Regulators Eye Stock Jumps Before Corporate Crypto Buys: WSJ

The Securities and Exchange Commission and financial industry regulators reportedly contacted certain companies after identifying unusual trading activities prior to the announcement regarding the Digital Assets Treasury.

Outreach was drawn from reviews of more than 200 companies that disclosed this year’s cryptocurrency strategies, but according to the first, some were flagged. Report from Wall Street Journal, I quote people who are familiar with this issue.

Decryption I contacted the SEC and FINRA to confirm.

The outreach, described as a reserve, reportedly followed sharp price shaking and a massive amount of trails, ranging from some companies that disclose digital assets strategies. Playbook Michael Saylor’s company, strategy is described.

This model involves raising liabilities or equity to acquire digital assets as balance sheet reserves. Bitcoin but also Ethereum, Solanaand others.

Observers have before caveat Carefully structured crypto-to-finance strategies can project strength, but poor timing or opportunistic movements can be gimmick It could expose the company to Forced liquidation and unstable.

Regulators are reportedly considering whether there could be a selective leak or transaction of material non-public information.

What is Reg FD?

Fair Regulation Disclosurealso known as Reg FD, is the SEC rule that prohibits companies from sharing important information with select investors before they are made public. Violations can put businesses at risk of civil penalties, enforcement measures and reputation.

It was introduced Recruitment In 2000, the rules were “in order to ensure that all investors have equal access to corporate information in the ‘material’ at the same time, focusing on the nature of the information and the way it is disclosed,” said Andrew Rossow, AR Media Consulting’s public relations lawyer and CEO. Decryption.

“Whatever reasonable investors consider important in their investment decisions can affect a company’s valuation, plan to raise capital, or an overall risk profile,” Rossault explained.

He noted that important private information “when it can be traced directly to a tipper or company source or an agent acting on that information,” it falls within the scope of a reg fd violation.

“In contrast, industry gossip, rumors, or third-party speculations are not generally the case,” he said, adding that insider trading liability is “if MNPI recipients are traded or leaked because they have been misused against personal or market interests.”

This type of investigation usually starts with an unusual trading activity, with “smoking guns being direct traces to the sauce/tipper,” Rosso said.

To build that link, authorities look for emails, communications that fill the memo, internal platforms like Slack and Teams, text messages, calendar invitations, and device records that could link suspicious transactions to the source.