Securities Litigation Insider is a source of insights, information, and analysis on a wide range of topics relevant to securities litigation, with a focus on notable developments in the securities space, including U.S. Securities and Exchange Commission (SEC) enforcement, rulemaking, and other regulatory trends and development. Patterson Belknap’s Securities Litigation team has extensive experience handling highly complex lawsuits and internal investigations. Our blog team includes experienced litigators and corporate advisors, and is led by a former senior counsel for the SEC Division of Enforcement with extensive experience investigating and litigating securities laws violations, providing a unique, interdisciplinary perspective on securities law.
by David Erroll and H. Gregory Baker on March 13, 2023
On February 22, 2023, a judge in the Southern District of New York ruled that a class action lawsuit may proceed alleging that Dapper Labs, Inc. violated federal securities laws when it issued of a series of non-fungible tokens (“NFTs”) of digital video clips of highlights from NBA games in 2019. [i] Dapper Labs, a blockchain technology company, is alleged to have issued securities without filing a required registration statement with the Securities and Exchange Commission ("SEC"), as required by Section 5 of the Securities Act of 1933. [ii]
[i] Friel v. Dapper Labs, Inc., Dkt. No. 1:21-cv-05837-VM (S.D.N.Y.) (the “Action”).
[ii] 15 U.S.C. § 77e. The Action also names Roham Gharegozlou, Dapper Labs’ Chief Executive Officer, as a defendant, asserting control person liability pursuant to Section 12(a)(1). 15 U.S.C. § 77l.
by H. Gregory Baker and Shelley Attadgie on February 21, 2023
On Tuesday, February 7, 2023, the Securities and Exchange Commission’s (“SEC”) Division of Examinations announced its 2023 examination priorities, which provide insights into the areas the Division believes present potential risks to investors and the integrity of the U.S. capital markets. These priorities, SEC Chair Gary Gensler notes, will “emphasize compliance with new SEC rules applicable to investment advisers and investment companies as well as continue our focus on emerging issues and rules aimed at protecting retail investors.”
by H. Gregory Baker and Cassandra Deskus on February 14, 2023
Earlier this month, Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse released a report analyzing 2022 securities class action filings. The report indicates that overall securities class action filings declined slightly by 5%, falling from 218 filings in 2021 to 208 filings in 2022. This number is 43% lower than the previous five-year average of 362 filings and far below a recent peak of 427 filings in 2019. Despite the relatively low number of filings, the size of core filings increased substantially, with the total Disclosure Dollar Loss (“DDL”) and Maximum Dollar Loss (“MDL”) increasing by 138% and 100% respectively.
by James V. Masella, III and Kaiying Wang on February 8, 2023
On January 25, 2023, the Securities and Exchange Commission (the Commission) voted unanimously to re-propose new Securities Act Rule 192. The proposed rule would prohibit securitization participants from engaging in asset-backed security (ABS) transactions that would represent a conflict of interest with ABS investors.[i] The proposed rule aims to protect the integrity of the securitization market by aligning the interest of investors and securitization participants.[ii]
[i] U.S. Securities & Exch. Comm’n, Prohibition Against Conflicts of Interest in Certain Securitizations (Jan. 25, 2023), https://www.sec.gov/rules/proposed/2023/33-11151.pdf [hereinafter Proposed Rule].
[ii] Commissioner Jaime Lizárraga, Statement on Prohibiting Conflicts of Interest in Certain Securitizations (Jan. 25, 2023), https://www.sec.gov/news/statement/lizarraga-statement-prohibiting-conflicts-interest-certain-securitizations-012523.
by H. Gregory Baker and Gargi Chaudhuri on February 6, 2023
Under the leadership of SEC Chairman Gary Gensler and Director of Enforcement Gurbir Grewal, the SEC has consistently prioritized compliance with books and recordkeeping obligations for registered broker-dealers, especially with regard to the failure to preserve communications from personal devices and ephemeral messaging applications that concern company business. Since December 2021, the SEC has procured over $1 billion in penalties from registered broker dealers that failed to maintain and preserve electronic communications.
by H. Gregory Baker and George A. Carotenuto on January 19, 2023
In United States v. Blaszczak, the Second Circuit recently remanded a criminal conviction concerning the misappropriation of confidential information to the District Court in light of the Supreme Court’s decision in Kelly v. United States, which held that a scheme to alter “a regulatory choice is not one to appropriate the government’s property” for purposes of the wire fraud statute. The Second Circuit previously affirmed convictions against defendants David Blaszczak, Theodore Huber, Robert Olan, and Christopher Worrall for conversion of government property, 18 U.S.C. § 641, and wire fraud, 18 U.S.C. § 1343, as well as convictions against Blaszczak, Huber, and Olan of Title 18 securities fraud, 18 U.S.C. § 1348, and related conspiracy charges under 18 U.S.C. §§ 371, 1349. The convictions all stemmed from a scheme that involved misappropriating confidential information from the Centers for Medicare & Medicaid Services (“CMS”), at which certain defendants previously worked.
by H. Gregory Baker and Kaiying Wang on December 22, 2022
It is no secret that over the last several years, there has been an exponential increase in the utilization of blockchain and digital assets. Crypto trading and lending platforms have grown rapidly and the total crypto market volume recently reached $35 billion a day. Many of the trading platforms have more than 100 crypto tokens trading on them. However, as is by now also apparent following the rapid, sudden collapse of FTX Trading Ltd., the development of digital assets and related technology also creates many potential financial risks. Prior to the FTX collapse, President Biden asked for “strong steps” to be taken to reduce the risks associated with digital assets. He specifically called out digital asset issuers, exchanges and trading platforms, and intermediaries as entities that should be subject to, and come into compliance with, regulatory and supervisory standards that govern traditional financial markets. SEC Chairman Gary Gensler has consistently claimed that many of the tokens trading on the platforms meet the definition of “securities,” and thus fall within the scope of SEC regulation. SEC V. LBRY, Inc. is an important example of SEC’s efforts to regulate the issuance of crypto tokens.
by H. Gregory Baker and Cassandra Deskus on December 21, 2022
As has been widely reported, last week, the SEC, CFTC, and U.S. Attorney’s Office (“USAO”) for the Southern District of New York (“SDNY”) announced charges against Samuel Bankman-Fried (“SBF”), the co-founder and majority owner of FTX Trading Ltd. (“FTX”), a crypto asset trading platform, and Alameda Research LLC (“Alameda”), a trading firm specializing in crypto assets.  This blog post provides an overview of the claims asserted against SBF, FTX, and Alameda, and discusses some of the surprising aspects of each of the cases.
by H. Gregory Baker and Shelley Attadgie on December 19, 2022
On Thursday, December 8, 2022, the Securities and Exchange Commission (“SEC”) published a notice to its website informing companies of their potential disclosure obligations regarding their crypto assets. The notice contains a “sample letter”, laying out questions the agency may pose to companies depending on their “particular facts and circumstances”.
by H. Gregory Baker and Ari K. Bental on December 14, 2022
On November 7, 2022, the U.S. Supreme Court heard oral arguments in the cases of SEC v. Cochran and Axon Enterprise, Inc. v. FTC, which address whether respondents in federal administrative proceedings have the ability to pose constitutional challenges to those proceedings in federal court prior to exhausting the administrative process. Decisions on these cases, expected in June 2023, could have far-reaching consequences for the federal administrative state.
by H. Gregory Baker and David Erroll on October 11, 2022
In March 2022, as it does every year, the Securities and Exchange Commission’s Division of Examinations (EXAMS) published its Examination Priorities, designed to highlight areas that the Agency views to be worthy of heightened scrutiny. Among these, EXAMS included “Emerging Technologies and Crypto-Assets,” noting that the SEC had observed “a proliferation of the offer, sale, and trading of crypto-assets.”
by H. Gregory Baker on October 6, 2022
Partner Greg Baker was quoted in an article from Crowdfund Insider relating to the recent SEC enforcement action against celebrity/influencer Kim Kardashian.
by Gargi Chaudhuri and James V. Masella, III on September 30, 2022
On July 15, 2022, the United States Court of Appeals for the Second Circuit affirmed the dismissal by the United States District Court for the Southern District of New York of a Securities and Exchange Commission (“SEC”) enforcement action alleging that Rio Tinto plc, Rio Tinto Limited, and its executive officers had engaged in securities fraud. In so doing, the Second Circuit held that a 2019 Supreme Court decision, Lorenzo v. SEC, did not change the scope of scheme liability under Rule 10b-5 and Section 17(a). That is, merely making a materially misleading statement, without something more, cannot constitute scheme liability.
by H. Gregory Baker and George A. Carotenuto on September 13, 2022
This summer, the U.S. Attorney’s Office for the Southern District of New York broke new ground in its oversight of fraud involving digital assets when it brought charges against Nathaniel Chastain related to an insider trading scheme involving non-fungible tokens (“NFTs”). NFTs are digital assets that are stored on a blockchain, which is a digital, decentralized transaction ledger. Each NFT is generally associated with some digital object, such as a piece of digital artwork or meme. An NFT provides proof of ownership of the digital object
by James V. Masella, III and Peter Vogel on August 18, 2022
On June 29, 2022, the Securities and Exchange Commission (the “Commission”) rejected a proposed rule change submitted by NYSE Arca, Inc. (the “Exchange”) that would have allowed it to list and trade shares of Grayscale Bitcoin Trust (“GBTC”), the largest fund in the world devoted to holding Bitcoin. Grayscale Investments, LLC (“Grayscale”), the sponsor of GBTC, wasted no time in petitioning the D.C. Circuit Court of Appeals to review the Commission’s order—it sued the same day.
See generally Securities and Exchange Commission, Release No. 34-95180; File No. SR-NYSEArca-2021-90, Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Shares of Grayscale Bitcoin Trust under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares), June 29, 2022 (“Disapproval Order”); see also Joe Light, Grayscale Offers a Giant Bitcoin Discount. It’s No Slam Dunk,” Barron’s July 2, 2022 (“Light”) (describing Grayscale Bitcoin trust as “a closed-end trust exclusively focused on holding [Bitcoin]” and “the largest such fund in the world”).
by David Erroll and James V. Masella, III on July 20, 2022
Each year, the U.S. Securities and Exchange Commission (SEC) publishes its enforcement priorities – a reminder that, although the Division of Examinations (EXAMS) remains committed to monitoring compliance with (and penalizing violations of) all regulations, the Agency recognizes that risks to the investing public are not uniform over time. As the SEC noted in its 2022 Examination Priorities Report, the Agency has a “desire to be transparent about the heightened risks that [it] see[s].”
by H. Gregory Baker on June 23, 2022
On June 6, 2022, U.S. Senator Kirsten Gillibrand of New York and U.S. Senator Cynthia Lummis of Wyoming proposed federal regulation of digital assets in the Responsible Financial Innovation Act (“RFIA”). The RFIA provides a definition of digital assets and assigns regulatory authority over various types of digital assets to the Securities Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). This post will provide an overview of the RFIA’s proposed treatment of digital assets and the political implications of the RFIA.
by Gargi Chaudhuri and James V. Masella, III on June 9, 2022
On April 21, 2022, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal by the United States District Court for the District of Maryland of allegations that Marriott International had violated federal securities laws by omitting from its public filings material information pertaining to cybersecurity vulnerabilities. This blog post examines the facts underlying the decision and the holding’s implications for comparable securities fraud claims.
by George A. Carotenuto and H. Gregory Baker on June 2, 2022
On April 27, 2022, the SEC filed suit against family office Archegos Capital Management, LP, as well as its Founder/Owner Sung Kook (Bill) Hwang, CFO Patrick Halligan, Head Trader William Tomita, and Chief Risk Officer Scott Becker with orchestrating a fraudulent scheme to inflate the value of its assets under management, which involved both false and misleading statements to security-based swap (“SBS”) counterparties and prime brokers, as well as manipulative trading practices.
by H. Gregory Baker on May 24, 2022
A pair of recent legal developments cast doubt on the long term ability of the Securities and Exchange Commission (“SEC”) to try contested actions before the agency’s in-house administrative law judges (“ALJ”). First, the Supreme Court accepted a petition to hear the matter of SEC v. Cochran, Petition No. 21-1239, which concerns whether the SEC’s ALJs are unconstitutionally protected from removal. Second, the U.S. Court of Appeals for the Fifth Circuit issued an opinion holding that (1) a respondent in an SEC administrative proceeding was deprived of his right to a jury trial; (2) that Congress unconstitutionally delegated legislative powers to the SEC by failing to provide it with an intelligible principle by which to exercise its delegated power, and (3) that the administrative law judges were unconstitutionally protected from removal. These developments could have long term implications not only for the SEC, but for all federal administrative agencies.
by James V. Masella, III and Peter Vogel on May 3, 2022
On September 14, 2021, the SEC announced it had reached a settlement with “a leading alternative data provider,” App Annie, and its co-founder and CEO, Bertrand Schmitt, to settle securities fraud charges related to their alleged deceptive practices and material misrepresentations regarding App Annie’s alternative data. This was the SEC’s first—but likely not last—enforcement action against an alternative data provider. In this post, we summarize the SEC’s findings regarding App Annie and Schmitt and consider the implications of the SEC’s investigation for executives, investors, and litigants.
by David Erroll and James V. Masella, III on April 18, 2022
On March 28, 2022, the Securities and Exchange Commission announced proposed changes to Exchange Act Rules that would expand the scope of which market participants the SEC considers to be a “dealer” or “government securities dealer.” Most investors would notice no change in their portfolio management practices. But for certain high-frequency trading operations, the new rules might lead to substantial changes.
by Alvin Li and H. Gregory Baker on March 30, 2022
Recently, the Securities and Exchange Commission (“SEC”) proposed a new rule concerning the disclosure of “certain climate-related information in their registration statements and annual reports” as well as “certain climate-related financial metrics . . . in a registrant’s audited financial statements.”[i] If the proposed rule is adopted, it would provide investors with relatively standardized disclosures on climate-related information.
by Gargi Chaudhuri and James V. Masella, III on March 29, 2022
NFTs, or “non-fungible tokens,” are in the headlines. Artists, politicians, and celebrities, along with everyday internet users, have been selling and trading various forms of the digital asset, sometimes earning millions of dollars from the sales. But how do NFTs fit into the current securities regulation framework? And what are the legal implications of participating in this new and volatile market? This blog post explores these issues and analyzes ongoing NFT-related litigation.
by H. Gregory Baker on March 28, 2022
Non-fungible tokens (NFTs) are the latest trend to sweep markets from the art industry to professional sports leagues. These digital assets have existed for several years but have achieved explosive popularity only recently. In fact, the global market for NFTs reportedly hit over $40 billion in 2021. Despite this, the legal frameworks governing NFTs—which could significantly impact the risks and rewards of buying or selling NFTs—are still catching up. In this series of articles, we will explore the developing legal landscape surrounding NFTs and the increased legal and regulatory scrutiny that lawyers should consider.
To continue reading Gregory Baker, Anne-Laure Alléhaut and Catherine J. Djang's New York Law Journal article on this topic, please click here.
by David Erroll and H. Gregory Baker on March 21, 2022
The full-scale invasion of Ukraine by a revanchist Russia continues to dominate headlines as the war enters its second month. While the sometimes-terrible choices facing those living in the conflict zone are unparalleled, investors around the world also have choices to make. Among those, ESG funds that are tasked with minimizing investment risks associated with environmental, social and governance issues find themselves with difficult – and sometimes contradictory – dilemmas.
by James V. Masella, III and Peter Vogel on March 17, 2022
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which required the SEC “to prescribe rules to make certain short sale data publicly available no less than monthly.” On February 25, 2022, the SEC acted to implement that directive by unanimously proposing Proposed Rule 13f-2, its plan to “broaden the scope of short-sale released data available to the investing public and to regulators” by requiring certain institutional investment managers to disclose substantial short positions to the SEC for its subsequent disclosure to the public in aggregated form.
In this post, we explain the basics of a short sale, summarize the SEC’s Proposed Rule 13f-2, and discuss the potential benefits and costs of this rule.
by Alvin Li and H. Gregory Baker on March 8, 2022
On June 29, 2021, a major cryptocurrency exchange (the “Crypto Exchange”) announced a new program called “Lend” in which it proposed offering customers a 4% interest rate on cryptocurrency tied to USD.[i] But on September 7, 2021, the Crypto Exchange announced that the U.S. Securities and Exchange Commission (the “SEC”) had issued a Wells notice, a formal notice that the agency was planning to sue them for offering the program.[ii] While the Crypto Exchange took the position that it was unclear why the SEC had issued this notice, it was evident from public comments that the SEC had been contemplating whether investment cryptocurrency programs should be classified as securities.[iii] On September 20, 2022, the Crypto Exchange announced that it was dropping its Lend program.
[i] Update as of 5pm ET, Friday, September 17th: we are not launching the USCD APY program announced below, Coinbase (June 29, 2021), https://blog.coinbase.com/sign-up-to-earn-4-apy-on-usd-coin-with-coinbase-cdad79e5f5eb.
[ii] Paul Grewal, The SEC has told us it wants to sue us over Lend. We don’t know why., Coinbase (Sept. 7, 2021), https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009. A Wells notice is a letter that the SEC sends to inform the recipient that the agency is planning to bring an enforcement action against them. The Wells notice sets out the charges that the SEC intends to bring against the recipient and offers the recipient a chance to submit a written statement to the ultimate decision maker. Wells Notice, Legal Information Institute, https://www.law.cornell.edu/wex/wells_notice (last visited Mar. 7, 2022).
[iii] Gary Gensler, Remarks Before the Aspen Security Forum, U.S. Sec. & Exch. Comm’n Commission (Aug. 3, 2021), https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03.
by Gerald F. DeSantis, Jr. and H. Gregory Baker on March 4, 2022
Securities class action case filings plunged in 2021 compared to the number of similar cases filed in 2020. According to Cornerstone Research’s 2021 Year in Review report, there were 218 securities class action cases filed in federal and state courts in 2021, which represents a 35% decline from the 333 securities class action cases filed in 2020. However, the 218 filings in 2021 is approximately 5% less than the average securities class action filings for the years from 1997 to 2020.
by James V. Masella, III, Gargi Chaudhuri and Peter Vogel on February 24, 2022
On June 21, 2021, the Supreme Court issued an opinion by Justice Barrett on the reliance element of a securities fraud claim. In a unanimous portion of her opinion (the “Decision”), Justice Barrett held that courts may consider the generic nature of an alleged misrepresentation in determining whether the misrepresentation impacted share price at the class certification stage. Of potentially greater significance, Justice Barrett also held, over a dissent by Justice Gorsuch (joined by Justices Thomas and Alito), that defendants bear the burden of persuasion by a preponderance of the evidence that an alleged misrepresentation has not had an impact on the price of a security. This second holding will facilitate the formation of classes under Rule 23 of the Federal Rules of Civil Procedure by making it at least marginally easier for putative classes to demonstrate reliance through evidence common to the class, which in turn will help the class satisfy Rule 23’s predominance requirement.
In this post, we will summarize the Decision, discuss the caselaw interpreting it to date, and offer concluding thoughts on its potential impact on the practice of securities litigation.
by David Erroll, James V. Masella, III and H. Gregory Baker on February 10, 2022
A California Court recently allowed the Securities and Exchange Commission (the “SEC” or “Commission”) to proceed with its first insider trading prosecution based on a theory of “shadow trading.” On January 14, 2022, Judge William H. Orrick, sitting in the District Court for the Northern District of California, issued a ruling denying defendant’s motion to dismiss the SEC’s civil action, which alleges a single violation of Section 10(b) of the Securities and Exchange Act of 1934.
by Alvin Li, James V. Masella, III and H. Gregory Baker on February 3, 2022
A key question for any company considering the issuance of cryptocurrency is whether that digital asset will be treated by regulators as a security, like BP stock, or a commodity, like Bitcoin.[i] In 2019, the Securities and Exchange Commission (the “SEC” or the “Commission”) provided guidance on this issue in a “Framework for ‘Investment Contract’ Analysis of Digital Assets” (“Framework”).[ii] The Framework lists characteristics that make it more or less likely that the SEC will deem a given cryptocurrency to be a security. The SEC’s enforcement action against Ripple Labs (“Ripple”) for the sale of a digital asset named “XRP,” filed in December 2020 and currently pending before the U.S. District Court, Southern District of New York, illustrates the manner in which the SEC has applied the Framework, and serves as an early test of whether courts agree with the SEC’s broad view of the investment contract analysis with respect to crypto assets.
by Jonathan (Yoni) Schenker and H. Gregory Baker on February 1, 2022
In 2021, there were 613 initial public offerings (“IPOs”) of Special Purpose Acquisition Companies (“SPACs”), after 248 SPACs went public in 2020 and 59 in 2019. Prior to 2021, there had not been more than 500 IPOs of any kind in one year in the U.S. markets since the 1990s. The SPAC explosion has led, inevitably, to litigation; often similar to the squabbles over disclosures, contracts, and failed negotiations that are standard in litigation surrounding IPOs and mergers. However, in a ruling in January, a Delaware Court of Chancery judge cast doubt on whether decisions by SPAC boards of directors to merge with private companies are entitled to the deference of the business judgment rule, which shields directors from liability for their decisions gone wrong.
by Gargi Chaudhuri and H. Gregory Baker on January 25, 2022
On November 18, 2021, the Securities and Exchange Commission (the “Commission”) released its Enforcement Results for fiscal year (“FY”) 2021, which spans from October 1, 2020 to September 30, 2021. The Commission published its results in an abbreviated press-release format with an accompanying addendum, foregoing the more formal annual report format it used in prior years. Gurbir S. Grewal, who was appointed Director of the Commission’s Division of Enforcement (the “Division”) in July 2021, emphasized a commitment to innovation. Grewal stated the Division brought “a number of critically important and first-of-their-kind enforcement actions,” and accomplished “record-breaking achievements” for its whistleblower program. This blog post will review some of the key takeaways, as well as offer predictions for enforcement trends in FY 2022.
by H. Gregory Baker on January 5, 2022
When it comes to settlements with the SEC’s Division of Enforcement (“Enforcement Division”), a question respondents often ask is how the SEC arrives at a given penalty amount? This blog post will discuss the SEC’s current approach to determining penalty amounts, as recently articulated by Gurbir Grewal, the Director of the SEC’s Enforcement Division, and also considers how the SEC’s recent settlement with Global Infrastructure Management, LLC (“Global”) may be indicative of the SEC’s new approach to penalties.
by Justin Zaremby on January 4, 2022
Last summer, Representative Alexandria Ocasio-Cortez (D-NY) introduced bill H.R. 4620 to limit the exemption from registration requirements applicable to certain family offices under the Investment Advisers Act of 1940 (the “Advisers Act”). If the bill becomes law, among other things, a family office with $750,000,000 or more in assets under management will no longer be exempt from registration under the Advisers Act.
by H. Gregory Baker and Anthony C. LoMonaco on September 9, 2021
Last month, we wrote about three actions taken by the SEC signaling a renewed interest in cybersecurity disclosure enforcement. In keeping with this theme, the SEC announced a number of significant new cybersecurity actions just last week. On August 30, the SEC disclosed enforcement actions against eight brokerage firms for failing to implement adequate cybersecurity policies and procedures, as required by the SEC’s “Safeguards Rule.” All eight firms agreed to settle with the SEC and will collectively pay hundreds of thousands of dollars in fines. These most recent actions underscore that companies should be mindful of whether their cybersecurity policies and procedures comply with SEC requirements and expectations.
by H. Gregory Baker and Anthony C. LoMonaco on August 9, 2021
The SEC is ramping up its cybersecurity disclosure enforcement. While the agency had made significant efforts relating to cybersecurity disclosure previously, there has been surprisingly little SEC activity in this area since 2018—even though the last three years has seen an explosion of high-profile data security incidents. That changed in June of this year, however, with the SEC taking three major actions that demonstrate a renewed interest in such enforcement. First, the SEC announced its intention to issue a new rule regulating cybersecurity risk governance disclosure. Second, it announced its first charges and settlement for cybersecurity disclosure violations since 2018. And third, it revealed a significant cybersecurity disclosure investigation relating to the recent SolarWinds supply-chain attack. In light of these developments, now would be a good time for issuers and registered entities to review the SEC’s expectations for cybersecurity disclosure, and implement any necessary changes to their respective policies and procedures, and disclosure practices.