC enforcement action;[26] and an award of nearly $3 million to a whistleblower who alerted the SEC to previously unknown conduct and then provided “substantial” additional assistance, which led to a successful enforcement action.[27]
  • Four awards in August, including awards totaling more than $4 million to four whistleblowers in two separate enforcement proceedings, each of whom were described as providing “high-quality information that made an important contribution” to the success of the underlying enforcement action;[28] awards totaling more than $3.5 million to three individuals in two separate enforcement proceedings, one of whom was awarded approximately $2 million for alerting SEC staff to an ongoing fraud, prompting the opening of an investigation;[29] awards of nearly $6 million to two whistleblowers in separate enforcement proceedings, one of whom was awarded more than $3.5 million for reporting new information that caused the SEC to expand an existing investigation into a new geographic area, while the other whistleblower was awarded more than $2.4 million for alerting the SEC to previously unknown conduct, prompting the opening of the investigation;[30] and awards totaling approximately $2.6 million to five whistleblowers in three separate enforcement proceedings who provided information, developed either from the whistleblower’s independent knowledge or the whistleblower’s independent analysis, which “substantially” contributed to a successful enforcement action.[31]
  • Three awards in September—including a notable award of approximately $110 million, consisting of an approximately $40 million award in connection with an SEC case and an approximately $70 million award arising out of related actions by another agency—for providing “significant” independent analysis that “substantially advanced” the investigations.[32] This award stands as the second-highest award in the program’s history, following the over $114 million whistleblower award the SEC issued in October 2020.  Additional awards in September included payments totaling approximately $11.5 million to two whistleblowers, one of whom was awarded nearly $7 million in recognition of the fact that the whistleblower was the initial source that caused the staff to open the investigation into hard-to-detect violations and thereafter provided substantial assistance, while the second whistleblower, by comparison, submitted information after the investigation was already underway and had delayed reporting for several years after becoming aware of the wrongdoing;[33] and an award of approximately $36 million to a whistleblower who provided what the SEC described as “crucial information” on an illegal scheme, which “significantly” contributed to the success of an SEC enforcement action, as well as actions by another federal agency.[34]
  • Two awards in October, including awards totaling approximately $40 million to two whistleblowers, one of whom received approximately $32 million for providing information that caused the opening of the investigation and exposed difficult-to-detect violations, as well as ongoing assistance, while the other whistleblower received approximately $8 million for providing new information during the course of the investigation, but waited several years to report to the Commission;[35] and a payment of more than $2 million to a whistleblower who provided information that led to a successful related action by the U.S. Department of Justice.[36]
  • Two awards in November, including awards totaling more than $15 million to two whistleblowers, one of whom received more than $12.5 million for alerting Commission staff to a fraudulent scheme and prompted the opening of an investigation;[37] and awards totaling approximately $10.4 million to seven whistleblowers who provided information and assistance in three separate covered actions.[38]
  • An award in December of nearly $5 million to a whistleblower who provided information and assistance that led to the success of a covered action, resulting in the return of millions of dollars to investors.[39]

Public company accounting and disclosure cases continued to comprise a significant portion of the SEC’s cases in the latter half of 2021, and included a range of actions concerning earnings management, revenue recognition, impairments, internal controls, and disclosures concerning financial performance.

A.  Financial Reporting Cases

In July, the SEC announced a complaint against the former CEO and CFO of a network infrastructure company for alleged accounting fraud.[40]  From January 2017 to January 2019, the SEC alleged that the executives secretly caused the company to issue nearly $23 million in convertible notes, each of which required complex analyses under GAAP, but instead masked the convertible notes as conventional promissory notes by creating fake copies and forging board signatures to mislead internal and external auditors.  Additionally, from early 2016 to November 2018, the executives allegedly inflated company revenues more than 100% by recording revenues from purportedly completed construction projects for which the infrastructure company had yet to complete the work.  The SEC also alleged that the executives misappropriated $5.4 million from the company for personal use, including salary increases, luxury cars, private jet services, and unauthorized cash payments.  The litigation is ongoing, and the SEC is seeking permanent injunctions, penalties, and officer and director bars against the executives.  The U.S. Attorney’s Office for the Southern District of New York also brought criminal charges against the two executives.

Also in July, the SEC announced a settled action against a specialty leather retailer and its former CEO for accounting, reporting, and control failures related to the retailer’s inventory tracking system which could not accurately support the retailer’s inventory accounting methodology.[41]  The SEC alleged that the inventory tracking system resulted in misleading financial statements which, for years, impacted the company’s calculations for income, profits, and inventory.  According to the SEC, the CEO was aware of the inventory tracking system’s shortcomings and did not adequately remedy them, nor institute additional proper accounting controls to ensure that inventory was recorded in accordance with GAAP.  Without admitting or denying the allegations, the retailer and the CEO agreed to cease and desist from future violations and pay a combined penalty of $225,000.

In September, the SEC instituted a settled action against a multinational food company and two former employees for negligently misreporting the company’s financial results.[42]  The SEC alleged that, for multiple years, the food company’s procurement division caused the company to prematurely recognize discounts from suppliers, which reduced the company’s reported cost of goods sold.  The SEC further alleged that the food company’s internal controls relating to accounting for supplier contracts were ineffective, and it alleged that the individual respondents, who had overseen the procurement division, should have known about the accounting misstatements.  Without admitting or denying the allegations, the food company agreed to pay a $62 million civil penalty, which recognized the company’s cooperation and remedial control improvements; one employee consented to a cease-and-desist order and paid disgorgement and a $300,000 civil penalty; and the other employee consented to a permanent injunction, a $100,000 civil penalty, and a five-year ban from serving as an officer or director of a public company.

In December, the SEC instituted a settled action against a dialysis provider and three former executives for improperly calculating and reporting revenue adjustments related to actual and expected payments from patients’ health insurance providers.[43]  The SEC alleged that, from 2017 to 2018, the company manipulated its revenues through accounting adjustments of the difference between what the company anticipated a patient’s insurance might pay for medical treatment and the actual payment received.  The three executives were alleged to have orchestrated a scheme to determine these adjustments not based on the actual difference between expected and received payment for each patient, but rather, based on mathematical calculations to achieve pre-determined revenue figures in any given period.  Furthermore, the adjustments were not reported until they were needed to meet financial targets.  The executives were also alleged to have misled the company’s outside auditor in order to conceal this accounting practice.  Without admitting or denying wrongdoing, the company agreed to resolve the action in a judgment with a permanent injunction and a $2 million fine.  Litigation against the executives remains ongoing, and also includes an allegation of making false statements to the company’s auditors.

B.  Disclosure Cases

In June, the SEC instituted a settled action against a publicly traded provider of title and escrow services, alleging disclosure controls violations related to a cybersecurity vulnerability that exposed sensitive customer information.[44]  The SEC alleged that the issuer’s information security personnel discovered a vulnerability that exposed a large number of customers’ personally identifiable information, but waited several months to escalate and remediate it.  Because information about the incident had not been escalated to senior management, the issuer filed an inaccurate Form 8-K about the incident.  According to the SEC, the issuer failed to maintain adequate disclosure controls designed to ensure that all available, relevant information concerning the vulnerability was analyzed for disclosure.  Without admitting or denying the findings, the issuer agreed to a cease-and-desist order and to pay approximately $490,000 in civil penalties.

In July, the SEC announced settled actions against a medical diagnostics company and two executives related to allegedly misleading statements regarding the company’s ability to produce COVID-19 tests and personal protective equipment (“PPE”) in order to boost its declining stock price.[45]  The SEC alleged that the company issued a series of press releases touting the immediate availability of PPE for sale, and that it would be developing a COVID-19 test which would be “available soon.”  The SEC alleged that, in fact, the company was insolvent, and this prevented it both from developing the COVID-19 test and purchasing or importing PPE for retail sale.  Without admitting or denying the findings, the company and executives consented to a permanent injunction from future violations and combined penalties of $185,000.  The two executives also consented to officer and director bars for three and five years each.

In August, the SEC announced a complaint against the former CEO of a private technology company, alleging that the CEO inaccurately claimed that the company had achieved strong and consistent revenue and customer growth in order to push it to a “unicorn” valuation of over $1 billion.[46]  According to the SEC, the CEO misrepresented the value of numerous customer deals to investors and altered or created invoices to make it appear that customers had been billed at higher amounts than they actually had.  The SEC’s litigation against the former CEO remains ongoing, and the U.S. Attorney’s Office for the Northern District of California announced criminal charges against the CEO stemming from the same conduct.

Also in August, the SEC instituted a settled action against a U.K.-based company that provides publishing and other services to schools and universities, alleging that the company made misleading statements and omissions to investors about a cyber breach.[47]  The order alleged that, in 2018, the company experienced a breach that resulted in the theft of millions of student records, including email addresses and dates of birth.  According to the Commission, the company’s disclosures referred to a data privacy incident as a mere hypothetical risk, when, in fact, the breach had already occurred.  Moreover, the company issued a media statement that misstated or omitted certain details about the breach.  The SEC alleged that the company failed to maintain disclosure controls and procedures designed to ensure that those responsible for making disclosure determinations were adequately informed about the breach.  Without admitting or denying the SEC’s findings, the publisher agreed to cease and desist from future violations and to pay a $1 million civil penalty.

In September, the SEC filed a complaint against the principals of a subprime automobile finance company for allegedly misleading investors about the loans which backed its $100 million offering.[48]  The SEC alleged that the principals inflated the value of these asset-backed securities by including loans that were not eligible in the securitization vehicle, extending loan repayment dates without borrower knowledge to adjust the performance of the securitization vehicle, and forgiving payments from delinquent borrowers without disclosing this fact to investors.  The SEC is seeking permanent injunctions, officer and director bars, disgorgement, and civil penalties, and the litigation against the principals remains ongoing.

In November, the SEC announced a settled action against an oilfield services company and its former CEO for allegedly failing to properly disclose the CEO’s executive perks and stock pledges.[49]  The SEC alleged that the CEO caused the company to incur over $380,000 worth of personal and travel expenses and failed to disclose to company personnel that he had pledged all his company stock in private real estate transactions.  The company also failed to properly disclose over $47,000 in unpaid perks to the CEO.  The CEO agreed to pay over $195,000 in civil fines, and both the CEO and the company agreed to cease and desist from further violations, without admitting or denying any wrongdoing.

Also in November, the SEC instituted a settled action against an exchange-traded product (“ETP”), which seeks to track the changes in the spot price of crude oil, and its general partner, a commodity pool operator, alleging that they misled investors about limitations imposed by the ETP’s sole futures commission merchant and broker.[50]  In the wake of the April 2020 shake-up of the oil market brought on by pandemic-related lockdowns, the ETP received record investor inflows while the ETP’s sole futures broker informed the ETP that it would not execute any new oil futures positions.  The SEC alleged that the ETP and its general partner did not fully disclose the character and nature of this limitation to investors until one month after it was first imposed.  Without admitting or denying the SEC’s findings, the ETP and its general partner agreed to pay a $2.5 million fine to settle the SEC action and a parallel action brought by the CFTC.

C.  Auditor Independence

In August, the SEC instituted a settled action against a Big Four accounting firm and three of its current or former audit partners for conduct which allegedly violated auditor independence rules in connection with the accounting firm’s pursuit to serve as the independent auditor for a public company.[51]  The SEC also instituted a settled action against the public company’s then-Chief Accounting Officer for his role in the alleged misconduct.  The SEC alleged that the accounting firm partners solicited and received confidential competitive intelligence regarding the public company’s audit committee and independent auditor selection process from the public company’s then-Chief Accounting Officer.  This information allegedly caused both the public company and the accounting firm to commit reporting violations because the accounting firm would no longer be able to exercise objective and impartial judgment after the audit engagement began.  Without admitting or denying the findings, the accounting firm and its current and former partners agreed to cease and desist from future violations.  Additionally, the accounting firm agreed to pay a $10 million civil fine and institute controls to prevent future violations, including regular reporting to the SEC.  The individual partners agreed to monetary penalties between $15,000 and $50,000, and agreed to a suspension from appearing or practicing before the SEC for periods of one to three years.  The Chief Accounting Officer, without admitting or denying the allegations, agreed to a civil fine of $51,000 and a two-year suspension from appearing or practicing before the SEC.

In the second half of 2020, the SEC instituted a number of actions against investment advisers.  We discuss notable cases below.

A.  Complex Products

The SEC, in connection with the SEC’s Exchange Traded Product (“ETP”) initiative, filed a settled action in July against a dual-registered broker-dealer and investment adviser,, alleging historic compliance failures related to the sale of a volatility-linked ETP.[52]  According to the SEC, the ETP was designed to track short-term volatility expectations in the market, and the product’s issuer told the company that it was not appropriate to hold the product for an extended period.  The SEC alleged that while the company prohibited the solicitation of the product entirely for brokerage accounts, it allowed more experienced financial advisors who managed client portfolios on a discretionary basis to buy the ETP after mandatory training.  Further, the SEC alleged that although the registrant had adopted a concentration limit on volatility-linked ETPs, it did not implement a system to monitor or enforce that limit.  Finally, the SEC alleged that certain financial advisers misunderstood the appropriate use of the ETP, failed to take sufficient steps to understand the risks of holding onto the ETP for an extended period, and ended up holding the product too long.  Without admitting or denying the SEC’s findings, the company agreed to a cease-and-desist order, censure, disgorgement of $112,000, and a civil penalty of $8 million.

B.  Material Misrepresentations

In July, the SEC announced a settled action against the subsidiary of an association which keeps records for employer-sponsored retirement plans (“ESPs”) and advises clients on whether to roll over their ESPs into individually managed accounts.[53]  The SEC and the New York Attorney General’s Office brought parallel actions that were simultaneously settled in July.  According to the SEC, the subsidiary made inaccurate and misleading statements to its clients by representing that its advisers acted in the client’s best interest and as fiduciaries.  Further, the SEC alleged that the subsidiary and its employees failed to adequately disclose their conflicts of interest when they made certain recommendations to the clients.  Without admitting or denying the SEC’s findings, the subsidiary agreed to a cease-and-desist order, to be censured, disgorgement, and a civil penalty totaling $97 million.

In September, the SEC announced a settled action against the CEO and chief portfolio manager of an advisory firm based on allegations of misrepresentations of the performance of funds managed by the firm.[54]  According to the SEC, the executives inflated net asset values and the performance of funds by recording non-binding transactions and fraudulent fees in books and records.  The SEC further alleged that the CEO waived monthly management fees owed to the firm to make it seem as if the funds were achieving better results.  These allegedly inflated results were then used in promotional materials sent to investors.  Without admitting or denying the SEC’s allegations, the CEO agreed to be barred from the securities industry and to pay over $5 million in disgorgement, and a penalty of almost $300,000.  The chief portfolio manager, also without admitting or denying the allegations, agreed to a limitation on activities in the securities industry for at least three years, and to pay a penalty of $50,000.

In November, the SEC announced that it prevailed in a jury trial against a hedge fund adviser and his investment firm for allegedly reaping profits from making false statements to drive down the price of a pharmaceutical company.[55]  The SEC alleged that the hedge fund had established a short position in the pharmaceutical company, and then made a series of false statements to shake investor confidence in the company and lower its stock price.  These statements included that the pharmaceutical company’s investor relations firm had told the hedge fund adviser that the company’s most profitable drug was nearly obsolete and that the pharmaceutical company had engaged in a risky transaction with an unaudited shell company in an effort to reduce the size of its balance sheet.  These statements and the ultimate decline in stock price allegedly resulted in more than $1.3 million in profits from the short position.  The jury found the hedge fund and its adviser guilty of fraudulent misrepresentations; remedies will be determined at a later date.

In December, the SEC announced a settled action against an investment adviser regarding improper calculation of management fees, which is an area the SEC continues to be focused on, and appears to be expanding into the private fund adviser space.[56]  According to the SEC, the investment adviser failed to adequately offset portfolio company fees against management fees paid to the company, despite promising clients it would do so in the relevant governing documents.  This allegedly led to clients overpaying millions in additional management fees.  The SEC also claimed the adviser made inconsistent statements to clients about how management fees would be calculated.  Without admitting or denying the SEC’s allegations, the investment adviser agreed to pay a $4.5 million penalty to settle the action.

C.  Misuse of Client Funds

In July, the SEC filed an action against an individual trader at an asset management firm.  According to the SEC, from January 2015 through April 2021, the individual traded stock in his family members’ accounts before or during the time periods when his employer’s advisory clients were executing large orders for the same stock.[57]  The SEC alleges that the trader would then close out the just-established positions in his relatives’ accounts before the client accounts completed their executions.  The SEC alleged the individual conducted a front-running scheme that violated the antifraud provisions of the federal securities laws and is seeking disgorgement, penalties, and injunctive relief.  The U.S. Attorney’s Office for the Southern District of New York also brought criminal charges against the trader.  Litigation remains ongoing.

The SEC also filed an action in July against the CEO of several real estate investment trusts (“REITs”) and his wholly-owned investment advisory firm.[58]  The SEC alleged that the CEO took money from two REITs he founded, put it into a third REIT he had founded, and later caused the same two REITs to enter into money-losing transactions with the third REIT to benefit himself and the third REIT.  According to the SEC, the CEO also made misrepresentations to the boards of the two REITs that resulted in a payment to him, and he also misled investors by causing those REITs to make false and misleading statements in their public filings.  The SEC alleged violations by the CEO of various federal antifraud provisions and is seeking disgorgement, penalties, permanent injunctions, and industry, penny stock, and officer and director bars against the CEO.

In October, the SEC filed am action against a former New Jersey-based financial adviser, alleging that he misappropriated several million dollars from client accounts.[59]  According to the SEC, the adviser used those funds to pay off balances in credit card accounts held by his wife and parents, caused checks to be drawn on his clients’ and customers’ accounts, and used client funds to purchase gold coins and other precious metals, buy luxury goods, and make electronic fund transfers to himself.  The SEC’s complaint alleged violations of the antifraud provisions of the federal securities laws and is seeking injunctive relief, disgorgement, and civil penalties.  The U.S. Attorney’s Office for the District of New Jersey has also filed criminal charges against him.

D.  Implementation of Form CRS

In July, the SEC announced settled actions against 21 investment adviser firms and 6 broker-dealer firms based on allegations that the firms failed to timely file and deliver their client or customer relationship summaries (Form CRS) to their retail investors.[60]  In June 2019, the SEC adopted Form CRS and required SEC-registered investment adviser and broker-dealer firms to take the following actions:  file these forms with the SEC, begin delivering them to prospective and new retail investors by June 2020, deliver them to existing retail investor clients or customers by July 2020, and prominently post the form on their websites.  The SEC alleged that these 27 firms missed the regulatory deadlines and did not comply until they were reminded at least twice over the course of several months by the appropriate regulatory authority.  Without admitting or denying the SEC’s findings, the firms all agreed to be censured, to a cease-and-desist order, and to pay civil penalties varying from $10,000 to $97,523.

E.  Ineffective Information Barriers

In November, the SEC announced a settled action against a management consulting firm’s wholly-owned registered investment adviser.[61]  The adviser’s advisory clients were limited to current and former employees of the consulting firm.  According to the SEC, the adviser directed the purchase and sale of securities in companies that the consulting firm previously had advised, or currently was advising.  The SEC alleged that the adviser did not maintain adequate policies and procedures to prevent investment decisions from utilizing material nonpublic information obtained through the firm’s consulting work.  Without admitting or denying the SEC’s findings, the affiliate agreed to a cease-and-desist order and to pay $18 million to settle the action.

Although not as numerous as prior years, there were nevertheless notable cases involving the conduct of broker-dealers in the latter half of 2021.

A.  Financial Reporting and Recordkeeping

In August, the SEC announced a settled action against an investment firm, its principal, and its trader for allegedly providing erroneous order-marking information on sale orders, causing the fund’s brokers to mismark the sales as “long,” and failing to borrow or locate shares prior to executing the sales.[62]  The firm and its personnel also allegedly engaged in dealer activity without registering with the SEC.  Without admitting or denying the findings, the parties each agreed to cease-and-desist orders, disgorgement fees, and penalties totaling $7.9 million.

In September, the SEC instituted an action against a school district and its former Chief Financial Officer, alleging that they misled investors who purchased $28 million in municipal bonds.[63]  According to the SEC’s complaint and order, the district and CFO provided investors with misleading budget projections indicating the district could cover its costs and would end the fiscal year with a general fund balance of approximately $19.5 million, when in fact the district ended the year with a negative balance of several million dollars.  The CFO agreed to pay a $28,000 penalty.  The district also agreed to settle with the SEC and consented, without admitting or denying any findings, to engage an independent consultant to evaluate its policies and procedures related to its municipal securities disclosures.

B.  Unfair Dealings

In August, the SEC instituted a settled action against a broker-dealer and its former CEO for allegedly engaging in unfair dealing in connection with a municipal bond tender offer.[64]  The SEC’s orders alleged that the broker-dealer recommended to a county that it attempt to reduce the amount of its outstanding debt service expense through a tender offer for bonds it had issued years earlier.  According to the orders, the broker-dealer allegedly purchased millions of dollars of the countys outstanding bonds, sold them to an affiliated entity, and tendered the bonds back to the county at a price that the broker-dealer recommended without disclosing to the county that the affiliate had acquired bonds to be tendered, or the resulting conflict of interest.  Without admitting or denying the SEC’s findings, the broker-dealer and CEO agreed to pay nearly $400,000 in disgorgement and civil penalties.

In September, and as a continuing part of an industry-wide series of investigations originating nearly five years ago, the SEC announced that a broker-dealer agreed to resolve allegations that it engaged in unfair dealing in municipal bond offerings.[65]  According to the SEC’s order, the broker-dealer allegedly allocated bonds intended for institutional customers and dealers to parties known in the industry as “flippers,” who then resold the bonds to other broker-dealers at a profit.  In addition, the SEC alleged that where an issuer had instructed the broker-dealer to place retail customer orders first, it violated those instructions by allocating bonds to flippers ahead of orders for retail customers, and improperly obtained bonds for its own inventory.  Without admitting or denying the findings, the broker-dealer consented to pay more than $800,000 in penalties and disgorgement.  Among multiple agreements, two employees consented to pay civil penalties of $25,000 and $30,000.

In September, the SEC brought an action against a municipal adviser and its two principals, alleging that they violated their duties by engaging in unregistered municipal advisory activities.[66]  According to the SEC, these actions are the first-ever SEC cases enforcing Municipal Securities Rulemaking Board (“MSRB”) Rule G-42 on the duties of non-solicitor municipal advisers.  The SEC’s complaint specifically alleged that the principals entered into an impermissible fee-splitting arrangement with their former employer and did not adequately disclose to their clients the conflicts of interest associated with the illicit arrangement or their relationship with the underwriting firm.  The SEC also alleged that all three parties engaged in municipal advisory activities when they were not registered with the SEC or MSRB.  One principal consented, without admitting or denying any findings, to pay a $26,000 penalty.  The SEC has not announced a settlement with respect to the other two principals.

Also in September, the SEC brought an action against a former managing director and head of fixed income trading at a broker-dealer, alleging that the individual engaged in unauthorized trading in fixed income securities and illegally obtained fictitious commission income.[67]  The conduct came to light after the allegedly illegal trading resulted in the broker-dealer’s bankruptcy in 2019.  The SEC’s complaint alleged that the individual engaged in unauthorized speculative trading in U.S. Treasury securities; incurred millions of dollars in losses for the firm; and obtained commission income based on fictitious commission payments from fabricated customers.  The individual agreed to settle the SEC’s action by consenting to a permanent injunction and to pay disgorgement and a civil penalty in amounts to be determined at a later date.  In a parallel action, the U.S. Attorney’s Office announced criminal charges for related misconduct.

In October, the SEC announced an order alleging that a financial services group raised funds on behalf of state-owned entities in Mozambique through two bond offerings and a syndicated loan, and that these proceeds were used to fund a hidden debt scheme, pay kickbacks to investment bankers along with their intermediaries, and bribe foreign government officials.[68]  The SEC’s order also alleged that the company failed to properly address significant and known risks concerning bribery.  The SEC announced that the financial services group agreed to pay $475 million in disgorgement and penalties.

Relatedly, a London-based subsidiary of a Russian bank also agreed to settle SEC allegations in October related to its alleged role in misleading investors in the second bond offering.[69]  According to the SEC’s order, the Russian bank and financial services group’s offering materials failed to disclose Mozambique’s debt and the risk of default on bonds.  The financial services group agreed to pay nearly $100 million in disgorgement and penalties, and the U.S. Department of Justice imposed a $247 million criminal fine.  Without admitting or denying the findings, the Russian bank agreed to pay $6.4 million in disgorgement and penalties.

C.  Internal Policies and Procedures

In August, the SEC instituted three settled actions against eight investment advisers and broker-dealers, alleging that the firms failed to create and maintain adequate cybersecurity policies and procedures in violation of the Safeguards Rule of Regulation S-P.[70]  In all three cases, unauthorized third parties gained access to email accounts, resulting in the exposure of customer data for periods of more than one year.  The Commission alleged that, in two of the cases, the firms violated the Safeguards Rule by failing to adopt and implement enhanced data security measures in a timely manner after discovering the account-takeovers.  In the press release announcing the actions, the SEC stressed that “[i]t is not enough to write a policy requiring enhanced security measures if those requirements are not implemented or are only partially implemented, especially in the face of known attacks.”  Without admitting or denying the SEC’s allegations, each firm agreed to cease and desist from future violations, to be censured, and to pay financial penalties totaling $750,000 (across all firms).

In October, the SEC announced a conclusion to its allegations that a clearing agency did not have adequate risk management policies within its Government Securities Division.[71]  In an order, the SEC alleged that the agency failed to comply with rules requiring it to have reasonably designed policies and procedures for holding sufficient qualifying liquid resources to meet the financial obligations created by the potential failure of a large participant.  According to the order, the agency did not conduct a required analysis of the reliability of its liquidity arrangements, failed to conduct required due diligence of its liquidity providers, and failed to adhere to rules requiring it to have reasonably designed policies and procedures for maintaining and periodically reviewing its margin coverage.  The clearing agency agreed to pay an $8 million penalty to settle the SEC’s allegations.

In December, the SEC announced a settled action against a broker-dealer subsidiary of a financial services company, alleging failures by the broker-dealer and its employees to maintain and preserve written communications.[72]  The company admitted that its employees, managing directors and other senior supervisors had communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts, and that the majority of these records were not surveilled nor preserved by the firm as required by the federal securities laws.  The company also acknowledged that its failure to capture and retain these records deprived the SEC staff of timely access to evidence and potential sources of information in other investigations.  The company admitted certain facts set forth in the SEC’s order and agreed to pay a $125 million penalty and implement improvements to its compliance policies and procedures.  The CFTC brought a parallel proceeding against the firm and related entities, similarly alleging that the firms’ recordkeeping violated CFTC requirements.[73]  The firm agreed to pay a $75 million penalty and implement remedial measures.

The Commission continued to bring enforcement actions in the area of digital assets throughout 2021.  As in 2020, these actions were based primarily on alleged failures to comply with the requirement to register an offering of assets deemed to be securities or allegations of fraud in the offer and sale of digital assets.  Significant uncertainty remains around exactly how the Commission will approach the regulation of crypto assets going forward.

A.  Significant Developments

As has been true for several years, the Commission has continued to struggle with how to define the ever-expanding collection of products in the digital asset space.  Emblematic of that question is an enforcement action from this summer, along with a follow-on statement from two Commissioners.

In July, the SEC instituted a settled action against the U.K.-based operator of a website for failing to disclose compensation it received from issuers of the digital assets it profiled.[74]  Each profile included links to the token issuer’s websites and a “trust score” that the website stated reflected its evaluation of the “credibility” and “operational risk” for each digital token offering.  In the press release announcing the action, the SEC noted that many of the profiles were published after the Commission issued a 2017 advisory warning that promoters of virtual tokens classified as securities must disclose any compensation received in exchange for the promotion.[75]  Without admitting or denying the SEC’s findings, the operator of the website agreed to pay $43,000 in disgorgement and a penalty of approximately $155,000.

Interestingly, Commissioners Peirce and Roisman took the unusual step of issuing a public statement after the above-described action, concurring in the result, but expressing their continued disappointment that the settlement with the operator “did not explain which digital assets touted by [the operator] were securities, an omission which is symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities.”[76]  They continued that “[t]here is a decided lack of clarity for market participants around the application of securities laws to digital assets and their trading . . . [and that despite some guidance m]arket participants have difficulty getting a lawyer to sign off that something is not a securities offering or does not implicate the securities laws; they also cannot get a clear answer, backed by a clear Commission-level statement, that something is a securities offering.”[77]  One proposal put forth by the two Commissioners, which was previously proposed by Commissioner Peirce,[78] is to offer a safe harbor of sorts, which would allow for token offerings to occur subject to a set of tailored protections for token purchasers.

While clarity on this issue is still forthcoming, there remains a groundswell of support from the digital asset community for further clarification on digital asset topics outside anecdotal and incremental progress toward regulatory standards posed by each new enforcement matter.

B.  Registration Cases

In August, the SEC instituted a settled action against a company for operating a web-based trading platform that facilitated the buying and selling of digital assets without registering as a national securities exchange.[79]  The order alleged that the company’s internal communications expressed a desire to be “aggressive” in making new digital assets available for trade, including assets that might be considered securities under the Howey test.  The SEC determined that some of these digital assets were investment contracts, thereby constituting securities.  Without admitting or denying the SEC’s findings, the company agreed to the entry of a cease-and-desist order and agreed to pay disgorgement of approximately $8.5 million and a civil penalty of $1.5 million.

In September, the Commission instituted a settled action against two U.S. media companies that conducted both an unregistered offering of common stock and an unregistered offering of digital coins, as well as a third company that participated only in the stock offering.[80]  The SEC alleged that the two companies involved in the coin offering promoted the coins to the general public through their websites and social media platforms.  Because the coins were allegedly marketed as an investment opportunity with a likelihood of significant returns, the Commission alleged that they constituted securities.  Without admitting or denying the findings, these two companies agreed to a cease-and-desist order, to pay disgorgement of over $434 million on a joint and several basis, and to each pay a civil penalty of $15 million.  The third company agreed to a cease-and-desist order, to pay disgorgement of more than $52 million, and to pay a civil penalty of $5 million.  The companies also agreed not to participate in any offering of a digital asset security, to assist SEC staff in the administration of a distribution plan, and to publish notice of the SEC’s order on their public websites and social media channels.

The SEC’s enforcement activities extended beyond unregistered offerings to consider the substance of attempted registrations of digital assets deemed securities.  In November, the Commission instituted proceedings against a Wyoming-based company in connection with allegedly incomplete and misleading registration forms.[81]  The effectiveness of the company’s registration of two digital tokens as securities remains stayed pending the completion of the proceedings.  The order alleged that the “Form 10” registration forms submitted by the company lacked material information about the tokens and about the company’s business practices, including audited financial statements.  The SEC further alleged that certain inconsistent statements rendered the Form 10 misleading.  In the press release announcing the action, the SEC stressed that all issuers of securities “must provide the information necessary for investors to make informed decisions.”

C.  Fraud Cases

In August, the SEC instituted a settled action against two Florida men and their Cayman Islands decentralized finance (“DeFi”) company in connection with their unregistered sales of two types of digital tokens.[82]  In offering and selling the tokens, the company stated that it would use investor assets to purchase income-generating “real world” assets, such as car loans.  The order alleged that the company misrepresented its business practices by claiming to have purchased these loans.  The SEC alleged that, although the men controlled another company that owned car loans, the DeFi company never acquired any ownership interest in those loans.  Instead, the Commission alleged that the men used personal funds and funds from the other company they controlled to make principal and interest payments for the DeFi company.  The respondents, without admitting or denying the findings, consented to a cease-and-desist order that included over $12 million in disgorgement and $125,000 penalties for each of the men.  Additionally, prior to the order, the respondents funded contracts that allowed those who held tokens to redeem their tokens and receive all principal and interest owed.

In September, the SEC filed an action against an online cryptocurrency lending platform, its founder, its top U.S. promoter, and the promoter’s affiliated company in connection with approximately $2 billion of unregistered sales of investments in their “Lending Program.”[83]  The lending platform, with the help of its promoter, allegedly represented that it would generate high returns on its customers’ investments by using a proprietary “volatility software trading bot.”  Instead, the complaint alleged, the company transferred investor funds to digital wallets controlled by the company, its founder, its promoter, and others.  The complaint further alleged that the company misled investors by failing to disclose commissions paid to promoters around the world.  The SEC previously reached settlements with two individuals in a related action for promoting the lending program, and the company’s top U.S. promoter pled guilty to criminal charges brought by the Department of Justice.  The litigation remains ongoing.

In November, the SEC filed an action against a California individual for allegedly conducting two unregistered securities offerings and misappropriating investor funds.[84]  The SEC found that he had raised over $3.6 million in Bitcoin from these offerings by promising an extremely high rate of return on the investments through, among other activities, fulfillment of social media marketing orders and “cryptocurrency trading and advertising arbitrage.”  The complaint alleges that he used at least $1 million of investor funds to pay personal expenses and, despite representations to the contrary, prevented investors from withdrawing their funds.  The U.S. Attorney’s Office for the Northern District of California has also brought criminal charges against the individual.  The litigation remains ongoing.

In December, the SEC filed an action against a Latvian citizen for allegedly conducting two fraudulent offerings, one involving the sale of unregistered digital tokens as part of an ICO and the other involving the investment of digital assets in a cloud mining company.[85]  In the former, the individual claimed users of the token could store their digital assets in a secure digital wallet and then spend them “like any other debit card,” but the complaint alleges that all of these claimed products and services were fictitious.  In the latter, the individual claimed that investors would receive a daily “automatic payout” from a cloud mining program, but the complaint similarly alleges that these services never existed.  The complaint alleges that the individual used fictitious names, phone numbers, addresses, and online profiles to market both offerings and misappropriated nearly all funds raised from each.  The litigation remains ongoing.

In addition to a significant uptick in insider trading enforcement actions in the second half of 2021, an indication that the SEC has reinvigorated its focus on insider trading cases, the SEC suffered a rare trial loss (after the alleged tipper defendant settled[86]) in a previously discussed insider trading case.

In December 2020, the SEC brought a case against a mortgage broker accused of being tipped by his brother-in-law, who was corporate controller at an IT company whose stock and options were traded by the broker.[87]  The case went to trial in late 2021, and after the close of the SEC’s case, the defense moved, as is typical, for a Rule 50 Judgment as a Matter of Law.  Surprisingly, and without the defense presenting any portion of its case, the court granted the defense’s motion and dismissed the case.[88]  The SEC’s case was built around circumstantial evidence of what it characterized as “highly suspicious trading,” but the judge concluded that neither the timing nor the manner of the trading nor the communications between the brothers-in-law were suspicious.  Despite surviving all pre-trial motions to dismiss the case, the judge concluded that he was having trouble finding “any circumstantial evidence that would justify a finding that [the broker] got insider information and took some action on it.”  Whether the SEC will file an appeal remains an open question, but as of yet, no appeal has been filed.

Below is an overview of insider trading enforcement actions brought in the second half of 2021.  Of particular note are two cases alleging insider trading against corporate outsiders who obtained material nonpublic information through unauthorized computer systems access.

A.  Cases Arising from Unauthorized Computer Systems Access

In July, the SEC filed an action against a foreign national who was allegedly selling stolen “insider trading tips” to individual investors on the dark web.[89]  According to the SEC’s complaint, beginning in December 2016, the individual obtained stolen order-book data from a securities trading firm as well as pre-release earnings reports of publicly traded companies and subsequently sold that information to investors.  The SEC’s complaint is seeking injunctive relief, disgorgement, and civil penalties.  The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges against the individual.

In December, the SEC filed an action against five Russian nationals for allegedly trading based on stolen corporate earnings announcements obtained by hacking into the systems of two U.S.-based filing agent companies.[90]  According to the allegations in the SEC’s complaint, one of the individuals hacked into the filing agents’ systems and fed the earnings information to his associates, who then used 20 different brokerage accounts located around the world to make trades before over 500 corporate earnings announcements.  According to the SEC, the trades occurred between 2018 and 2020 and netted at least $82 million in profits.  The SEC complaint further alleged that the defendants shared the profits by funneling them through a Russian information technology company in which some of the individuals were involved as founders and directors.  The SEC’s complaint seeks civil penalties, disgorgement, and injunctive relief.  The U.S. Attorney’s Office for the District of Massachusetts filed parallel criminal charges against all five individuals and announced that one of the individuals has been extradited to the United States from Switzerland.

B.  Other Insider Trading Cases

In July, the SEC filed an action against three individuals with insider trading related to stock purchases in advance of an announcement by a beverage company that it was pivoting its business to focus on blockchain technology.[91]  The SEC’s complaint alleged that an insider at the company provided confidential information related to the planned changes to his friend, who then subsequently passed that information on to another friend, who ultimately purchased 35,000 shares that resulted in profits of over $160,000 when the information was made public.  The SEC’s complaint seeks permanent injunctions and civil penalties against all three individuals, and an officer and director ban for the company insider.  The SEC also revoked the registration of the company’s securities as part of the action.  Two of the individuals involved in the case are currently in litigation with the SEC over an alleged market manipulation scheme.  The two individuals pled guilty to criminal charges in a parallel action brought in relation to the alleged market manipulation scheme.

In August, the SEC filed an action against a former employee of a biopharmaceutical company with insider trading based on trades made in advance of the company’s announcement that it would be acquired by a major pharmaceutical company.[92]  The SEC’s complaint alleged that the former employee, then the head of business development at the biopharmaceutical company, purchased short-term, out-of-the-money options of a similar pharmaceutical company after learning that his company was getting acquired by a large pharmaceutical company at a significant premium.  The SEC’s complaint alleged that the employee made the purchase just minutes after learning that the investment bankers had listed the similar company as a comparable company in their discussions with his company over valuations.  The SEC’s complaint alleged that the trading netted the former employee profits of just over $100,000, and seeks injunctive relief, a civil penalty, and an officer and director bar for the employee.  A motion to dismiss in the case was recently denied, and litigation is ongoing.[93]

Also in August, the SEC filed an action against three former software engineers and two of their associates with insider trading.[94]  The SEC alleged that a former employee and two associates made trades based on confidential, nonpublic information about subscriber growth at the former employee’s streaming media company.  The SEC’s complaint alleges that the former employees had passed along confidential information about subscriber growth, which was a key metric reported alongside their company’s quarterly earnings, to their close acquaintances, who traded the stock in advance of the key earnings releases.  The SEC’s complaint alleged that the trades netted approximately $3 million in profits.  All five individuals consented to judgments that impose various injunctive relief and civil penalties, including, for one of the software engineers, an officer and director ban.  The U.S. Attorney’s Office for the Western District of Washington filed parallel criminal charges against two of the software engineers and the two associates.

In September, the SEC announced a settlement with a leading alternative data provider company and its co-founder based on allegations that it engaged in deceptive practices and made material misrepresentations about how its alternative data was derived.[95]  The SEC alleged that the co-founder, in order to induce companies to share their data, made assurances to those companies that their data would be aggregated and anonymized prior to being fed into a statistical model.  However, the SEC alleged that for approximately four years, the company used non-aggregated and non-anonymized data to alter its model-generated estimates of app performance to make them more valuable to the trading firms that it sold the estimates to.  The SEC also alleged that the company further misrepresented to their trading firm customers that it generated the estimates in a way that was consistent with the consents they obtained from their data-providing clients and that they had effective internal controls to prevent the misuse of confidential data and to ensure compliance with federal securities laws.  The SEC alleged that the company and its co-founder were aware that the trading firm customers were making investment decisions based on the estimates, and in fact touted how closely their data correlated with the companies’ true performance and provided guidance to the trading firms as to how they could use the estimates to trade ahead of upcoming earnings announcements.  As part of the settlement agreement, neither the company nor the co-founder admitted any wrongdoing.  However, both consented to a cease-and-desist order that included a $10 million penalty for the company and a $300,000 penalty for the co-founder.  The settlement also included a three-year public company officer and director ban for the co-founder.

Also in September, the SEC brought an action against a former IT manager at a pharmaceutical company with insider trading based on four trades made just prior to public announcements that were allegedly based on material nonpublic information shared with him by a former colleague at the company.[96]  The SEC’s complaint alleged that the manager used nonpublic information on the company’s earnings, drug approvals, and a pending merger with a major pharmaceutical company to place highly profitable options trades.  The SEC alleged that the manager made over $8 million in combined profits and avoided losses, and shared some of his profit with the former colleague in the form of overseas cash payments.  The manager consented to a judgment which enjoined him from violating the alleged provisions and barred him from acting as an officer or director of a public company, with civil penalties in an amount to be determined by the court.  The U.S. Department of Justice, Fraud Section, announced parallel criminal charges against the manager.

In September, the SEC brought an action against a quantitative analyst who worked at two prominent asset management firms for allegedly perpetuating a years-long front-running scheme that generated at least $8.5 million in profits.[97]  The SEC alleged that the analyst used information he had about his firm’s securities orders to place similar orders just before the firm on nearly 3,000 occasions, taking advantage of the price movements caused by the firm’s trades.  The SEC’s complaint alleges that the analyst utilized his wife’s brokerage account to make the trades.  The SEC’s complaint seeks disgorgement plus interest, civil penalties, and injunctive relief.  The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges against the analyst.

Also in September, the SEC brought an action against a compliance analyst, who was a foreign national working at an overseas office of an investment bank, for allegedly placing trades in advance of corporate events involving the investment bank’s clients.[98]  The SEC’s complaint alleges that the individual used his position as a compliance analyst to place trades in advance of at least 45 events involving the investment bank’s clients.  The SEC alleged that the individual took steps to avoid detection, including only placing relatively small trades and using multiple U.S.-based brokerage accounts held in his parent’s name.  The SEC obtained an emergency court freezing the individual’s assets.  The trades allegedly generated more than $471,000 in gains.  The SEC is seeking injunctive relief, disgorgement, and a civil penalty, and has also named the individual’s parents as relief defendants in the action.

In November, the SEC brought an action against a partner at a global management consulting firm for insider trading.[99]  The SEC alleged that the partner purchased out-of-the-money call options of a company after he learned that one of the consulting firm’s clients would be acquiring the company.  According to the SEC’s complaint, the partner sold the options the morning of the acquisition announcement, just days before they were set to expire, for profits totaling over $450,000.  The SEC also alleged that the partner violated his firm’s policies by failing to pre-clear the trades.  The SEC’s complaint seeks injunctive relief and a civil penalty.  The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges against the partner.

In December, the SEC brought an action against a medical school alleging insider trading in the securities of a biotechnology company in advance of that company’s announcement of positive drug trial results for its flagship drug candidate.[100]  The SEC alleged that the professor entered into a consulting relationship with the biotechnology company to serve as its lead clinical investigator for the drug trial, and that, through his role, he learned material nonpublic information about the drug trial results.  The complaint alleged that upon learning of the positive results, the professor purchased over 8,000 shares of the company’s stock, which, upon release of the drug trial results, rose approximately 300% and generating gains of over $130,000.  The SEC reached a settlement with the professor that, if approved by the court, provides for a permanent injunction and a civil penalty in an amount to be determined by the court at a later date.  The U.S. Attorney’s Office for the Northern District of Illinois announced parallel criminal charges against the professor.

There were three alleged market manipulation schemes that were the focus of SEC enforcement actions during the second half of 2021.

In September, the SEC, in two separate complaints, commenced actions against four people and five entities in an allegedly fraudulent microcap operation that generated more than $10 million in profits.[101]  The SEC also sought an order to freeze the assets of seven of the defendants and one relief defendant.  According to the SEC’s first complaint, one of the individuals and his son allegedly acquired millions of shares in U.S. publicly traded microcap companies, disguised their control over the companies, and then dumped their shares into the public markets in violation of the securities laws.  The SEC alleged that, while concealing their holdings in the companies, they allegedly engaged in manipulative trading and generated artificial demand for the stock by making misleading statements to investors.  According to the SEC’s second complaint, two associates of the individual and his son allegedly used their roles as officers or majority shareholders at several of the microcap companies to hide the individual’s control, while simultaneously helping him and his son acquire and then sell millions of the companies’ shares.  The SEC also alleged that one of the associates made false and misleading statements in response to subpoenas issued by the SEC and during a subsequent interview.  The SEC is seeking injunctive relief, disgorgement and civil penalties against all of the parties.  The SEC is also seeking penny stock bars against three of the non-entity defendants, conduct-based injunctions against the individual and his son, and officer and director bars against the two company-insider associates.

Also in September, the SEC brought an action against an individual and his friend for allegedly engaging in a coordinated operation to collect liquidity rebates from exchanges by wash trading put options of certain “meme stocks” in early 2021.[102]  The SEC’s complaint alleged that the individual was able to generate at least $668,000 in profits from approximately 11,400 trades made in a way that took advantage of a certain brokerage firms’ maker-taker rebate programs.  The friend generated approximately $51,000 in profits as a result of approximately 2,300 trades.  The SEC alleged that the individual placed initial orders on one side of the market utilizing brokerage accounts that passed rebates back to their customers and then placed opposite orders in brokerage accounts that did not charge trading fees, thereby essentially trading with himself and retaining the rebates.  The SEC alleged that the practice impacted the market by skewing the volume in certain option contracts and induced other traders to place trades in otherwise illiquid option contracts.  Litigation against the individual is ongoing.  The friend, without admitting or denying the allegations, consented to a judgment providing for injunctive relief, disgorgement and a civil monetary penalty of $25,000.

In October, the SEC brought an action against a webcast host for allegedly making more than 100 false statements regarding public companies.[103]  According to the SEC’s complaint, the host received advance notice of companies about which another individual allegedly planned to spread false statements, after which the host shared the names of those companies with his subscribers.  The SEC alleged that the conduct led to temporary increases in the companies’ stock prices and netted the host more than $347,000 in profits.  The SEC alleged that the host was working as part of a broader group; the complaint follows a similar complaint against a different individual allegedly involved in the scheme.  The host agreed to cooperate with the SEC and has consented to the entry of a judgment that provides for injunctive relief, disgorgement, a civil penalty in an amount to be determined by the court, a penny stock bar and a bar from the securities industry generally.  The host also pleaded guilty to criminal charges brought in a parallel action by the U.S. Attorney’s Office for the Northern District of Georgia.

Also in October, the SEC filed an emergency action and obtained an injunction and asset freeze against an individual, alleging that he used his Twitter handle to encourage his followers to buy stocks in which the individual had holdings.[104]  According to the SEC, the individual encouraged his followers to invest in the stock and then sold his own stock at inflated prices while continuing to recommend on Twitter that people purchase the stock.  The SEC has alleged violations of the antifraud provisions of the federal securities laws and seeks a permanent injunction, disgorgement, civil penalties, and the asset freeze already granted by the court.

The SEC continued to bring numerous offering fraud cases, which often allege violations by individuals and companies that target particular groups of investors, sometimes referred to as affinity frauds.

A.  Penny Stock Schemes

In August, the SEC brought an action against a company, its CEO, and several other entities and individuals with participating in an alleged penny stock fraud scheme.[105]  According to the SEC, the company bought shares of another company’s stock with the understanding that the offering proceeds would be used to secretly finance stock promotions.  Those involved then allegedly misled investors about how offering proceeds would be used and the promotional activities undertaken to boost the value of the stock.  The SEC has alleged violations of the antifraud provisions of the federal securities laws and seeks disgorgement of ill-gotten gains, civil penalties, permanent injunctive relief, and penny stock bar, and officer and director bars.

In August, the SEC brought an emergency action against a public company’s chairman, several of his associates, and several clients of the company.[106]  The SEC alleged that the chairman and his associates masterminded and implemented a scheme that allowed the clients—who controlled microcap companies—to conceal their control and ownership of those companies through a network of offshore shell companies.  According to the SEC, the clients used this system to dump their stock while hiding their control positions from investors.  In December, the SEC alleged violations by three more clients for activity stemming from the same alleged scheme.[107]  In both complaints, the SEC seeks permanent injunctions, conduct based injunctions, disgorgement, civil penalties and penny stock bars.

B.  Frauds Targeting Senior Citizens and Retirees

In August, the SEC filed several actions based on different Ponzi-like schemes.  In one, the SEC brought an emergency action and obtained temporary relief against a Minnesota couple and various entities they controlled.  According to the SEC, the couple raised almost $17.6 million by promising friends and family—including many elderly retirees—that investments would be used to trade foreign currencies.[108]  The SEC’s complaint alleged that, in fact, funds were used to pay returns to existing investors and to support other businesses.  The SEC is seeking preliminary and permanent injunctions, disgorgement, civil penalties, and an asset freeze.

Also in August, the SEC brought an emergency action against an individual along with the investment adviser with which he was associated, and an investment fund he controlled.[109]  The SEC alleged that he—and persons directed by him—raised more than $110 million from investors—including many elderly retirees—for his investment fund and then used money from new investors to pay earlier investors.  The SEC is seeking preliminary and permanent injunctions, disgorgement, civil penalties, an asset freeze, and the appointment of a receiver.

In a similar case, the SEC brought an emergency action, and obtained an asset freeze and temporary relief, against an individual who allegedly used an investment adviser to solicit over $10 million in investments from clients—many of whom were elderly—into an investment fund, only to use the funds for Ponzi-like payments.[110]  The SEC is seeking preliminary and permanent injunctions, disgorgement, and civil penalties.

C.  Frauds Targeting Affinity Groups

In September, the SEC brought an action against a payday loan company and its CEO for an alleged Ponzi-like scheme targeting South Florida’s Venezuelan-American community.[111]  According to the SEC’s complaint, the CEO raised at least $66 million by telling investors that their money would be used to make payday loans, but in reality, he misappropriated the funds for personal use and to make payments to other investors.  The SEC seeks permanent injunctions, disgorgement, and civil penalties from each of the defendants and an officer and director bar against the CEO.

D.  Frauds Related to Natural Resource Offerings

In September, the SEC announced a settled action against two individuals and the entities they controlled for making misrepresentations in connection with unregistered oil and gas securities offerings.[112]  The two individuals—acting as unregistered brokers—allegedly made material misstatements regarding debt and equity securities in oil and gas wells they sold to retail investors.  Without admitting or denying the SEC’s allegations, the two entities each agreed to pay a civil penalty of $225,000, and the individuals each agreed to pay a civil penalty of $75,000, and further agreed to prohibitions on future undertakings related to offerings.

Also in September, the SEC brought an action against a mining company and its two managing members for their participation in an unregistered offering related to a Columbian mining venture.[113]  According to the SEC’s complaint, the two individuals raised approximately $2.7 million by misrepresenting to investors that they could share in the profits of a Columbian gold mining operation and that all the necessary permits had been obtained.  The SEC is seeking permanent injunctions, disgorgement, and civil penalties.  To date, one of the managing members has offered to settle with the SEC for a permanent injunction, disgorgement, and penalties totaling approximately $820,000.

E.  Misuse of Investor Funds

In July, the SEC filed an emergency action and sought and received a temporary restraining order and asset freeze against an investment firm and two individuals associated with the firm.[114]  According to the SEC’s complaint, the firm represented to investors that their money would be invested according to recommendations made by an artificial intelligence supercomputer that consistently provided large returns for investors.  The SEC alleged that defendants then misused investor money for personal use and for paying other investors.  The complaint alleged the firm and two individuals violated the antifraud provisions of the federal securities laws.  Further, the complaint alleged that one individual acted as the control person under the Exchange Act.  The SEC is seeking permanent injunctions, disgorgement, and civil penalties.

Also in July, the SEC filed a settled action against an individual in connection with his involvement in two companies.[115]  According to the SEC, he misappropriated investor funds and used those funds for personal use, secretly sold stock while paying promoters to recommend the same stock to retail investors, failed to provide the required disclosures in connection with his stock trading, and made material misrepresentations to investors regarding one company’s products.  The SEC sought injunctive relief, an officer and director bar, a penny stock bar, disgorgement, and civil penalties.  Without admitting or denying the allegations, the individual consented to a settlement that included an injunction, an officer and director bar and penny stock bars, and disgorgement and civil penalty in excess of $1.3 million.

In August, the SEC brought an emergency action and obtained temporary relief against two entities and the individual who controlled them to stop an alleged Ponzi scheme.[116]  The SEC alleged that the individual told investors that offering proceeds would be used to fund small business loans.  According to the SEC, only a small portion of the $70 million raised was used for such small business loans; instead, the rest was used to pay returns to prior investors and to pay sales agents who promoted the investments.  The SEC complaint seeks preliminary and permanent injunctions, disgorgement, and civil penalties, as well as an officer and director bar against the individual.

In September, the SEC brought an emergency action and obtained an asset freeze against a real estate company and its president for alleged securities fraud in connection with EB-5 offerings tied to two development projects.[117]  According to the SEC, the president raised more than $229 million by misrepresenting the source of financing for the projects, the scope of the projects, and the experience of the development and construction teams in offering materials, then misappropriated millions of dollars for unauthorized purposes.  The complaint requests a permanent injunction, disgorgement, civil penalties, an asset freeze, and the appointment of a monitor.

F.  Misleading Statements to Investors

In July, the SEC filed an emergency action against an individual, alleging that he made misleading statement to encourage investors to invest in several microcap companies.[118]  According to the SEC, the individual and others he worked with encouraged investors to make such investments during high pressure sales calls or email promotions and the individual received money from the stock sale proceeds of one of the microcap companies.  The SEC is seeking an asset freeze, permanent injunctions, disgorgement, civil penalties, and penny stock and officer and director bars.

The SEC filed an emergency action in July against an investment company and its director.[119]  According to the SEC, the company and its director raised money from investors by falsely representing that the company had sufficient funds to acquire three Italian cycling companies and that the director had invested his own money in the offerings.  The SEC alleged that the director misappropriated the funds for personal use and hid from investors the fact that the company had failed to acquire the cycling companies.  The complaint seeks emergency relief, permanent injunctions, disgorgement, civil penalties, and a conduct-based injunction, and an officer and director bar against the director.

The SEC also filed an action in July against an individual, alleging that he made misrepresentations to investors, created false documents, misappropriated investor funds, and acted as an unregistered broker-dealer.[120]  According to the SEC, the individual falsely represented to investors that he was a licensed securities professional, provided false documents showing that he was associated with a licensed broker-dealer, and further provided false account statements and trading data to make it appear that his trading on their behalf was generating more value than it was.  The SEC alleges violations of the antifraud provisions and broker-dealer registration provisions of the federal securities laws.  The complaint seeks an injunction, disgorgement, and a civil penalty.

In September, the SEC brought an action against three individuals—as well as a funding portal and its CEO—for their roles in selling nearly $2 million of unregistered securities through crowdfunding offerings.[121]  According to the SEC, the three individuals misrepresented information in their crowdfunding offering, which they conducted through two cannabis and hemp companies.  Specifically, one of the individuals hid his involvement in the offerings due to concerns about a prior criminal conviction.  The SEC also brought an action against the registered funding portal and its CEO that hosted the offerings for allegedly failing to address red flags—such as the prior criminal conviction—associated with the offerings.  The complaint seeks injunctions, disgorgement, and civil penalties.

In October, the SEC filed an action against a hemp company and its co-founders for allegedly making misrepresentations to investors.[122]  According to the SEC, the company misrepresented that it was a fully integrated company processing its own hemp, misstated historical revenue numbers, and provided unsupported projections for future revenues.  Further, the SEC alleges that the co-founders misappropriated several million dollars from the company for personal use.  The SEC seeks permanent injunctions, disgorgement, civil penalties, and officer and director and penny stock bars against the co-founders.  The U.S. Attorney’s Office for the Southern District of New York filed criminal charges against the individual co-founders.

The SEC also filed an action in October against a real estate investment company and its co-founders.[123]  According to the SEC, the company and its co-founders made misrepresentations to investors about the source of investor returns and paid investors using funds raised from other investors.  Further, one of the co-founders allegedly made representations to investors about his education in finance and his investment experience without disclosing that he had been barred by FINRA from affiliating with any FINRA-member firm.  The SEC’s complaint alleged the company and its co-founders violated the antifraud and securities offering and broker-dealer registration provisions of the federal securities laws.  The complaint is seeking permanent injunctions, disgorgement, and civil penalties.

In November, the SEC brought an emergency action and obtained temporary relief against a claims aggregator—a firm that submits claims to administrators tasked with returning settlement funds to harmed investors—and its three principals in federal court.[124]  According to the SEC, these individuals, and the entities they control, stole at least $40 million from 400 distribution funds by submitting false claims to settlement fund administrators.  The U.S. Attorney’s Office for the Eastern District of Pennsylvania filed parallel criminal charges against the three principals.  In addition to the asset freeze and temporary restraining order granted by the court, the SEC is seeking disgorgement and civil penalties.

__________________________

[1]  SEC Speech, PLI Broker/Dealer Regulation and Enforcement 2021, Gurbir Grewal, Division of Enforcement (Oct. 6, 2021), available at https://www.sec.gov/news/speech/grewal-pli-broker-dealer-regulation-and-enforcement-100621.

 [2]  SEC Speech, Remarks at SEC Speaks 2021, Gurbir Grewal, Director, Division of Enforcement (Oct. 13, 2021), available at https://www.sec.gov/news/speech/grewal-sec-speaks-101321.

 [3]  SEC Press Release, SEC Charges Dialysis Provider and Three Former Senior Executives with Revenue Manipulation Scheme (December 6, 2021), available at https://www.sec.gov/news/press-release/2021-252.


[4]  SEC Speech, Remarks at SEC Speaks 2021, Gurbir Grewal, Director, Division of Enforcement (Oct. 13, 2021), available at https://www.sec.gov/news/speech/grewal-sec-speaks-101321.

[5] SEC Press Release, JPMorgan Admits to Widespread Recordkeeping Failures and Agrees to Pay $125 Million Penalty to Resolve SEC Charges (December 17, 2021), available at https://www.sec.gov/news/press-release/2021-262.

[6] SEC Speech, Remarks at SEC Speaks 2021, Gurbir Grewal, Director, Division of Enforcement (Oct. 13, 2021), available at https://www.sec.gov/news/speech/grewal-sec-speaks-101321.

 [7]  SEC Speech, Prepared Remarks at the Securities Enforcement Forum, Chair Gary Gensler (Nov. 4, 2021), available at https://www.sec.gov/news/speech/gensler-securities-enforcement-forum-20211104.

 [8]  SEC Speech, Remarks at SEC Speaks 2021, Gurbir Grewal, Director, Division of Enforcement (Oct. 13, 2021), available at https://www.sec.gov/news/speech/grewal-sec-speaks-101321.


 [9]  SEC Press Release, SEC Announces Enforcement Results for FY 2021 (Nov. 18, 2021), available at https://www.sec.gov/news/press-release/2021-238.


 [10]  SEC Press Release, SEC Charges SPAC, Sponsor, Merger Target, and CEOs for Misleading Disclosures Ahead of Proposed Business Combination (July 13, 2021), https://www.sec.gov/news/press-release/2021-124.


 [11]  SEC Press Release, Nikola Corporation to Pay $125 Million to Resolve Fraud Charges (Dec. 21, 2021), available at https://www.sec.gov/news/press-release/2021-267.


 [12]  SEC Press Release, SEC Charges Founder of Nikola Corp. With Fraud (July 29, 2021), available at https://www.sec.gov/news/press-release/2021-141.


 [13]  SEC Statement, Statement of Commissioner Elad L. Roisman (Dec. 20, 2021), available at https://www.sec.gov/news/statement/roisman-20211220.


 [14]  SEC Press Release, Daniel S. Kahl Appointed Acting Director of the Division of Examinations; Peter B. Driscoll to Depart Agency (July 14, 2021), available at https://www.sec.gov/news/press-release/2021-126.


 [15]  SEC Press Release, Sanjay Wadhwa Named Deputy Director of Enforcement Division (Aug. 18, 2021), available at https://www.sec.gov/news/press-release/2021-157.


 16]  SEC Press Release, Dan Berkovitz Named SEC General Counsel; John Coates to Leave SEC (Sept. 28, 2021), available at https://www.sec.gov/news/press-release/2021-198.


 [17]  SEC Press Release, Nicole Creola Kelly Named Chief of SEC Whistleblower Office (Nov. 5, 2021), available at https://www.sec.gov/news/press-release/2021-225.


 [18]  SEC Press Release, Daniel R. Gregus Named Director of Chicago Office (Nov. 15, 2021), available at https://www.sec.gov/news/press-release/2021-234.


 [19]  SEC Press Release, SEC Appoints Haoxiang Zhu Director of Division of Trading and Markets (Nov. 19, 2021), available at https://www.sec.gov/news/press-release/2021-242.


 [20]  SEC Press Release, James E. Grimes Named Chief Administrative Law Judge at SEC (Dec. 17, 2021), available at https://www.sec.gov/news/press-release/2021-263.


 [21]  SEC Press Release, William Birdthistle Named Director of Division of Investment Management (Dec. 21, 2021), available at https://www.sec.gov/news/press-release/2021-268.


[22]  SEC Public Statement, Statement in Connection with the SEC’s Whistleblower Program (Aug. 2, 2021), available at https://www.sec.gov/news/public-statement/gensler-sec-whistleblower-program-2021-08-02.

 [23]  SEC Rules Release, Procedures for the Commission’s Use of Certain Authorities Under Rule 21F-3(B)(3) and Rule 21F-6 of the Securities Exchange Act of 1934, available at https://www.sec.gov/rules/policy/2021/34-92565.pdf.

 [24] SEC Public Statement, Statement on the Commission’s Action to Disregard Recently-Amended Whistleblower Rules (Aug. 5, 2021), available at https://www.sec.gov/news/public-statement/peirce-roisman-whistleblower-procedures-2021-08-05.


 [25] SEC Press Release, SEC Bars Two Individuals from Whistleblower Award Program (Sept. 28, 2021), available at https://www.sec.gov/news/press-release/2021-199.


 [26]  SEC Press Release, SEC Awards More Than $1 Million to Whistleblower (July 15, 2021), available at https://www.sec.gov/news/press-release/2021-128.


 [27]  SEC Press Release, SEC Awards Nearly $3 Million to Whistleblower (July 21, 2021), available at https://www.sec.gov/news/press-release/2021-134.


 [28]  SEC Press Release, SEC Issues Whistleblower Awards Totaling More Than $4 Million (Aug. 2, 2021), available at https://www.sec.gov/news/press-release/2021-143.


 [29]  SEC Press Release, SEC Awards $3.5 Million to Whistleblowers in Two Enforcement Actions (Aug. 6, 2021), available at https://www.sec.gov/news/press-release/2021-146.


 [30]  SEC Press Release, SEC Issues Nearly $6 Million in Whistleblower Awards (Aug. 10, 2021), available at https://www.sec.gov/news/press-release/2021-149.


 [31]  SEC Press Release, SEC Issues Whistleblower Awards Totaling $2.6 Million (Aug. 27, 2021), available at https://www.sec.gov/news/press-release/2021-168.


 [32]  SEC Press Release, SEC Surpasses $1 Billion in Awards to Whistleblowers with Two Awards Totaling $114 Million (Sept. 15, 2021), available at https://www.sec.gov/news/press-release/2021-177.


 [33]  SEC Press Release, SEC Awards $11.5 Million to Two Whistleblowers (Sept. 17, 2021), available at https://www.sec.gov/news/press-release/2021-180.


 [34]  SEC Press Release, SEC Awards Approximately $36 Million to Whistleblower (Sept. 24, 2021), available at https://www.sec.gov/news/press-release/2021-192.


 [35]  SEC Press Release, SEC Awards $40 Million to Two Whistleblowers (Oct. 15, 2021), available at https://www.sec.gov/news/press-release/2021-211.


 [36]  SEC Press Release, SEC Awards More Than $2 Million to Whistleblower for Successful Related Action (Oct. 29, 2021), available at https://www.sec.gov/news/press-release/2021-220.


 [37]  SEC Press Release, SEC Issues Awards Totaling More Than $15 Million to Two Whistleblowers (Nov. 10, 2021), available at https://www.sec.gov/news/press-release/2021-232.


 [38]  SEC Press Release, SEC Issues Whistleblower Awards Totaling Approximately $10.4 Million (Nov. 22, 2021), available at https://www.sec.gov/news/press-release/2021-243.


 [39]  SEC Press Release, SEC Issues Whistleblower Nearly $5 Million Award (Dec. 7, 2021), available at https://www.sec.gov/news/press-release/2021-253.


 [40]  SEC Press Release, SEC Charges Executives of Network Infrastructure Company with Accounting Fraud (July 15, 2021), available at https://www.sec.gov/news/press-release/2021-127.


 [41]  SEC Press Release, SEC Charges Retailer and Former CEO for Accounting, Reporting, and Control Failures (July 21, 2021), available at https://www.sec.gov/news/press-release/2021-133.


 [42]  SEC Press Release, SEC Charges The Kraft Heinz Company and Two Former Executives for Engaging in Years-Long Accounting Scheme (Sept. 3, 2021), available at https://www.sec.gov/news/press-release/2021-174.


 [43]  SEC Press Release, SEC Charges Dialysis Provider and Three Former Senior Executives with Revenue Manipulation Scheme (Dec. 6, 2021), available at https://www.sec.gov/news/press-release/2021-252.


 [44]  SEC Press Release, SEC Charges Issuer with Cybersecurity Disclosure Controls Failures (Jun. 15, 2021), available at https://www.sec.gov/news/press-release/2021-102.


 [45]  SEC Press Release, SEC Charges Company and Two Executives for Misleading COVID-19 Disclosures (July 7, 2021), available at https://www.sec.gov/news/press-release/2021-120.


 [46]  SEC Press Release, SEC Charges Former CEO of Technology Company with $80 Million Fraud (Aug. 25, 2021), available at https://www.sec.gov/news/press-release/2021-164.


 [47]  SEC Press Release, SEC Charges Pearson plc for Misleading Investors About Cyber Breach (Aug. 16, 2021), available at https://www.sec.gov/news/press-release/2021-154.


 [48]  SEC Press Release, SEC Charges Principals of Subprime Automobile Finance Company with Fraud (Sept. 23, 2021), available at https://www.sec.gov/news/press-release/2021-189.


 [49]  SEC Press Release, SEC Charges Oilfield Services Company and Former CEO With Failing to Disclose Executive Perks and Stock Pledges (Nov. 22, 2021), available at https://www.sec.gov/news/press-release/2021-244.


 [50]  SEC Press Release, SEC Charges Exchange-Traded Product and Its General Partner With Disclosure Failures (Nov. 8, 2021), available at https://www.sec.gov/news/press-release/2021-229.


 [51]  SEC Press Release, SEC Charges Ernst & Young, Three Audit Partners, and Former public Company CAO with Audit Independence Misconduct (Aug. 2, 2021), available at https://www.sec.gov/news/press-release/2021-144.


 [52]  SEC Press Release, UBS Settles Charges Related to Investments in Complex Exchange-Traded Product (July 19, 2021), available at https://www.sec.gov/news/press-release/2021-130.


 [53]  SEC Press Release, SEC Announces $97 Million Enforcement Action Against TIAA Subsidiary for Violations in Retirement Rollover Recommendations (July 13, 2021), available at https://www.sec.gov/news/press-release/2021-123.


 [54]  SEC Press Release, SEC Charges Former Executives of Registered Investment Advisor with Fraud (Sept. 30, 2021), available at https://www.sec.gov/news/press-release/2021-204.


 [55]  SEC Press Release, SEC Wins Jury Trial: Hedge Fund Adviser Found Liable for Securities Fraud (Nov. 5, 2021), available at https://www.sec.gov/news/press-release/2021-224.


 [56]  SEC Press Release, SEC Charges Private Equity Fund Advisor with Fee and Expense Disclosure Failures (Dec. 20, 2021), available at https://www.sec.gov/news/press-release/2021-266.


 [57]  SEC Press Release, SEC Charges Hedge Fund Trader in Lucrative Front-Running Scheme (July 2, 2021), available at https://www.sec.gov/news/press-release/2021-118.


 [58]  SEC Press Release, SEC Charges Real Estate CEO with Defrauding Investors (July 30, 2021), available at https://www.sec.gov/news/press-release/2021-142.


 [59]  SEC Press Release, SEC Charges Financial Advisor With Stealing Investor Funds to Pay Off Credit Cards, Buy Gold Coins (Oct. 28, 2021), available at https://www.sec.gov/news/press-release/2021-217.


 [60]  SEC Press Release, SEC Charges 27 Financial Firms for Form CRS Filing and Delivery Failures (July 26, 2021), available at https://www.sec.gov/news/press-release/2021-139.


[61]  SEC Press Release, McKinsey Affiliate to Pay $18 Million for Compliance Failures in Handling Nonpublic Information (Nov. 19, 2021), available at https://www.sec.gov/news/press-release/2021-241.


 [62]  SEC Press Release, SEC Charges Investment Adviser and Associated Individuals with Causing Violations of Regulation SHO (Aug. 17, 2021), available at https://www.sec.gov/news/press-release/2021-156.


 [63]  SEC Press Release, SEC Charges School District and Former Executive with Misleading Investors in Bond Offering (Sept. 16, 2021), available at https://www.sec.gov/news/press-release/2021-178.


 [64]  SEC Press Release, SEC Charges Underwriter and Its Former CEO With Misconduct In Muni Bond Tender Offer (Aug. 26, 2021), available at https://www.sec.gov/news/press-release/2021-166.


 [65]  SEC Press Release, RBC Charged With Failing to Give Priority to Retail and Institutional Investors in Municipal Offerings (Sept. 17, 2021), available at https://www.sec.gov/news/press-release/2021-179.


 [66]  SEC Press Release, SEC Charges Firm and Two Principals in First-Ever Actions Enforcing Rule on Duties of Municipal Advisors (Sept. 23, 2021), available at https://www.sec.gov/news/press-release/2021-188.


 [67]  SEC Press Release, SEC Charges Rogue Trader Who Bankrupted His Firm (Sept. 30, 2021), available at https://www.sec.gov/news/press-release/2021-205.


 [68]  SEC Press Release, Credit Suisse to Pay Nearly $475 Million to U.S. and U.K. Authorities to Resolve Charges in Connection with Mozambican Bond Offerings (Oct. 19, 2021), available at https://www.sec.gov/news/press-release/2021-213.


 [69] Id.


 [70]  SEC Press Release, SEC Announces Three Actions Charging Deficient Cybersecurity Procedures (Aug. 30, 2021), available at https://www.sec.gov/news/press-release/2021-169.


 [71]  SEC Press Release, SEC Charges Fixed Income Clearing Corp. With Having Inadequate Risk Management Policies (Oct. 29, 2021), available at https://www.sec.gov/news/press-release/2021-219.


 [72]  SEC Press Release, JPMorgan Admits to Widespread Recordkeeping Failures and Agrees to Pay $125 Million Penalty to Resolve SEC Charges (Dec. 17, 2021), available at https://www.sec.gov/news/press-release/2021-262.


 [73]  CFTC Press Release, CFTC Orders JPMorgan to Pay $75 Million for Widespread Use by Employees of Unapproved Communication Methods and Related Recordkeeping and Supervision Failures (Dec. 17, 2021), available at https://www.cftc.gov/PressRoom/PressReleases/8470-21.


 [74]  SEC Press Release, ICO “Listing” Website Charged with Unlawfully Touting Digital Asset Securities (Jul. 14, 2021), available at https://www.sec.gov/news/press-release/2021-125.


 [75]  See SEC Statement, SEC Statement Urging Caution Around Celebrity Backed ICOs (Nov. 1, 2017), available at https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos.


 [76]  SEC Statement, In the Matter of Coinschedule by Commissioners Peirce and Roisman (July 14, 2021), available at https://www.sec.gov/news/public-statement/peirce-roisman-coinschedule.


 [77]  Id.


 [78]  Hester Peirce, Commissioner, SEC, Token Safe Harbor Proposal 2.0 (Apr. 13, 2021), available at https://www.sec.gov/news/public-statement/peirce-statement-token-safe-harbor-proposal-2.0.


 [79]  SEC Press Release, SEC Charges Poloniex for Operating Unregistered Digital Asset Exchange (Aug. 9, 2021), available at https://www.sec.gov/news/press-release/2021-147.


 [80]  SEC Press Release, SEC Charges Three Media Companies with Illegal Offerings of Stock and Digital Assets (Sep. 13, 2021), available at https://www.sec.gov/news/press-release/2021-175.


 [81]  SEC Press Release, Registration of Two Digital Tokens Halted (Nov. 10, 2021), available at https://www.sec.gov/news/press-release/2021-231.


 [82]  SEC Press Release, SEC Charges Decentralized Finance Lender and Top Executives for Raising $30 Million Through Fraudulent Offerings (Aug. 6, 2021), available at https://www.sec.gov/news/press-release/2021-145.


 [83]  SEC Press Release, SEC Charges Global Crypto Lending Platform and Top Executives in $2 Billion Fraud (Sep. 1, 2021), available at https://www.sec.gov/news/press-release/2021-172.


 [84]  SEC Press Release, SEC Charges Promoter with Conducting Cryptocurrency Investment Scams (Nov. 18, 2021), available at https://www.sec.gov/news/press-release/2021-237.


 [85]  SEC Press Release, SEC Charges Latvian Citizen with Digital Asset Fraud (Dec. 2, 2021), available at https://www.sec.gov/news/press-release/2021-248.


 [86]  The alleged tipper settled for a permanent injunction, a $240,000 fine, and a two-year officer and director bar, as well as a two-year bar under a parallel Rule 102(e) forbidding practice before the SEC.  See SEC Litigation Release, SEC Obtains Judgment Against Former Corporate Controller for Tipping Brother-in-Law Ahead of Merger Announcement (Nov. 15, 2021), available at https://www.sec.gov/litigation/litreleases/2021/lr25264.htm.


 [87]  SEC Litigation Release, SEC Charges Corporate Controller and His Brother-In-Law with Insider Trading Ahead of Merger Announcement (Dec. 11, 2020), available at https://www.sec.gov/litigation/litreleases/2020/lr24982.htm.


 [88]  Dean Seal, SEC Handed Rare Midtrial Defeat in Insider Trading Case (Dec. 14, 2021), available at https://www.law360.com/articles/1448811/sec-handed-rare-midtrial-defeat-in-insider-trading-case.


 [89]  SEC Press Release, SEC Charges TheBull with Selling “Insider Trading Tips” on the Dark Web (Jul. 9, 2021), available at https://www.sec.gov/news/press-release/2021-122.


 [90]  SEC Press Release, SEC Charges Five Russians in $80 Million Hacking and Trading Scheme (Dec. 20, 2021), available at https://www.sec.gov/news/press-release/2021-265.


 [91]  SEC Press Release, SEC Charges Three Individuals with Insider Trading (Jul. 9, 2021), available at https://www.sec.gov/news/press-release/2021-121.


 [92]  SEC Press Release, SEC Charges Biopharmaceutical Company Employee with Insider Trading (Aug. 17, 2021), available at https://www.sec.gov/news/press-release/2021-155.


 [93]  Order Denying Motion to Dismiss, S.E.C. v. Panuwat, No. 3:21-cv-06322 (N.D. Cal. Jan. 14, 2022) ECF No. 26.


 [94]  SEC Press Release, SEC Charges Netflix Insider Trading Ring (Aug. 18, 2021), available at https://www.sec.gov/news/press-release/2021-158.


 [95]  SEC Press Release, SEC Charges App Annie and its Founder with Securities Fraud (Sept. 14, 2021), available at https://www.sec.gov/news/press-release/2021-176.


 [96]  SEC Press Release, SEC Charges Former Pharmaceutical Global IT Manager in $8 Million Insider Trading Scheme (Sept. 17, 2021), available at https://www.sec.gov/news/press-release/2021-181.


 [97]  SEC Press Release, SEC Charges Quant Analyst in Multimillion Dollar Front-Running Scheme (Sept. 23, 2021), available at https://www.sec.gov/news/press-release/2021-186.


 [98]  SEC Press Release, SEC Charges Investment Bank Compliance Analyst with Insider Trading in Parents’ Accounts and Obtains Asset Freeze (Sept. 29, 2021), available at https://www.sec.gov/news/press-release/2021-203.


 [99]  SEC Press Release, SEC Charges Partner at Global Consulting Firm With Insider Trading (Nov. 10, 2021), available at https://www.sec.gov/news/press-release/2021-230.


 [100]  SEC Press Release, SEC Charges Clinical Drug Trial Investigator with Insider Trading (Dec. 20, 2021), available at https://www.sec.gov/news/press-release/2021-264.


 [101]  SEC Press Release, SEC Charges U.K.-Based Father and Son, and Two Others in Transatlantic Microcap Fraud Scheme (Sept. 23, 2021), available at https://www.sec.gov/news/press-release/2021-187.


 [102]  SEC Press Release, SEC Charges Two Individuals for Wash Trading Scheme Involving Options of “Meme Stocks” (Sept. 27, 2021), available at https://www.sec.gov/news/press-release/2021-195.


 [103]  SEC Press Release, SEC Charges Webcast Host for Role in Market Manipulation Scheme (Oct. 1, 2021), available at https://www.sec.gov/news/press-release/2021-206.


 [104]  SEC Press Release, SEC Obtains Asset Freeze and Other Relief in Halting Penny Stock Scheme on Twitter (Oct. 26, 2021), available at https://www.sec.gov/news/press-release/2021-214.


 [105]  SEC Press Release, SEC Charges Penny Stock Company, CEO and Others with Multi-Million Dollar Fraud (Aug. 16, 2021), available at https://www.sec.gov/news/press-release/2021-153.


 [106]  SEC Press Release, SEC Charges International Microcap Fraud Scheme Participants (Aug. 9, 2021), available at https://www.sec.gov/news/press-release/2021-148.


 [107]  SEC Press Release, SEC Charges Three Canadian Citizens in Fraudulent Penny Stock Scheme (Dec. 10, 2021), available at https://www.sec.gov/news/press-release/2021-255.


 [108]  SEC Press Release, SEC Obtains Emergency Relief, Charges Couple Who Operated $18 Million Ponzi Scheme (Aug. 31, 2021), available at https://www.sec.gov/news/press-release/2021-170.


 [109]  SEC Press Release, SEC Obtains Emergency Relief, Charges Investment Adviser and its Principal with Operating $110 Million Ponzi Scheme (Aug. 25, 2021), available at https://www.sec.gov/news/press-release/2021-163.


 [110]  SEC Press Release, SEC Obtains Court Order to Stop Investment Adviser’s Alleged Ongoing Offering Fraud (Aug. 13, 2021), available at https://www.sec.gov/news/press-release/2021-150.


 [111]  SEC Press Release, SEC Charges Florida Payday Lender and CEO with Affinity Fraud Targeting the Venezuelan-American Community (Sept. 27, 2021), available at https://www.sec.gov/news/press-release/2021-196.


 [112]  SEC Press Release, SEC Charges Two Companies and Their Principals with Misleading Investors in More Than a Dozen Oil and Gas Securities Offerings (Sept. 24, 2021), available at https://www.sec.gov/news/press-release/2021-193.


 [113]  SEC Press Release, SEC Charges Puerto Rican Company and Managing Members with Fraud (Sept. 21, 2021), available at https://www.sec.gov/news/press-release/2021-185.


 [114]  SEC Press Release, SEC Shuts Down Fraudulent Mother-Son Offering Involving Purported Supercomputer (July 19, 2021), available at https://www.sec.gov/news/press-release/2021-131.


 [115]  SEC Press Release, SEC Files Charges in Multi-Million Dollar Fraud Involving Two Companies (July 19, 2021), available at https://www.sec.gov/news/press-release/2021-132.


 [116]  SEC Press Release, SEC Obtains Emergency Relief, Charges Two Florida Companies and Their Principal Officer with Operating a Ponzi Scheme (Aug. 13, 2021), available at https://www.sec.gov/news/press-release/2021-151.


 [117]  SEC Press Release, SEC Obtains Emergency Relief Against New York Real Estate Developer Charged with EB-5 Securities Fraud (Sept. 28, 2021), available at https://www.sec.gov/news/press-release/2021-200.


 [118]  SEC Press Release, SEC Charges California Resident in Microcap Fraud Scheme Targeting Retail Investors (July 22, 2021), available at https://www.sec.gov/news/press-release/2021-135.


 [119]  SEC Press Release, SEC Halts Alleged Ongoing Offering Fraud Involving Cycling Companies (July 22, 2021), available at https://www.sec.gov/news/press-release/2021-136.


 [120]  SEC Press Release, SEC Charges Unlicensed Broker with Defrauding Investors (July 28, 2021), available at https://www.sec.gov/news/press-release/2021-140.


 [121]  SEC Press Release, SEC Charges Crowdfunding Portal, Issuer, and Related Individuals for Fraudulent Offerings (Sept. 20, 2021), available at https://www.sec.gov/news/press-release/2021-182.


 [122]  SEC Press Release, SEC Charges Hemp Company and Co-Founders with Fraud (Oct. 5, 2021), available at https://www.sec.gov/news/press-release/2021-208.


 [123]  SEC Press Release, SEC Charges Newport Beach Company and its Principals with Operating a $13.5 Million Ponzi-Like Scheme (Oct. 29, 2021), available at https://www.sec.gov/news/press-release/2021-221.


 [124]  SEC Press Release, SEC Obtains Emergency Relief in Case Charging Claims Aggregator and Principals with Multi-Million Dollar Fraud (Nov. 4, 2021), available at https://www.sec.gov/news/press-release/2021-222.


The following Gibson Dunn lawyers assisted in the preparation of this client update:  Mark Schonfeld, Richard Grime, Barry Goldsmith, David Ware, Timothy Zimmerman, Lindsey Geher, Jeff Meyers, Ben Gibson, Kate Googins, Caelin Moriarty Miltko*, Sean Brennan*, and Jimmy Pinchak*.

Gibson Dunn is one of the nation’s leading law firms in representing companies and individuals who face enforcement investigations by the Securities and Exchange Commission, the Department of Justice, the Commodities Futures Trading Commission, the New York and other state attorneys general and regulators, the Public Company Accounting Oversight Board (PCAOB), the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange, and federal and state banking regulators.

Our Securities Enforcement Group offers broad and deep experience.  Our partners include the former Director of the SEC’s New York Regional Office, the former head of FINRA’s Department of Enforcement, the former United States Attorneys for the Central and Eastern Districts of California and the District of Maryland, and former Assistant United States Attorneys from federal prosecutors’ offices in New York, Los Angeles, San Francisco and Washington, D.C., including the Securities and Commodities Fraud Task Force.


Securities enforcement investigations are often one aspect of a problem facing our clients. Our securities enforcement lawyers work closely with lawyers from our Securities Regulation and Corporate Governance Group to provide expertise regarding parallel corporate governance, securities regulation, and securities trading issues, our Securities Litigation Group, and our White Collar Defense Group.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work or any of the following:

Securities Enforcement Practice Group Leaders:
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Please also feel free to contact any of the following practice group members:

New York
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Barry R. Goldsmith (+1 212-351-2440, bgoldsmith@gibsondunn.com)
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Washington, D.C.
Stephanie L. Brooker (+1 202-887-3502, sbrooker@gibsondunn.com)
Daniel P. Chung (+1 202-887-3729, dchung@gibsondunn.com)
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Thad A. Davis (+1 415-393-8251, tadavis@gibsondunn.com)
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Michael D. Celio (+1 650-849-5326, mcelio@gibsondunn.com)
Paul J. Collins (+1 650-849-5309, pcollins@gibsondunn.com)
Benjamin B. Wagner (+1 650-849-5395, bwagner@gibsondunn.com)

Denver
Robert C. Blume (+1 303-298-5758, rblume@gibsondunn.com)
Monica K. Loseman (+1 303-298-5784, mloseman@gibsondunn.com)

Los Angeles
Michael M. Farhang (+1 213-229-7005, mfarhang@gibsondunn.com)
Douglas M. Fuchs (+1 213-229-7605, dfuchs@gibsondunn.com)
Nicola T. Hanna (+1 213-229-7269, nhanna@gibsondunn.com)
Debra Wong Yang (+1 213-229-7472, dwongyang@gibsondunn.com)

* Caelin Moriarty Miltko, Sean Brennan, and Jimmy Pinchak are recent law graduates working in the firm’s Washington, D.C., Denver and New York offices, respectively, and not yet admitted to practice law.

© 2022 Gibson, Dunn & Crutcher LLP

Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

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How PPP Loan Distribution Became the New Red Line – Mother Jones https://expo-monet.com/how-ppp-loan-distribution-became-the-new-red-line-mother-jones/ Thu, 03 Feb 2022 05:27:23 +0000 https://expo-monet.com/how-ppp-loan-distribution-became-the-new-red-line-mother-jones/ A street in Philadelphia in May 2020.Matt Rourke/AP The coronavirus is fast-developing news, so some of the content in this article may be out of date. Discover our most recent coverage of the coronavirus crisisand subscribe to Mother Jones Daily newsletter. The Paycheck Protection Program was meant to help small businesses struggling with the crippling […]]]>

A street in Philadelphia in May 2020.Matt Rourke/AP

The coronavirus is fast-developing news, so some of the content in this article may be out of date. Discover our most recent coverage of the coronavirus crisisand subscribe to Mother Jones Daily newsletter.

The Paycheck Protection Program was meant to help small businesses struggling with the crippling financial effects of the coronavirus pandemic. But the advantages, as for other governments answers to the crisis, were disproportionately flocking to white communities.

A new investigation from Reveal, which analyzed the distribution of more than five million PPP loans, found that the program was plagued by widespread racial disparities. The results show a persistence of the kind of structural racism—exemplified by the racial pacts and redlining policies of the 20th century—that has long prevented communities of color from thriving. Reveal found, for example, that in the “vast majority” of large metropolitan areas, businesses in predominantly white neighborhoods were approved for loans at much higher rates than those in predominantly Latino, black, or Asian neighborhoods. According to the survey, published in partnership with the Los Angeles Times:

Los Angeles has had some of the worst [disparities] in the nation. Even though communities of color were hit much harder by COVID-19businesses in majority white areas received loans at twice the rate of those in majority Latin areas, one and a half times the rate of businesses in majority black areas, and 1.2 times the rate in Asian areas.

The New York metropolitan area, which includes Newark and Jersey City in New Jersey, saw similarly stark disparities, with white areas receiving loans at twice the rate of Latinx areas, 1.8 times the rate of black areas and 1.2 times the rate of Asian areas.

In other metro areas, including Dallas, San Francisco, San Diego, Las Vegas and Phoenix, businesses in majority-white regions also received loans at about twice the rate of those in majority-Latin regions.

The first batch of loans, totaling $349 billion, was issued last spring, days after Congress passed the CARES Act. But amid the rushed deployment, a lack of federal guidance meant that, as Reveal In other words, “any impediment, such as missing documents or no existing relationship with a bank, risked leaving a business last.”

In early April, Malik Muhammad, the owner of a Los Angeles bookstore specializing in African-American literature, contacted Wells Fargo, a bank that “effectively starved communities of color of PPP money”, Reveal reports. Muhammad heard nothing of his loan application for weeks. In early June, he received a form letter: “We cannot confirm that all applications will be submitted and processed by the SBA before funds are exhausted, and we anticipate that demand will exceed available funds.” He never received follow-up communication from Wells Fargo, although he later managed to secure a small loan from Square. “I know we’re not a big company, but we deserve a call,” he said..

The CARES Act had directed the federal Small Business Administration to prioritize “socially and economically disadvantaged individuals,” according to an October 2020 congressional subcommittee report Quoted by Reveal. But the SBA, the Treasury Department and the big banks that administer PPP loans ignored those guidelines. In fact, the subcommittee found that the Treasury had privately encouraged banks to limit their initial loans to existing customers, excluding many minority and women-owned businesses.

None of the lenders interviewed by the subcommittee recalled any direction from the Trump administration on how to prioritize underserved communities, and several set up lending programs in which large commercial customers benefited. of a “separate and faster process”. In some cases, PPP loans for the wealthiest customers have been processed twice as fast as loans for really needy small businesses.

Reveal had reported in April 2020 that small business owners in Republican states without stay-at-home orders were more likely to have obtained PPP loans than those in Democratic states where COVID hit hard first. In December, the New York Times and Washington Post both reported that the majority of PPP money went to big companies, including dozens of national chains, many of which are publicly traded. The same month when Congress passed its second COVID relief package, the legislation included a bipartisan provision that helped all PPP recipients but was most beneficial to companies with the largest loans, which resulted in an estimate $120 billion in tax relief for America’s wealthiest business owners.

The botched rollout of a program supposed to help small businesses and their employees has proven devastating for many, especially black owners, who are far more likely to be sole proprietors. Reveal cites a study by the Federal Reserve Bank of New York, which find that from February to April 2020, the number of active businesses fell 22%, but the number of Black and Latino businesses fell 41% and 32%, respectively.

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Special Edition: Underrecognized Art Histories https://expo-monet.com/special-edition-underrecognized-art-histories/ Tue, 25 Jan 2022 08:00:00 +0000 https://expo-monet.com/special-edition-underrecognized-art-histories/ Our work at Hyperallergic means that we often come across stories of under-recognized art stories that tell a story we don’t often hear, whether it’s a little-recognized art movement outside of a city or region or type of work that is largely invisible to art lovers as institutions have been slow to adopt the work […]]]>

Our work at Hyperallergic means that we often come across stories of under-recognized art stories that tell a story we don’t often hear, whether it’s a little-recognized art movement outside of a city or region or type of work that is largely invisible to art lovers as institutions have been slow to adopt the work due to various factors. While we often research and publish under-recognized art stories, we decided to compile many of these unique stories in a special edition of Hyperallergic to bring them to light. To understand contemporary art, it is necessary to investigate the connections sometimes invisible to those who are unaware of the backstories.

Many of these stories, such as alternative spaces in Los Angeles, may be familiar to many, but we have chosen to include them here to highlight their importance. In the case of LA’s alternative spaces, I frequently encounter people outside of Southern California (and sometimes Californians) who don’t realize the significance of what this city’s artistic innovators have actually created as a foundation that has contributed to the global success of the city. art scene today. In other cases, like the Cass Corridor, I was surprised to learn that people outside the Detroit area rarely know about the movement that has influenced many contemporary artists, writers, and curators in the area and beyond. of the.

A number of stories focus on individuals, like Rafael França, Sam Tchakalian, PHASE 2, Frances Gearhart, Renluka Maharaj and Suchitra Mattai, some of whom have had business careers, museum exhibits and fame, or the still do, but we thought they would benefit from wider exposure of their work to Hyperallergic readers. We also invited artist and writer Daniel Temkin to write about a programming language that might be the least NFT-compatible digital art possible – although given how this market is changing, I can foresee a time when that will also be a victim of financialization.

Our choices are, of course, subjective, and we urge our readers to take note of any stories we might consider for future editions of this series. We hope you enjoy this edition in the spirit it was intended, which is the start of an ongoing conversation about art history and what is included, or excluded, and why.

  • Jordan Karney Chaim examines the influence of alternative spaces of Los Angeles and how they encourage the artists who today are the bold names in contemporary art.
  • Sarah Rose Sharpwho lives in Detroit, writes about the Corridor Cass movement that has influenced generations of artists from this city.
  • Artist Daniel Temkin writes about the open, community and collaborative approach “esolangswhich point to other little-discussed digital art story threads.
  • Writer John Seed tells the story of the Bay Area artist and teacher Sam Tchakalianwho is best known for his abstractions which introduced squeegee-like techniques into his paintings long before others popularized this visual language.
  • Padder Sadaf written about two Indo-Caribbean artists (Renluka Maharaj and Suchitra Mattai) in Colorado who situate female subjects in their art, based on ancestors, living relatives, and deities.
  • Learned Serouj Aprahamian shares the latest poems illustrated by STAGE 2an artist perhaps best known as the first to create a 3D sculpture based on his graffiti work, which once stood in front of the Javits Center in Manhattan until it was suddenly removed and destroyed under bizarre circumstances.
  • Ela Bittencourt considers the innovation of the Brazilian video artist Raphael Francewhose art is intimately linked to the early history of AIDS in the United States and in his country of origin.
  • Anne Wallentine written on the print studio of Frances Gearhartwhich was a hub of the Southern California Arts and Crafts movement.

We would also like to thank the Sam Francis Foundation for supporting articles that delve into California art history, a subject we have long covered in various ways over the years.

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7 in-depth stories of surrealism – ARTnews.com https://expo-monet.com/7-in-depth-stories-of-surrealism-artnews-com/ Wed, 29 Dec 2021 20:27:00 +0000 https://expo-monet.com/7-in-depth-stories-of-surrealism-artnews-com/ If you purchase an independently rated product or service through a link on our website, we may receive an affiliate commission. We live in a society that abjures shared reality for the chaos of social media. The situation might have appealed to the Surrealists, and it certainly would have amused their leader, André Breton, who […]]]>


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We live in a society that abjures shared reality for the chaos of social media. The situation might have appealed to the Surrealists, and it certainly would have amused their leader, André Breton, who once hailed a self-destructive drug addict as the embodiment of surrealism. Although Guillaume Apollinaire is thought to have coined the term, Breton claimed it as his own with his October 1924 manifesto in a sort of battle over intellectual property with the poet Yvan Goll, a rival for control of the surrealist brand that had issued a similar decree two weeks earlier. Breton won, and the rest, as they say, is the history of art. Born out of collective PTSD in Europe after WWI, Surrealism sought to make the realm of the subconscious visible to a conscious world distracted by the initial wave of mass production and reproduction of the 20th century. Its complexities were manifold, as evidenced by our recommendations for the best books on surrealism. (Price and availability in effect at the time of publication.)

1. Leslie Jones, Draw surrealism
Drawing is essential for developing ideas, but as a stand-alone expression it is often seen as secondary to painting or sculpture. However, the medium played a pivotal role in shaping the principles of Surrealism, and this richly illustrated catalog accompanying a 2012-2013 exhibition at the Los Angeles County Museum of Art (LACMA) shows how. For the surrealists, tapping the subconscious was fundamental, and drawing provided the key to it in the form of several unconventional techniques. Automatism, for example, transformed free association into concrete gesture and later became a cornerstone of abstract expressionism. The exquisite exercise of the corpse, a sort of telephone game played by drawing, explored the happy results of random juxtapositions. Rubbing, or rubbing, offered another means of dissociating the intention from the creative act. This book contains texts and works of 100 contributors and moves out of the original surrealist circle to include artists from Japan, Central Europe and the Americas.
Purchase: Surrealist Drawing from $ 16.02 (Used) on Amazon

Amazon

2. André Breton, Surrealism and painting
When André Breton’s manifesto launched surrealism in 1924, the movement was meant to be literary rather than artistic. In response, he publishes Surrealism and painting four years later. Over time, the original treatise was combined into a book with other Breton writings published between 1928 and 1962, and this volume remains the main source on the subject. In it, Breton states that surrealism was not so much an aesthetic as a “purely internal model” for exploring the “dark continent of consciousness”. Breton’s essays deal with a wide range of artists associated with surrealism, as well as ruminations on popular art traditions (Haitian painting, Oceanic sculpture) that he considered relevant to the movement. Published in 2002, this edition was the first to be translated into English.
Purchase: Surrealism and Painting $ 11.18 (new) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

Amazon

3. Stéphanie D’Alessandro and Matthew Gale, Surrealism beyond borders
Among the art isms of the early twentieth century, surrealism was arguably the most suitable for dissemination around the world for several reasons. First, he didn’t emphasize any particular style, instead welcoming abstraction, representation, or anything in between as long as he adhered to surrealist tenets. Second, the group had in André Breton a tireless leader and promoter whose writings and travels spread surrealist ideas far beyond the limits of their Parisian origins. The Metropolitan Museum’s extensive investigation into this chapter in the history of modern art, which runs through January 30, 2022, is the first of its kind and is repeated in this lavishly illustrated and deeply thought-out catalog, which, among others , reveals fascinating artists. and works of art hitherto known mainly to specialists. Surrealism beyond borders lives up to its title, offering a revealing look at how the movement has spread across the world, from Central Europe and Latin America to Asia and the Middle East, on a period of several years until the 1970s.
Purchase: Surrealism Beyond Borders $ 57.99 (New) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

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4. Oliver Shell and Oliver Tostmann, Monsters and Myths: Surrealism and War in the 1930s and 1940s
Just as Dada was a response to the catastrophe of 1914-1918, the Surrealists reflected the exhaustion and terror of the interwar period before the onset of a conflict that would prove to be even more devastating than its predecessor. Key figures of the movement like André Breton, André Masson and Max Ernst had served on the Western Front, so it is not surprising that they and other Surrealists (Salvador Dalí, Joan Miró and Yves Tanguy among them) were particularly alarmed, the prospects for war have increased with the rise of fascism. This catalog for a 2018 exhibition at the Wadsworth Atheneum explores how surrealism was galvanized by these developments and how its imagery became more gruesome as a result. Additionally, the authors of the book argue that this period produced some of the movement’s greatest works, particularly that of Ernst. Europe after the rains II, reproduced here in a superb gatefold. Monsters and myths shows how surrealism was born from one trauma to face another.
Purchase: Monsters and Myths $ 50.00 (new) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

Amazon

5. Amy Dempsey, Surrealism
Published by Thames & Hudson as part of its Art Essentials series, Surrealism offers a digestible overview that will appeal to readers passionate about the subject as well as those with a simple curiosity about it. It begins with André Breton and the programmatic structure that he imposes on surrealism to distinguish it from the anarchist drifts of Dada. Breton’s precepts are covered comprehensively and incisively, along with the work of key figures and lesser-known names. Profusely illustrated with archival photos and color images which are often full-page or double-page reproductions, Surrealism Also contains a glossary of terms and a timeline of the history of the movement’s exhibition and other related events. Beautifully printed and ready for a coffee table, the book is also an encyclopedic appreciation of one of the most important chapters of 20th century modernism, whose stunning style continues to influence art to this day.
Purchase: Surrealism $ 16.95 (new) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

Amazon

6. Whitney Chadwick, Women artists and the surrealist movement
Surrealism was hardly favorable to women: many of the male artists involved were misogynistic, as was much of their art. There were women who belonged to the movement, but they were expected to stand in the shadow of the men, serving as wives, mistresses and muses. But many of them were full-fledged artists whose work was as exceptional as that of the men. A few names – Dorothea Tanning, Meret Oppenheim – have been mentioned in standard accounts of modernist art history, but most have been ignored and their rediscovery only began in earnest after the rise of feminism in the years. 1970. Originally published in 1985, this book was the first major study of its kind, exploring the careers of female artists who, in addition to Tanning and Oppenheim, included Leonora Carrington, Frida Kahlo, Leonor Fini, Remedios Varo and others. Based in part on interviews and correspondence with a number of artists, the book is considered a classic.
Purchase: Women Artists and the Surrealist Movement $ 29.95 (new) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

Amazon

7. Ruth Brandon, Surrealist Lives: The Surrealists 1917-1945
Focusing more on personalities than practices, Ruth Brandon Surreal lives is a sort of revealing group detailing the complicated relationships the Surrealists had with each other and with their leader, André Breton. The latter saw his role as that of guardian and chief executor – a position that has often rubbed artists upside down – and as such colored the movement’s love-hate dynamic. Salvador Dalí sums it up in his inimitable way: “The surrealist group was a coterie of pederasts all in love with André Breton. They all adored him and he loved to exercise his relentless power over them. Brandon goes into all of this and more, recounting the various peccadilloes, jealousies, indiscretions, and sexual relationships (including the female swap incidents) that made the pot boil. In bringing these characters to life, however, Brandon’s goal is not to be salacious, but rather to define what it meant to be a surrealist for an eccentric group of icons from the history of the art.
Purchase: Surreal Lives $ 16.00 (new) on Amazon

Essentials: 7 In-Depth Stories of Surrealism

Amazon


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Brainbase named “Contract Management Solutions Provider of the Year” in LegalTech Breakthrough Awards 2021 https://expo-monet.com/brainbase-named-contract-management-solutions-provider-of-the-year-in-legaltech-breakthrough-awards-2021/ Tue, 30 Nov 2021 13:00:00 +0000 https://expo-monet.com/brainbase-named-contract-management-solutions-provider-of-the-year-in-legaltech-breakthrough-awards-2021/ Prestigious annual awards program rewards innovative companies, products and services supporting the legal field LOS ANGELES, November 30, 2021 / PRNewswire / – Brainbase, the venture capital-backed company helping licensing teams optimize their partnerships from contract to revenue, today announced that it has been selected as the winner of the Supplier Award. of Contract Management […]]]>


Prestigious annual awards program rewards innovative companies, products and services supporting the legal field

LOS ANGELES, November 30, 2021 / PRNewswire / – Brainbase, the venture capital-backed company helping licensing teams optimize their partnerships from contract to revenue, today announced that it has been selected as the winner of the Supplier Award. of Contract Management Solutions of the Year ”at the second annual LegalTech Breakthrough Awards. program. LegalTech Breakthrough is a leading independent market intelligence organization that evaluates and recognizes outstanding legal technology companies, products and services around the world.

(PRNewsfoto / Brainbase)

Brainbase brings together all the features needed to run a large-scale global licensing business so licensing teams can make smarter, faster decisions. With the help of Brainbase, IP owners are able to unify their global operations into a single software platform – from transaction and contract management, to product approvals, to royalty reporting, to digital asset management and dashboard analysis.

“It’s an amazing time for Brainbase, especially for our product and engineering teams, to be recognized by LegalTech Breakthrough and other amazing companies in the legal technology and contract management field.” , said God Gautam, senior vice president of products at Brainbase. “While still focused on creating the best end-to-end platform for brands that own and license their intellectual property, we are grateful to be recognized for the contract management functionality of our platform. “

The mission of the annual LegalTech Breakthrough Awards program is to conduct the industry’s most comprehensive analysis and assessment of the best technology companies, solutions, and products in the legal technology industry today. This year’s program attracted over 1,300 nominations from over 12 different countries around the world.

“Intellectual property management has so far been lost in the old-school archaic paper rework. The owners of intellectual property assets have spent so much time trying to capture more value, ”said Bryan vaughn, Managing Director of LegalTech Breakthrough Awards. “This cutting-edge legal technology from Brainbase helps clients collect royalties faster and gives them the tools to more effectively manage their license agreements and creative approvals. Congratulations on winning the “Contract Management Solutions Provider of the Year” award. “

Brainbase works with the world’s biggest brands including BBC Studios, BuzzFeed, Chefclub, Crayola, kathy ireland® Worldwide, Moose Toys, Penske Media Corporation, SYBO Games and the Van Gogh Museum, among others.

About Brainbase
Brainbase is a modern technology platform that helps licensing teams optimize their partnerships, from contract to revenue. The company is headquartered at Los Angeles with offices in Europe, and is backed by leading investors in San Francisco, THE, new York, and Europe. Follow @Brainbase on Twitter and @BrainbaseInc on LinkedIn, Instagram and Facebook, and learn more at www.brainbase.com. To download the Brainbase logo, please CLICK HERE.

About LegalTech Breakthrough
Part of Tech Breakthrough, a leading market intelligence and recognition platform for global technology innovation and leadership, the LegalTech Breakthrough Awards program is dedicated to honoring excellence in technology, services, businesses and legal products. The LegalTech Breakthrough Awards program provides a forum for public recognition around business achievements and LegalTech solutions in categories such as Case Management, Client Relations, Data & Analytics, Documentation, Legal Education, practice management, e-discovery and more. For more information visit LegalTechBreakthrough.com

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Haunting stories and otherworldly experiences are on display at the Speed ​​Art Museum – 89.3 WFPL News Louisville https://expo-monet.com/haunting-stories-and-otherworldly-experiences-are-on-display-at-the-speed-%e2%80%8b%e2%80%8bart-museum-89-3-wfpl-news-louisville/ https://expo-monet.com/haunting-stories-and-otherworldly-experiences-are-on-display-at-the-speed-%e2%80%8b%e2%80%8bart-museum-89-3-wfpl-news-louisville/#respond Thu, 28 Oct 2021 14:01:38 +0000 https://expo-monet.com/haunting-stories-and-otherworldly-experiences-are-on-display-at-the-speed-%e2%80%8b%e2%80%8bart-museum-89-3-wfpl-news-louisville/ Walking through the exhibition, footsteps echo in the room. Art is everywhere: the walls, the floor, suspended from above. The air is heavy in the galleries of the Speed ​​Art Museum. There is energy circulating in space. Go from room to room, swirling to fill the rooms. The tension around Supernatural America: The Paranormal in […]]]>


Walking through the exhibition, footsteps echo in the room. Art is everywhere: the walls, the floor, suspended from above.

The air is heavy in the galleries of the Speed ​​Art Museum. There is energy circulating in space. Go from room to room, swirling to fill the rooms.

The tension around Supernatural America: The Paranormal in America Art isn’t surprising, given its name.

“The works in this exhibition, put together, have a very different intentionality, and you feel it,” said Erika Holmquist-Wall, Curator of European and American Painting and Sculpture. “They are imbued with an energy.”

This intentionality crosses two floors. With works spanning 250 years, this is the largest exhibition Speed ​​has ever hosted.

“It’s an exhibit I’ve really had my eye on for over five years,” said Holmquist-Wall.

He is originally from the Minneapolis Institute of Art.

Grounding forces

The huge screen is divided between two main themes. The lower floor explores America as a haunted place.

Holmquist-Wall said this part of the exhibit focuses on the stories and haunted landscapes of the United States. She confronts the ghosts of the past that continue to affect the present.

Visitors to the exhibition were particularly interested in the multimedia works and two pieces in particular.

The first is a reconstruction of a living room by Whitfield lovell.

“The piece is made of wood reclaimed from the Jackson neighborhood in Richmond, Virginia, which was the first successful black entrepreneurial neighborhood after the Civil War, ”said Holmquist-Wall.

The room is frozen in an instant. There are plates on the table, mail at a desk, and keys by the door.

The recreated living room goes beyond visual engagement to include an audio element that evokes the people and sounds of the era.

On the wall, ghostly figures of the people who may have inhabited this space are painted, but to achieve the full effect visitors have to move around the space.

A man watches visitors move through the recreated lounge from the walls.

Near the organ on one side of the room the sound of a gospel song can be heard, but moving to the other side the sound turns into someone reading the names and addresses of the locals by Jackson Ward.

“This piece, in particular, is incredibly powerful,” said Ashely Giron, who attended the opening of the exhibition. “This is a great opportunity to remind ourselves that there are many very interesting spiritual connections to the lands and culture of America.”

Directly across from the room is a room that spans an entire wall, nearly 15 feet in diameter.

Fates manifest through John Jota Leanos is a seven-minute video that challenges the concept of manifest fate, the idea that it was divine will for the United States to expand west.

John Jota Leanos. American (Xicano-Mestizo), born in 1969. Destinies Manifest, 2017. Digital animation, installation, 7 minutes. Commissioned by the Denver Art Museum. Courtesy of the artist, John Jota Leaños. Photos: Blue Rain Gallery, Santa Fe, New Mexico. © John Jota Leaños.

“You have this kind of famous folk art painting where you had this cute blonde 19th century angel flying a bit in the sky guiding the Conestoga carts across the border to the west, but what happens is she becomes the Angel of Death ” , said Holmquist-Wall.

John Jota Leanos. American (Xicano-Mestizo), born in 1969. Destinies Manifest, 2017. Digital animation, installation, 7 minutes. Commissioned by the Denver Art Museum. Courtesy of the artist, John Jota Leaños. Photos: Blue Rain Gallery, Santa Fe, New Mexico. © John Jota Leaños.

The video then describes the borders that cross the native lands and the destruction of their space. A buffalo crosses the screen, reminding viewers of the freedom the landscape once had.

“We were just having a conversation about, you know, the state of our indigenous people and how the land was taken from them,” Kirby Coleman said after watching the video on the first night of the exhibit.

He said he was delighted to see how the artwork confronts the racist, violent and colonial past of the United States from the perspective of those most affected by it.

Passing from the first floor to the second, the theme literally rises in the spirit world.

“America as a haunted place is kind of dry land below, and upstairs you take the stairs or the elevator, you’re in the spirit world,” said Holmquist-Wall.

Ascension, challenge of understanding

On this floor, the artists explore the afterlife, the occult and even the extraterrestrial.

Moving across the second floor, the murmur of voices intensified until at Tony Oursler “Dust” may be seen.

Tony Oursler. American, born 1957 Dust, from Thought Forms, 2006. Fiberglass sculpture, Haron Kardon HS100 5.1 audio system, Sony XGA VPL-PX41 projector, 2 Sanyo PLC-XU48 projectors, 3 DVD players, 6 DVDs and 3 master tapes , 72 × 72 × 72 inches. The Broad Art Foundation, Los Angeles CA, F-Ours-1S06.05. Photo: Courtesy of Tony Oursler. © Tony Oursler.

It’s a huge cloud coming down from the ceiling; parts of the body are projected on it: eyes, ears and mouth. Voices and noises overlap.

“This piece really explores the idea that what’s going on around us, we’re all made up of dust,” said Holmquist-Wall. “We are just made up of the essence of everything.”

The last part of the exhibition leaves Earth completely to explore alternate universes and the extraterrestrial.

Images of UFOs and non-terrestrial creatures line the walls.

There is a piece, The Thanaton III through Paul Laffoley, on the wall that claims to be a portal to another world. All you have to do is place one hand on the past, one on the future, and look into the present eye.

Paul Laffoley. American, 1935-2015 The Thanaton III, 1989. Oil, acrylic, ink and hand-applied vinyl lettering on canvas; painted wood frame, 73 1/2 × 73 1/2 in. Private collection, courtesy of Kent Fine Art, New York, NY Photo: Kent Fine Art.

However, there is a sign next to this room warning you not to touch. Speed ​​doesn’t want anyone to travel interdimensionally or visit distant planets under their watch.

This is part of the exhibit that Holmquist-Wall finds most difficult to accept. The ghosts and spirits she can endure more easily, but the challenges of coming to terms with the UFO and alien experience remind her of the take-out food she hopes people will leave with.

“I cannot ignore someone else’s experience, whether it is an experience that they have personally had and that they are trying to articulate and draw or paint or d ‘express,’ said Holmquist-Wall. “Who are we, who are we to judge this?”

Supernatural America: The Paranormal in America Art will be on display at the Speed ​​Art Museum until January 2022.


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