Corteva Inc. is nearing a settlement in a proposed class action by farmers over a pesticide rebate program, that is also being challenged by federal enforcers, that allegedly paid distributors not to carry cheaper generic rivals.

A mediation report filed in North Carolina federal court Friday indicates that Corteva has reached a settlement with the proposed class to resolve the claims against it. The report said the sides expect to file a motion for preliminary approval of the agreement by June 10, but did not provide any details about the terms of the settlement.

The deal does not impact the farmers’ claims against Syngenta AG over a similar rebate program.

The multidistrict litigation accuses Corteva and Syngenta of using loyalty rebate programs to artificially extend their patent monopolies over certain pesticides by offering payments to distributors that agree to limit their sales of cheaper generic products. The farmers are looking to represent 250,000 buyers of Syngenta’s pesticides and 100,000 buyers of Corteva’s pesticides, who are seeking more than $2 billion in total damages, according to their class certification bids last year.

. . .

The farmers are represented by Quinn Emanuel Urquhart & Sullivan LLP, Lowey Dannenberg PC, Cohen Milstein Sellers & Toll PLLC, Korein Tillery LLC and Pinto Coates Kyre & Bowers PLLC.

On May 26, Cohen Milstein was proud to co-sponsor a special event marking the 65th anniversary of the Freedom Rides, a defining moment in the struggle for civil rights in the United States.

The commemoration took place at 1100 New York Avenue, NW—the very site where, on May 4, 1961, a small group of determined Americans began a journey that would challenge segregation, test the rule of law, and help reshape the nation. This building has also been home to our Washington, D.C. office since 1994, making the opportunity to reflect on the history here especially meaningful.

Joseph Sellers, founder and co-chair of Cohen Milstein’s Civil Rights & Employment practice, was invited to give remarks alongside Kristen Clarke, General Counsel of the NAACP and former head of the DOJ Civil Rights Division; Cortland Cox, chair of the SNCC Legacy Project Board of Directors; and members of the Art Deco Society of Washington and DC Historic Preservation Office.

As Joseph Sellers noted during the program, “Every day that we walk through this space we are reminded of the bravery of those who began their journey from here against overwhelming odds.”

More than six decades later, that moment continues to resonate.

A Journey That Tested the Law and the Nation

The Freedom Rides were not simply symbolic. They were a direct and deliberate test of whether the United States would enforce its own laws.

In Boynton v. Virginia (1960, the U.S. Supreme Court made clear that segregation in interstate bus travel was unlawful. Yet in practice, many Southern states continued to ignore the law.

The Freedom Riders set out to confront that gap.

On May 4, 1961, thirteen Black and white volunteers, ranging in age from 18 to 61, departed Washington, D.C. on two buses—one from the Greyhound terminal at this site, and another from a Trailways station nearby. Organized by the Congress of Racial Equality (CORE), their two-week journey took them through Virginia, the Carolinas, Georgia, Alabama, Mississippi, and Louisiana.

Their strategy was intentional and disciplined:

• Interracial riders sat together in defiance of segregation norms
• Black riders occupied seats reserved by custom for white passengers
• Some participants documented violations and coordinated a legal response

Their objective was clear: to force the federal government to enforce the law.

As Sellers observed, the riders were engaged in testing to detect and expose violations of civil rights laws—a critical form of enforcement that remains a cornerstone of modern civil rights practice. “Our civil rights laws do not enforce themselves,” he stated. “Their grand promise is only as effective as our ability to ensure violations can be detected and challenged.”

Courage in the Face of Violence

The riders’ journey began quietly in Washington, but conditions changed quickly.

As they moved South, they encountered escalating hostility. In South Carolina, future Congressman John Lewis was attacked. In Alabama, the violence drew national and international attention. In Anniston, a Greyhound bus was firebombed. In Birmingham, riders were beaten by mobs in coordinated attacks.

These acts of violence exposed the extent to which segregation persisted despite federal law. Just as importantly, they created pressure for action.

The riders’ courage helped compel the federal government to enforce desegregation in interstate travel. What began as a test of legal precedent became a turning point in the Civil Rights Movement.

The Place Where It Began

The impact of the Freedom Rides is inseparable from the place where the journey began.

The Greyhound Bus Terminal at 1100 New York Avenue opened in 1940 as a striking example of Streamline Moderne architecture. It once reflected the optimism of mid-century travel, serving passengers during World War II and the decades that followed.

But by the 1970s, the terminal had entered a period of decline. As bus travel lost prominence, the station reflected broader urban challenges—aging infrastructure and growing safety concerns. Renovations in 1976 attempted to modernize the space but obscured much of the building’s original architectural character. By the early 1980s, the terminal had reached the end of its functional life, and operations were relocated. Its future was uncertain.

Preservation and a Continuing Legacy

What might have been lost was ultimately preserved.

In 1987, the D.C. Historic Preservation Review Board took the unusual step of designating the terminal a historic landmark even though its defining features were hidden beneath later alterations. The decision helped establish a broader understanding of how historic significance can endure beyond visible condition.

When the current office tower was constructed in 1991, the terminal was incorporated into its design rather than demolished. Its restored structure became part of the new development, ensuring that the space where history unfolded remained part of the present. And that legacy continues to evolve.

In November 2025, the building’s historic interior spaces, including the waiting room and lobby, were formally designated as landmarks, further recognizing the site’s architectural significance and its place in civil rights history.

A Shared Moment of Reflection

The May 26 commemoration brought together leaders from the legal, civil rights, and preservation communities to reflect on this shared history. Remarks from distinguished speakers honored both the legal foundations and the individual courage that defined the Freedom Rides.

Holding the event at the very site where the journey began underscored a powerful connection between past and present.

Why the Freedom Rides Still Matter

The Freedom Rides transformed a legal principle into lived reality. They demonstrated that court decisions alone are not enough—that enforcement, accountability, and persistence are essential to meaningful progress.

They remind us that legal rights must be defended to have effect, that progress often requires individuals willing to challenge the status quo, and courage and advocacy can reshape institutions.

Reflecting on the Freedom Rides in the place where they began offers a unique perspective on the ongoing work of civil rights. This building has witnessed transformation, from a transportation hub to a site of protest and courage, to a preserved landmark embedded within the modern city. Its history mirrors a broader story of change.

The commemoration also served as a reminder of a deeper principle. As Sellers concluded, “The enactment of laws is not enough. Justice requires people who are willing to challenge unlawful conduct, to speak out against bigotry and insist that constitutional rights apply to everyone. The Freedom Riders proved that ordinary people can create extraordinary change.”

The commemoration serves as a reminder that progress is built over time through law, through action, and through individuals willing to move both forward.

For Cohen Milstein, that legacy is not just historical, it is ongoing. The same principles that drove the Freedom Riders guide our civil rights practice today: advocating for fair pay, equal access, and accountability where unlawful bias persists. Their example remains a powerful reminder of what it means to stand up for fairness—and to ensure the law works as it is intended for everyone.

Brent W. Johnson is helping to pioneer the use of antitrust law to tackle collusion in low-wage labor markets with work that includes representing workers from poultry and meat-processing plants in a pair of cases that led to more than $600 million in settlements last year.

Co-chair of Cohen Milstein Sellers & Toll’s antitrust practice, Johnson has represented workers in multiple labor-side antitrust cases over the past decade, stretching across a number of industries and including both highly skilled workers and lower-income employees, earning him a spot among Law360’s 2026 Titans of the Plaintiffs Bar.

He has also worked on traditional antitrust cases, including a long-running price-fixing case in the broiler-chicken industry.

While Johnson takes satisfaction from helping consumers and small businesses win money after large corporations break the rules, he said, representing workers in cases against their own employers has been the most satisfying opportunity of his career.

“How much money people make and how they’re treated by their employers, and whether that’s done in a dignified fashion, really matters to folks,” Johnson told Law360.

Working with attorneys from Handley Farah & Anderson and Hagens Berman Sobol Shapiro LLP, Johnson is representing poultry plant workers who accused major processors — including Purdue, Tyson and Pilgrim’s Pride — of sharing compensation data, including through the agricultural data firm Agri Stats Inc., to suppress wages.

The workers won $398 million in settlements with processors approved in Maryland federal court last year and have also now inked an agreement with the final defendant, Agri Stats, that includes significant changes to the benchmarking reports that allegedly allowed the processors to share wage information.

The same team of firms is also representing beef- and pork-processing plant workers who made similar claims against Tyson, Cargill, JBS Foods, National Beef and others. Workers in that case have secured about $202.7 million in settlements.

“Representing lower-income workers and proving that we can have successful antitrust class actions on their behalf, despite some of the relevant market and other challenges is particularly gratifying,” Johnson said.

There’s a particular concern for named plaintiffs in labor-side antitrust cases: that an employer could retaliate against them. While Johnson said corporations will not generally retaliate directly against someone when a lawsuit is ongoing, workers worry they could find themselves blacklisted when they try to get their next job.

This was a major concern for the animation workers Johnson represented in an earlier labor-side antitrust case, targeting an alleged conspiracy by Steve Jobs, as head of Pixar, and George Lucas, as head of Lucasfilm, to not hire each other’s employees, Johnson said. In that industry, workers frequently change employers with each film they work on.

“If you sue the handful of companies that do that work, you’d be quite worried about getting hired for the next one,” he said. “The concern is probably not as acute among beef, pork and poultry workers, but it’s still there.”

Johnson credits the animation workers case, where settlements totaled nearly $170 million, as sparking his interest in labor-side antitrust issues. His work in the space currently includes a case targeting an alleged agreement between the nation’s largest military shipbuilders and engineering consulting firms not to hire architects and engineers from one another.

FinCEN’s imposition of large civil penalties, combined with clear, sharp language in its consent order, highlights an expectation that firms invest in their anti-money-laundering programs

By Christina K. McGlosson

The U.S. Treasury Department’s Financial Crimes Enforcement Network in March announced historic civil penalties of $80 million against Securities and Exchange Commission-registered broker-dealer and OTC market maker Canaccord Genuity for “willful violations” of the Bank Secrecy Act.

FinCEN’s Consent Order Imposing Civil Penalties notes that FinCEN is imposing a Civil Monetary Penalty of $80 million in this matter, and that FinCEN has agreed to credit against its $80 Million Civil Monetary Penalties Canaccord’s $20 million in civil penalties to the SEC, and $20 million to the Financial Industry Regulatory Authority.

The laundry list of federal violations is alarming—anti-money-laundering compliance program failures, failure to detect red flags indicating money laundering, customer due diligence failures, lack of system and personnel resources, lack of training in AML policies for those in charge of monitoring for possible money laundering activities—and to top it off, failing to report close to more than 160 suspicious activities to federal regulators. Moreover, Finra’s examinations, beginning in 2013, and continuing periodically through 2021, repeatedly discovered deficiencies in AML surveillance and compliance that remained unremediated, despite Canaccord’s agreement to remediate.

The BSA requires broker-dealers and certain other financial institutions to develop and implement AML compliance programs. A key ingredient of this compliance program is surveillance requirements. Anomalous trading must be flagged and investigated to identify any tangential criminal activity or intention to evade the BSA and the broker-dealer’s AML surveillance program. And, in each case, as required by the SEC and FinCEN, broker-dealers must file a suspicious activity report in a timely manner detailing the suspicious transaction (or pattern of transactions of which the transaction is a part) aggregating to at least $5,000 in funds.

Yet for three years, Canaccord failed to maintain an AML surveillance program that was “reasonably designed to detect, investigate, and report suspicious activity within its equity trading business.”

Unfortunately, Canaccord isn’t alone. Last year, the SEC issued a cease-and-desist and$500,000 penalty against Velox Clearing, which specializes in clearing services for foreign financial broker-dealers, for egregious breaches of the SEC’s and Finra’s BSA requirements.

These BSA compliance failures are especially concerning given that broker-dealers are gatekeepers to the U.S. financial system and yet highly susceptible to money laundering due to the speed, volume and international scope of broker-dealers’ securities transactions. These failures and the subsequent enforcement actions should be a wake-up call to not only broker-dealers, but to all entities required to maintain an AML program to comply with the BSA.

Background on the Bank Secrecy Act and anti-money-laundering provisions

Money laundering is one of the most pervasive criminal activities globally, according to Anti-Money Laundering Network. The Federal Bureau of Investigation estimates that around $300billion is laundered into the U.S. every year, while laundered money constitutes approximately $1 trillion to $2 trillion of the global gross domestic product annually. New technologies and unregulated financial digital currencies only make money laundering faster and easier.

The BSA, originally named the Currency and Foreign Transactions Reporting Act of 1970, was specifically enacted by Congress to detect and prevent money laundering. Although it has been amended multiple times over the past 50 years, the BSA remains one of the most comprehensive anti-money-laundering laws in the world.

Essentially, the BSA authorizes the U.S. Treasury Department through its bureau, FinCEN, to require U.S. financial institutions such as banks, broker-dealers, credit unions as well as other money-service businesses, such as casinos, to detect and report suspicious transactions that may involve money laundering, tax evasion and other financial crimes.

The BSA was designed to help financial institutions and money-service businesses identify the source, volume and movement of currency and other financial instruments transmitted into or out of the U.S. Accordingly, it requires these businesses to report cash transactions exceeding $10,000 and report suspicious activity, identify people involved and maintain a record-keeping paper trail of financial transactions. It also requires the establishment of robust internal AML programs—commensurate with the scope and risk exposure of that business—to ensure that proactive detection, monitoring, policies, procedures and people are in place.

As gatekeepers of the U.S. financial system, banks, broker-dealers and money-service businesses are required to be responsive to the BSA under not only FinCEN, but their respective regulatory agencies.

What are the BSA/AML compliance obligations of broker-dealers?

The SEC incorporated the BSA into the Securities Exchange Act of 1934 (Exchange Act) under Rule 17a-8 in 1981. And while the statute originally targeted banks, the USA Patriot Act of 2001 amended the BSA to extend specifically to broker-dealers, requiring them to establish comprehensive compliance programs to help broker-dealers anticipate, flag and mitigate suspicious activity and money laundering at every step of a customer relationship and transaction.

• Dynamic AML programs, which must include internal policies, procedures and controls, a compliance officer, an independent audit function and ongoing employee training
• Customer identification programs, including determining whether a customer appears on any list of known or suspected terrorist organizations
• Due diligence of foreign correspondent accounts, to assess the risk of such accounts and to ensure they are not prohibited foreign “shell” banks
• File SARs for transactions of at least $5,000, including suspicious transactions involving money used in illegal activity, designed to evade BSA, or having no apparent lawful purpose—within 30 days of detecting the activity

These programs are so mission critical, the SEC maintains a BSA/AML requirements and resources portal specifically for broker-dealers.

This is why the violations of Canaccord and Velox were so egregious. As noted by the SEC in the cease-and-desist orders in both cases, the actions by the broker-dealers were willful violations of the BSA under Exchange Act Section 17(a) and Rule 17a-8.

Canaccord Genuity

In March 2026, the SEC settled an administrative proceeding against Canaccord, one of the most active market makers in the over-the-counter market, for willful violations of the BSA for, among other things, its failure to file more than 160 SARs over a three-year period (February 2019-March 2022).

According to the SEC, Canaccord’s AML surveillance program relied on exception reports designed to flag potentially manipulative trading activity. However, those reports were deficient in design and went unreviewed for extended periods. For example, Canaccord’s Low Volume report intended to capture instances where its trading represented a significant percentage of total market volume in each security, went entirely unreviewed for 34consecutive months, leaving thousands of flagged trades uninvestigated.

Furthermore, in 2021, the firm discovered that compliance employees had falsified documentation of their purported reviews and produced those fabricated records in response to multiple Finra examinations.

The SEC imposed a $20 million civil money penalty, a censure, and a cease-and-desist order. The $20 million SEC penalty represents one of the largest recent SAR-filing enforcement actions against a broker-dealer under Rule 17a-8, and it arrived as part of a coordinated resolution with FinCEN and Finra totaling $80 million, the largest BSA penalty FinCEN has ever assessed against a broker-dealer.

According to FinCEN, Canaccord was well-positioned to detect and investigate red flags of suspicious trading but failed due to a severely under-resourced AML program that didn’t match its risk profile, thereby hindering its ability to identify and report suspicious transactions.

. . .

This past March, the Institute for Law and Economic Policy (ILEP), together with the Business Law Journal, hosted its annual symposium. Marking a significant milestone, this year’s convening focused on The 30th Anniversary of the Private Securities Litigation Reform Act (PSLRA). Over two days, the Symposium brought together esteemed jurists, academics, practitioners, and former Securities and Exchange Commission officials for wide‑ranging and thought‑provoking discussions on investor protection, securities litigation, and the evolving civil justice landscape.

Looking back, speakers examined how the PSLRA and caselaw interpreting the statute since have reshaped class certification, Section 11 claims and the traceability of shares, attorneys’ fees, and pleading standards. Looking ahead, discussions turned to forced arbitration, precatory shareholder proposals, and the growing attempt to privatize securities law. The program also featured insights from Northern District of California Federal Judge Jon S. Tigar on class certification, and Delaware Supreme Court Justices Collins J. Seitz, Jr. and Abigail M. LeGrow and Vice Chancellor Paul A. Fioravanti, Jr. on Delaware’s most recent corporate law reforms and landmark cases. The Symposium concluded with two fireside conversations—one with Delaware Supreme Court Chief Justice Seitz, and the other with former SEC Commissioner Caroline A. Crenshaw.

The Private Securities Litigation Reform Act, commonly known as the PSLRA, was enacted in December 1995, over the veto of President Clinton, and represents the most sweeping overhaul of the federal securities laws since the passage of the Securities Act of 1933 and Securities Exchange Act of 1934. At its core, the legislation was premised on the belief that the securities litigation system was broken. Critics argued that non‑meritorious cases were filed too frequently, that nearly all cases survived early motion practice only to settle without regard to the merits, and that class actions were driven more by lawyers than by investors themselves.

To address these perceived problems, Congress enacted reforms that were widely viewed at the time as a boon to public companies, their executives, investment banks, and accounting firms. The PSLRA imposed new restrictions and procedural hurdles, including reforms to the selection and compensation of lead plaintiffs; limits on recoverable damages and attorneys’ fees; an automatic stay of discovery while motions to dismiss are pending; a safe harbor for certain forward‑looking statements; a mandate requiring courts to sanction attorneys who violate Rule 11(b), with penalties potentially reaching 100 percent of defendants’ fees; and, most significantly, heightened pleading requirements for falsity and scienter that exceeded even Rule 9(b) of the Federal Rules of Civil Procedure. Taken together, the PSLRA codified a set of tools designed to delay and defeat securities fraud claims and to discourage plaintiffs’ counsel from filing suit.

There is little dispute that the statute succeeded in achieving at least one of its primary objectives. While the number of securities class actions filed has remained relatively stable since 1995, the PSLRA dramatically increased dismissal rates. As Symposium panelist Susan Saltzstein recently observed in her New York Law Journal article, “Reflections on the PSLRA at 30,” heightened pleading standards fundamentally reshaped early motion practice. Data from the Securities Class Action Clearinghouse, operated by Stanford Law School in partnership with Cornerstone Research, confirms this shift: since the PSLRA’s enactment, 3,306 cases have been dismissed and 3,004 have settled—a dismissal rate of 52%.

Dismissal rates have climbed even higher over time, particularly as the Supreme Court has interpreted and strengthened the PSLRA’s requirements in decisions such as Tellabs, Halliburton, Janus, Omnicare, and Slack. NERA’s 2025 year‑end report found that between 2016 and 2025, motions to dismiss were granted in full in 62% of cases, partially granted in another 21%, and denied entirely in only 17%. As Professor and former SEC Commissioner Joseph Grundfest—himself involved in the PSLRA’s drafting and another one of the Symposium’s speakers—recently remarked, the statute was “a major success” that brought long‑needed discipline and order to securities litigation.

Importantly, however, the PSLRA did not extinguish private enforcement of the federal securities laws. Instead, by ensuring that only non‑frivolous claims survived to discovery, the statute contributed to significantly larger recoveries in cases that cleared its thresholds. According to the Stanford Clearinghouse, since 1995, nearly $120 billion has been recovered for investors—an average of $4 billion per year. All 100 of the largest securities class action settlements in history occurred after the PSLRA’s passage, and both average and median settlement amounts have increased substantially.

Private class actions also continue to play a vital role in policing markets and deterring fraud. According to a 2025 ISS report, only 27 of the top 100 securities class action settlements had related SEC enforcement actions. In those cases, private litigation recovered more than $34 billion for investors, compared to just $4.6 billion recovered by the SEC—meaning private actions yielded, on average, more than seven times what SEC-related actions covered. Overall, the top 50 private securities settlements recovered over $58 billion, while the top 50 SEC actions recovered less than $14 billion, much of which was never returned to investors.

Against this backdrop, investors now face a renewed challenge. SEC Chair Paul Atkins has argued that declining numbers of public companies and IPOs are attributable to regulatory burdens and fears of frivolous litigation. Yet empirical research does not support his claim. A recent Journal of Financial Economics study found that regulatory compliance costs explain just 7.3 percent of the decline in IPOs. Instead, the primary drivers are the expanding availability of private capital or M&A activity. Further, if litigation costs were the culprit of the IPO decline, IPO activity should have increased as the PSLRA increased dismissal rates—but data shows precisely the opposite trend.

Despite this evidence, efforts continue to weaken private enforcement through forced arbitration, expanded safe harbors, and pressure on states to adopt investor‑hostile laws. As the Symposium made clear, 30 years on, the PSLRA’s legacy is complex. But private securities litigation remains indispensable to market integrity and investor protection.

Proposed changes may mean reduced reporting burden and higher reporting thresholds for registered investment advisers

By Christina McGlosson

The Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)  jointly  proposed amendments to Form PF, the confidential reporting form that certain SEC-registered investment advisers, including those that also are registered with the CFTC as a commodity pool operator or a commodity trading advisor, use to report information about the private funds they advise. The public comment period on the proposed rule concludes on June 19, 2026.

Form PF collects information designed to facilitate the Financial Stability Oversight Council’s (FSOC) monitoring of systemic risk in the financial markets. The SEC and CFTC also use the information collected on Form PF in their investor protection efforts. 

Among the goals of the amendments are raising the filing threshold, thereby reducing the burdens of filing on funds with lower assets under management (AUM), and streamlining Form PF.

Purpose of Form PF

Investment advisers that are registered both under the SEC’s Investor Advisers Act of 1940, and the CFTC’s Commodity Exchange Act must maintain records and reports for each private fund under advisement. In so doing, Form PF requires the following information, primarily designed to evaluate systemic risk to the financial economy:

1. AUM and use of leverage, including off-balance-sheet leverage;
2. Counterparty credit risk exposure;
3. Trading and investment positions;
4. Valuation policies and practices of the fund;
5. Types of assets held;
6. Side arrangements or side letters, whereby certain investors in a fund obtain more favorable rights or entitlements than other investors;
7. Trading practices; and
8. Other information the SEC deems necessary to protect investors.

Proposed Changes

The proposed changes are a response to  President Trump’s January 20, 2025 Presidential Memorandum, mandating the close review of pending rules issued by the previous administration.

The proposed amendments would eliminate filing requirements for smaller advisers, who represent almost half of the advisers currently required to file Form PF, by raising the filing threshold from $150 million in private fund AUM to $1 billion. The proposal would also raise the exposure reporting threshold for “large” hedge fund advisers from $1.5 billion in hedge fund AUM to $10 billion.  Form PF would continue to obtain information on over 90 percent of private fund gross assets and require detailed exposure information for funds managed by large hedge fund managers.

Summary of Proposed Changes

Table 1a summarizes the proposed changes to the AUM-related filing threshold for all Form PF filers and the reporting threshold for large hedge fund advisers:

Table 1a: Proposal to Increase Certain Thresholds
Eliminate filing requirements for smaller advisers.	Increase the filing threshold for all filers from $150 million in private fund AUM to $1 billion. (Rule 204(b)-1(a) and General Instruction 1.)
Eliminate certain reporting requirements for smaller hedge fund advisers.	Increase the reporting threshold for large hedge fund advisers from $1.5 billion in hedge fund AUM to $10 billion. (General Instruction 3.)

Table 1b summarizes the proposed changes to the reporting obligations:

Table 1b: Proposed Changes to Reporting Obligations
Eliminate separate reporting for certain feeder funds.	Currently, Form PF filers must separately report each component fund of masterfeeder arrangements and parallel fund structures, except under certain limited circumstances.   The proposed amendments seek to eliminate this separate reporting requirement for any feeder fund that has de minimis holdings outside a single master fund, U.S. treasury bills, and/or cash and cash equivalents. (General Instruction 6.)
Eliminate “look through” requirements.	Currently, Form PF provides instructions for a filer to “look through” a reporting fund’s investments in other private funds and entities.   The proposed amendments seek to eliminate the prescriptive “look through” requirements and allow filers to report indirect exposures based on reasonable estimates that are consistent with their internal methodologies and the conventions of service providers. (General Instructions 7 and 8, and conforming amendments to certain questions and asset classes in the Glossary of Terms.)
Eliminate identification requirements for certain trading vehicles.	Currently, if a reporting fund holds assets, incurs leverage, or conducts trading or other activities through a trading vehicle, the adviser must provide identifying information about each such trading vehicle.   The proposed amendments seek to narrow the universe of trading vehicles that advisers must identify. (Question 9.)
Eliminate certain performance volatility reporting requirements.	Currently, if an adviser calculates a market value on a daily basis for any position in the reporting fund’s portfolio, it must report certain volatility information including aggregated calculated values, monthly annualized volatility of returns, and other data associated with the daily rates-of-return.   The proposed amendments seek to eliminate these requirements. (Question 23(c).)
Eliminate certain trading and clearing reporting requirements.	Currently, filers must report how they use trading and clearing mechanisms, including the value traded over the reporting period and the value of positions at the end of the reporting period.   The proposed amendments seek to eliminate the requirement to report the value of positions at the end of the reporting period. (Questions 29 and 30.)
Streamline adjusted exposure reporting.	Currently, large hedge fund advisers must report their qualifying hedge funds’ monthly adjusted exposures using multiple methods.   The proposed amendments seek to eliminate one of the methods, so filers would no longer be required to report additional adjusted exposure based on the filer’s internal methodologies. (Question 32.)
Eliminate portfolio turnover reporting.	Currently, large hedge fund advisers must report the value of their qualifying hedge funds’ monthly turnover by asset class.   The proposed amendments seek to eliminate this question. (Question 34.)
Reduce burdens associated with reporting North American Industry Classification System (“NAICS”) codes.	Currently, large hedge fund advisers must report their qualifying hedge funds’ monthly industry exposures when they exceed a certain amount, using the six-digit NAICS code that best describes the fund adviser’s primary business activity and principal source of revenue.   The proposed amendments seek to provide flexibility to allow filers to report fewer digits of the NAICS codes for industry exposures. (Question 36; see the Glossary of Terms (defining “NAICS code.”)
Eliminate certain reporting concerning qualifying hedge funds’ monthly exposures to reference assets and, instead, include streamlined exposure reporting under an existing extraordinary loss current report trigger.	Currently, large hedge fund advisers must report details about their qualifying hedge funds’ monthly concentrated exposure to specific, position-level reference assets.   The proposed amendments seek to eliminate those questions. Instead, if large hedge fund advisers file a current report about their qualifying hedge funds’ extraordinary investment losses, they would include a description of the largest exposure contributing to the loss. (Questions 39 and 40, and section 5, Item B.)
Simplify certain large hedge fund counterparty exposure reporting.	Currently, large hedge fund advisers must report in a consolidated counterparty exposure table their qualifying hedge funds’ borrowing, collateral received, lending, and posted collateral, all aggregated across all counterparties as of the end of each month.   The proposed amendments seek to eliminate this table and direct large hedge fund advisers to: (1) complete the more simplified table in Question 26 for their qualifying hedge funds; and (2) report all borrowings to significant counterparties under Questions 42 and 43, and (3) categorize significant borrowing entries in Question 42. (Questions 41 and 42, and conforming amendments to Questions 18, 26, 43, and the Glossary of Terms.)
Eliminate rehypothecation reporting.	Currently, large hedge fund advisers must report the total amount of collateral posted by counterparties to the qualifying hedge fund that may be and has been rehypothecated by the qualifying hedge fund.   The proposed amendments seek to eliminate these questions. (Question 45.)
Modify the current reporting trigger for all current reports.	Currently, section 5 requires large hedge fund advisers to file a current report “as soon as practicable, but no later than 72 hours” upon the occurrence of certain events at their qualifying hedge fund.   The SEC proposes to modify the reporting trigger by removing the requirement to report as soon as practicable. Under the proposal, large hedge fund advisers would have the full 72 hours to file a current report. (Section 5.)
Eliminate current reporting for large hedge fund advisers concerning certain margin defaults.	Currently, large hedge fund advisers are required to report within 72 hours if their qualifying hedge fund is in margin default or is unable to meet a call for margin, collateral, or equivalents.   The SEC proposes to eliminate this requirement. (Section 5, Item D.)
Eliminate current reporting for certain operations events.	Currently, large hedge fund advisers are required to report within 72 hours if their qualifying hedge fund client experiences an operations event (i.e., a significant disruption or degradation of the fund’s “critical operations”). Form PF defines “critical operations” as operations necessary for (1) the investment, trading, valuation, reporting, and risk management of the reporting fund; or (2) the operation of the reporting fund in accordance with the Federal securities laws and regulations.   The SEC proposes to eliminate the second element. (Section 5, Item G, and the Glossary of Terms.)
Eliminate current reporting related to the inability to satisfy redemption requests.	Currently, large hedge fund advisers are required to report within 72 hours if their qualifying hedge fund (1) is unable to pay redemption requests or (2) has suspended redemptions and the suspension lasts for more than five consecutive business days.   The SEC proposes to eliminate the first element. (Section 5, Item I.)
Eliminate quarterly event reporting for all private equity fund advisers.	Currently, all private equity fund advisers must submit quarterly reports about adviser-led secondary transactions, general partner removals, termination of investment periods, and fund terminations.   The SEC proposes to eliminate this requirement. (Section 6.)
Corrections and other revisions.	The proposed amendments seek to make corrections and other revisions to help ensure filers clearly understand Form PF requirements.
Request for comments on private credit reporting.	The proposal requests comments on all the proposed amendments.

Whistleblowers play a critical role in ensuring the integrity of the U.S. and global financial markets. Both the SEC and CFTC rely on whistleblowers to help them enforce violations of the federal securities laws and the Commodity Exchange Act, respectively. If you have witnessed fraud, consider blowing the whistle.

What to Do if You Have Witnessed Fraud:

1. Speak with an Experienced Whistleblower Attorney: Contact an experienced whistleblower attorney who understands the SEC and CFTC whistleblower programs. These consultations at Cohen Milstein are confidential and free of charge. Counsel can guide you through the process and assist in preparing and submitting your Tip, Complaint, and Referral (Form TCR) to the SEC or CFTC.
2. Gather Your Information: Along with your personal observations and a completed Form TCR, the SEC and CFTC requires supporting information that is original and not in the public sphere.
3. Understand the Potential for a Whistleblower Award: If your information leads to a successful SEC or CFTC enforcement action resulting in more than $1 million in monetary sanctions, you may receive an award ranging from 10-30% of any amount collected.

The SEC’s Whistleblower Program and the CFTC’s Whistleblower Program provide comprehensive guidelines on reporting fraud and the whistleblower process. Access the Tip, Complaint or Referral (TCR) forms: SEC Form TCR and the CFTC Form TCR.

About the Author

Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation. She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to the SEC’s Chief Economist.

Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, as part of the U.S. Treasury, the Department of Justice, and other government agencies.

On January 6, 2026, Judge Noël Wise of the U.S. District Court for the Northern District of California denied a motion to dismiss securities fraud claims against Block, Inc.—the parent company of Square and Cash App— and senior executives Jack Dorsey and Amrita Ahuja, allowing investors’ claims that Block misled the market about Cash App’s compliance practices and user metrics to proceed.

Judge Wise held that plaintiffs sufficiently alleged that Block misled shareholders about the strength of its compliance program and the size of Cash App’s user base. As lead counsel, Cohen Milstein represents lead plaintiffs, a group of New York City pension funds, on behalf of investors who purchased Block stock between February 26, 2020, and May 1, 2025.

The lawsuit focuses on alleged misstatements and omissions about Cash App, Block’s flagship mobile payments platform and a central driver of the company’s growth and valuation. Cash App allows users to send and receive money, invest, and access financial services through a single mobile phone app.

Plaintiffs allege that Block intentionally underinvested in anti[1]money-laundering, know-your-customer, and sanctions compliance to make Cash App easy to join and use and to fuel rapid growth, all the while assuring investors that its compliance program was robust and highly effective. According to the complaint, this approach led to large backlogs of unreviewed alerts and allowed many known bad actors to create large numbers of accounts used to facilitate illicit activities.

Plaintiffs also allege that Block overstated Cash App’s user growth by failing to disclose the extent of duplicate, fraudulent, and illicit accounts. When increased regulatory scrutiny later forced Block to tighten its compliance controls, the company allegedly changed how it calculated user metrics without fully informing investors, leading investors to make misleading comparisons between earlier and later figures and to overestimate Cash App’s growth rate.

Block, Dorsey, and Ahuja moved to dismiss the complaint. Judge Wise denied the motion, emphasizing that even statements that are literally true can be misleading if they omit material facts. Based on detailed allegations of chronic underinvestment in compliance, large alert backlogs, and the ease with which prohibited users could rejoin the platform, Judge Wise found it plausible that Block’s repeated claims about proactive anti-fraud efforts misled investors.

The court also upheld plaintiffs’ allegations that Block’s statements about Cash App’s user metrics were misleading. Judge Wise found that failing to disclose the prevalence of multiple accounts per user plausibly obscured the true size of Cash App’s user base. The court further rejected defendants’ argument that these statements were mere puffery, concluding they were specific enough for reasonable investors to rely on.

The court also found that plaintiffs adequately alleged scienter as to Jack Dorsey and Amrita Ahuja. According to the order, the complaint plausibly alleges that the executives had access to detailed internal information through board reports, compliance meetings, and employee feedback about duplicate accounts and fraud levels. Those allegations support the inference that Dorsey and Ahuja either knew their public statements were misleading or acted with deliberate recklessness in making them.

Finally, the court held that plaintiffs adequately pleaded loss causation. The complaint alleges that misleading statements about Block’s compliance program allowed bad actors to create multiple accounts, inflating reported user metrics and Block’s stock price. In March 2023, the alleged truth began to emerge with a report by Hindenburg Research, followed by investigations by multiple states and the Consumer Financial Protection Bureau. As these developments unfolded, Block’s stock price fell by 84 percent, from $289 to $46 per share. The court found the connection between the alleged misrepresentations and investors’ losses to be plausible.

The decision reinforces that technology companies’ statements about their compliance practices and user metrics must be grounded in reality. The ruling marks an important step toward accountability and transparency in the fintech and technology sectors, where user growth narratives often play a central role in valuation and market confidence.

The Defendants must now answer the amended complaint and the case moves into discovery, where investors will gain a clearer picture of whether Block’s public disclosures matched internal measurements of growth and compliance.

The practice of buying and selling contracts based on the outcome of future events has undergone a recent, remarkable transformation in the United States. What was once an activity conducted almost exclusively through offshore platforms (or “exchanges”) under the Commodity Futures Trading Commission’s (“CFTC”) regulatory regime for “event contracts” or were limited academic experiments, has exploded into a multi-billion-dollar industry reshaping how Americans engage with speculation on everything from elections to sports. This growth has coincided with the dramatic expansion of legal sports betting across America, creating a landscape where the boundaries between commodity derivatives and gambling have become increasingly blurred. As this market continues its rapid expansion, it raises profound questions about fairness, investor protection, regulatory oversight, and whether our government will establish a protective framework before, rather than after, significant consumer harm occurs.

The Explosive Growth of Prediction Markets

Super Bowl LX: A Case Study in Convergence

The transformation of American betting was on full display during Super Bowl LX when the Seattle Seahawks defeated the New England Patriots. The game served as a flashpoint for the collision between traditional sports betting and the new world of prediction markets—and illustrated both the scale of the phenomenon and the regulatory questions it raises.

Total Super Bowl LX betting wagers (the “handle”) approached approximately $1.7 billion. But the real story is the emergence of prediction markets as a genuine alternative to traditional sports betting. Traders on Kalshi and Polymarket (two major prediction market trading platforms) swapped more than $800 million in contracts tied to the Super Bowl.

The timing of the increase in predictive market betting was not coincidental. Just days before the Super Bowl, which is historically one of the most heavily wagered sporting events in the country, new CFTC Chairman Michael Selig withdrew a 2024 proposed rule that would have banned sports and politics-related wagers on prediction markets, signaling the federal government’s embrace of the industry.

The growth since platforms like Kalshi and Polymarket launched in 2020 has been extraordinary. In 2025, total prediction market trading volume reached approximately $44 billion across major platforms, split between $21.5 billion on Polymarket and $17.1 billion on Kalshi. This represents a nearly 130% increase for Polymarket alone, who had a total trading volume of $9 billion in 2024. This explosive growth has even led to major trading firms like Susquehanna International Group and Jump Trading becoming big players in prediction markets, along with familiar names in the retail space, such as Robinhood.

From Foreign Shores to American Mainstream

For decades, prediction markets operated primarily outside U.S. marketplaces, or in narrow, academic contexts. Intrade, founded in Ireland in 2001, became the most prominent early example of a commercial prediction market. The platform offered peer-to-peer binary contracts on event outcomes and gained widespread media attention for its accuracy in predicting the 2008 and 2012 U.S. presidential elections.

The limited academic alternative, the Iowa Electronic Markets launched in 1988 and operated under a CFTC “no-action” letter.

The landscape changed dramatically in 2020, with the founding of Kalshi and Polymarket, which would become the dominant platforms.

What Can People Bet On?

The range of contracts available on prediction markets has expanded dramatically. While political events remain significant, the universe of tradeable outcomes now encompasses virtually every category of measurable future events, such as elections, sports outcomes, and award shows. More specifically, people can bet on more nuanced events such as specific legislative or political decisions, individual sports match outcomes, top streaming musical artists, the length of the Super Bowl halftime show and even the likelihood of specific celebrities attending it

The Parallel Rise of Legal Sports Betting

The growth of prediction markets has coincided with (and been accelerated by) the dramatic expansion of legal sports betting in the United States. On May 14, 2018, the Supreme Court struck down the Professional and Amateur Sports Protection Act in Murphy v. NCAA, freeing individual states to regulate sports wagering. The transformation has been remarkable since. In 2018, legal sports betting generated only $4.6 billion in handle nationwide (almost entirely in Nevada). By 2024, Americans legally wagered approximately $149 billion; a more than 3000% increase in just six years.

The growth in prediction markets has been similar to the growth of sports wagering, and prediction market trading in sports now accounts for 85% of trading volume on Kalshi. The convergence between sports betting and prediction markets is stark: prediction markets have evolved to closely mirror traditional sports wagers, offering spreads, totals, player props, and even same-game parlays

Regulatory Issues, Fairness, and Market Integrity

Federal vs. State: A Jurisdictional Battle

The central regulatory question facing prediction markets is whether they are federally regulated and thus exempt from state gambling laws, or whether they fall under the arm of state enforcement. This battle is playing out in courts across the country, where prediction market platforms, traditional sports platforms, and state attorneys general are engaged in a series of lawsuits to resolve this question.

In a recent op-ed, Chairman Selig stated that the CFTC has overseen prediction markets for decades because event contracts qualify as derivative instruments but that recently states have increasingly launched legal challenges arguing these contracts constitute gambling under state law, with nearly 50 active cases pending against CFTC-registered exchanges, including Kalshi, Polymarket, Coinbase, and Crypto.com. He also noted that the number of prediction market users has quadrupled to 15 million over the last two years and that these markets are subject to the CFTC’s rules requiring market surveillance, anti-money-laundering compliance, and customer information collection to prevent fraud and insider trading. Chairman Selig concluded his thoughts with a warning: “Any erosion of the CFTC’s ability to regulate transactions in commodity derivatives is a direct threat to the markets and investors Congress intended the agency to oversee.”

The Missing Regulatory Infrastructure

Traditional equities and bond markets operate under extensive regulation designed to protect participants against some of the same concerns raised by prediction markets, such as insider trading, market manipulation, dissipation of customer funds, and lack of disclosures, among other traditional concerns.

For example, concern over insider trading on prediction markets was highlighted when a Polymarket user made approximately $400,000 in profit by betting that Venezuelan President Nicolás Maduro would be removed from office—a bet placed just hours before U.S. military forces captured him in a secretive operation. The prescient timing raised immediate allegations that the trader possessed inside information about the military operation that was unknown to other market participants, a typical insider trading scenario.

In addition, concerns have been raised in a class action lawsuit that Kalshi’s affiliate participates as a bettor on its own platform and may be betting against ordinary participants, which the suit alleges misleads consumers who are unaware of this practice. And unlike in stock markets where securities are held in regulated accounts, the funds used for bets on prediction markets may be held in less secure environments, including on blockchains.  

What the Future May Hold

Scenario 1: Federal Regulation Akin to Other Markets

The most orderly path forward would involve the CFTC establishing comprehensive regulations specifically designed for event contracts. Chairman Selig has directed staff to begin this rulemaking process. The federal government has also signaled interest in enforcement. Manhattan U.S. Attorney Jay Clayton stated that his office is “thinking about how the current laws apply to prediction markets” and expects fraud cases to be brought. “Because it’s a prediction market doesn’t insulate you from fraud,” Clayton emphasized, using the example of conspiring to fix a golf game through prediction markets.

As prediction markets grow to resemble traditional financial markets, pressure may build to impose securities or commodity-style regulation. This could include registration requirements for large traders, position limits to prevent market manipulation, and mandatory disclosure of level of risk.

Scenario 2: State-by-State Patchwork

If federal courts ultimately reject broad federal preemption arguments, prediction markets could face the same state-by-state licensing regime that governs sportsbooks. This would mean different rules and availability in each state with state gaming commission oversight and consumer protections varying by jurisdiction.

Scenario 3: The Wild West Until Crisis Hits

History suggests comprehensive financial regulation often follows a crisis rather than preceding or preventing one. The pattern is well-established:

• The stock market crash and Great Depression led to the creation of the SEC in 1934
• The Enron scandal produced the Sarbanes-Oxley Act in 2002
• The 2008 financial crisis resulted in Dodd-Frank in 2010

Will prediction markets follow this pattern? The documented concerns—manipulation, insider trading, conflicts of interest—suggest the potential for significant consumer harm.

As a concerned observer might ask: Will we have to burn our hand to find out that the stove is hot?

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This promotional piece is intended for informational purposes only and does not constitute legal advice. The regulatory landscape for prediction markets is evolving rapidly, and readers should consult appropriate counsel regarding specific questions.

The last few months have seen rapid and dramatic policy change at the Securities and Exchange Commission (SEC) that institutional investors, including pension funds, should pay attention to.

The SEC has stated that the goal of these changes is to promote capital formation by increasing flexibility for public companies, but critics say the changes may significantly limit investors’ access to information and their ability to hold the companies in which they invest accountable.

This blog will look at three recent changes implemented or in progress at the SEC and discuss the implications for multiemployer pensions and their fiduciaries.

Arbitration of Shareholder Claims

On September 17, 2025, the SEC issued a policy statement stating that it would no longer delay approval of registrations with provisions that make arbitration of shareholder claims mandatory.

Background

One of investors’ main tools for holding public companies accountable is the ability to bring class action lawsuits for violations of federal securities laws. The Private Securities Litigation Reform Act (PSLRA) requires a highly structured and efficient process to try and recover investors’ losses if they believe that a public company has misled investors or manipulated the stock market. In a class action suit, a single investor or small group of investors takes leadership of the case; all other investors are passive class members who can recover a portion of losses if the case is successful, without the burden of participating in litigation.

In arbitration, a dispute is resolved in a private, confidential forum, without the procedural safeguards of a traditional court proceeding. Arbitrators are not required to follow legal precedent or rules of evidence, which can create a highly unpredictable environment where two shareholders bringing the same lawsuit may reach wholly different outcomes. While there are some scenarios where arbitrations proceed as a class or collective action, those proceedings are increasingly rare. Many companies that favor forced arbitration try to preclude class or collective arbitrations, meaning that every investor or fund that wanted to bring a claim to recover for securities fraud would have to proceed alone. Supporters of arbitration of shareholder claims argue that it saves companies significant time and money; opponents note the loss of the deterrent impact of large class actions and the sunlight that comes from public court proceedings.

Historically, the SEC has upheld the class action process and pushed back on corporate efforts to force mandatory arbitration of shareholder claims. In the past, the SEC has expressed concern that mandatory arbitration of shareholder claims violates state law and may violate federal law. Specifically, if a company was trying to go public and included a mandatory arbitration provision in its registration materials, the SEC would have essentially delayed approval. As a result, companies either did not include those provisions or eventually dropped them.

Fiduciary Considerations

The SEC’s new policy statement has sparked significant concern from institutional investors. They claim that without an efficient, centralized method to challenge securities fraud, every pension fund will need to conduct its own investigations and litigate its own cases or give up the ability to recover any funds lost to fraud. Because they no longer have the concern of having to face a single, major class action that can achieve a major recovery, some companies may be emboldened to engage in misstatements, omissions or fraudulent activity, knowing that they face less risk of consequence, contend critics.

Fiduciaries may benefit from periodic updates from counsel or a knowledgeable advisor on whether any companies are trying to impose mandatory arbitration of shareholder claims; as of the time of this article, only one small company has taken that step. If this becomes a trend—or a more prominent and heavily traded company takes this step—fiduciaries may wish to consider a process for identifying whether companies in which they invest are utilizing mandatory arbitration and, if so, whether any steps need to be taken to monitor for or pursue potential securities claims.

Shareholder Proxy Proposals

Typically, spring is the start of proxy season, where the majority of public companies hold their annual shareholder meetings and file their DEF 14A proxy statements with the SEC. The proxy is a key opportunity for shareholders to vote and express their views on issues such as executive compensation, board member elections and shareholder proposals. On November 17, 2025, the SEC announced that it would no longer provide its views or a substantive response to no-action requests for the upcoming proxy season, with a limited exception for no actions based on certain state law issues.

Background

In addition to litigation, shareholders can express concerns and their priorities to the companies in which they invest by making nonbinding proposals. Frequent topics for proposals include opposition to executive pay packages; requests to separate the board chair and CEO positions or eliminate dual-class voting; and requests for the company to provide disclosures on issues like political lobbying, human capital management or plans for navigating environmental issues. If the proposal meets certain criteria, including that it was filed timely and relates to an appropriate topic, the company must include the proposal on its proxy for a vote by all shareholders. Historically, if a company received a shareholder proposal that it thought was improper and did not want to include on the proxy, it would go to the SEC for an advisory opinion that it could take no action on the proposal—hence, referred to as the “no-action” process. The no-action process allowed the SEC to referee these disputes, which many viewed as a way to ensure that companies and shareholders alike had a fair process.

In its November announcement, the SEC stated that if a company submitted a no-action letter and stated that it had a reasonable basis to exclude the proposal based on the applicable regulation, prior published guidance or judicial decisions, the SEC would confirm in writing that it could exclude the proposal based on that representation. Critics say this essentially gives blanket approval to what are typically complex, debatable questions of law and policy.

Fiduciary Considerations

Investors and many companies alike have expressed concern about the change. Investors have heightened concerns about their proposals being improperly omitted. Public companies and their advisors are concerned that the unpredictable environment may lead to burdensome litigation. The SEC stated that its abandonment of the no-action process is for the current proxy season due to “current resource and timing considerations.” It is not clear whether the SEC will extend this practice in future years or revert to the past protocol.

Fiduciaries of institutional funds that are typically engaged in making shareholder proposals may wish to pay particular attention this year to how companies respond. In addition, as fiduciaries consider how to vote their proxy and any policies or guidance they provide proxy advisors or related consultants, they may wish to consider how companies have reacted to this situation. For instance, a fund may wish to discuss with its advisors whether—for those companies in which the fund has significant holdings or a particular concern about long-term value—the fund should create a process to determine whether proper proposals have been omitted and how (if at all) that bears on the fund’s view of the company’s leadership and its vote on issues like executive compensation and director elections.

A federal judge granted preliminary approval to a $34 million settlement of an investor lawsuit accusing Deloitte of issuing misleading audit reports about the progress of a massive South Carolina nuclear energy expansion, ignoring red flags about fraudulent numbers that would doom the project.

Reached on behalf of shareholders in SCANA Corp., a regulated South Carolina utility that was sold in 2018 after exposure of the fraud left the company in shambles, the settlement marked a rare victory for investors seeking to hold independent auditors accountable under the heightened liability standards of federal securities laws. If approved, the settlement will be among the top five auditor settlements of the last decade. Deloitte had been SCANA’s auditor for more than 70 years.

Cohen Milstein represents lead plaintiff International Brotherhood of Electrical Workers Local 98 Pension Fund as sole lead counsel in the lawsuit, which stems from a planned $9 billion expansion of the Virgil C. Summer Nuclear Station in Jenkinsville, South Carolina. In what is considered the largest fraud in South Carolina history, SCANA and its corporate executives deceived shareholders, regulators, and ratepayers about mounting costs and delays that disqualified the company from vital tax credits. In issuing false and misleading clean audit reports on SCANA’s financial statements, investors alleged, Deloitte breached its duties as SCANA’s independent auditor under Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

Specifically, investors claimed that Deloitte failed in its role of gatekeeper, deceiving investors about SCANA’s accounting for the project. Investors claimed that Deloitte gave unqualified, “clean” audit reports on SCANA’s financial statements and internal controls over financial reporting, that misled investors into believing that SCANA would complete the nuclear project in time to obtain $1.4 billion in nuclear tax credits. Deloitte allegedly did so despite possessing voluminous evidence that SCANA could not possibly achieve this goal. Investors also alleged that had it not been for Deloitte’s signoff on SCANA’s materially false and misleading financial statements, Lead Plaintiff and the Class would not have purchased their SCANA shares, and certainly not at the prices they paid.

The original suit was filed in 2019, and is pending in the U.S. District Court for the District of South Carolina on behalf of investors who acquired SCANA stock between February 26, 2016 through December 20, 2017, and were damaged by the alleged fraud. In November 2020, the Court denied Deloitte’s motion to dismiss, holding that “even under the heightened standards applicable” in auditor cases, the shareholders plausibly alleged that Deloitte “helped conceal the fraud from investors by blessing” SCANA’s financial statements, which misrepresented the true status of the project and “continued to reassure investors that the project would be completed in time, even though they knew this information was false.”

The Court certified the class in November 2024 and cross-motions for summary judgment were pending at the time the settlement was reached. The case is International Brotherhood of Electrical Workers Local 98 Pension Fund et al. v. Deloitte & Touche, LLP and Deloitte LLP, 19cv03304 (D.S.C.).