Miguel Lopez New York Southern District Judge Katherine P. Failla highlighted the U.S. Securities and Exchange Commission’s (SEC) role in sanctioning Coinbase’s Initial Public Offering (IPO), implying that the Commission could have scrutinized the process more closely. Judge Failla raised questions about the SEC’s assumption that greenlighting Coinbase’s S-1 form for public listing had “no consequences,” emphasizing that the commission had the opportunity to flag issues with Coinbase’s operations.
SEC vs. Coinbase: Judge Failla’s Doubts About the Regulator’s Role in Coinbase IPO Approval
Judge Katherine P. Failla, from the Southern District of New York, brought to light the SEC’s conduct in authorizing Coinbase’s IPO back in 2021. She suggested that the commission could have taken steps to identify potential issues with the company’s business model prior to its approval for listing on Nasdaq.
During the pre-motion conference held on July 13, Judge Failla expressed interest in the SEC’s approval process for Coinbase’s S-1 form, which outlined the company’s business model for its public listing.
Judge Failla quizzed SEC attorney Peter Mancuso on this topic, asking:
Should I attribute some importance, or perhaps none, to the fact that the commission issued the S-1 and didn’t raise an alarm about potential securities law violations?
Mancuso countered that S-1 approval does not equate to an “endorsement of a company’s entire operation.” Yet, Judge Failla continued to probe, showing “skepticism” about the SEC’s viewpoint. She further stated:
Couldn’t the SEC have instructed them to register as a securities exchange? That was within the SEC’s jurisdiction, wasn’t it?
Although Mancuso claimed he couldn’t “really comment on that,” Judge Failla noted that there was nothing preventing the commission from doing so.
Further Criticism
The conversation returned to the topic of Coinbase’s IPO approval later in the discussion, with Steven Peikin of Sullivan & Cromwell challenging the commission’s stance. He asserted:
The truth is, other judges have shared your sentiment and have indicated, on numerous occasions, that the commission’s review and approval of a registration statement carry some legal significance.
One of the filings prior to the pre-motion conference mentioned Coinbase’s IPO approval as part of the company’s defense. It stated that the commission permitted Coinbase’s shares “to be sold to millions of retail and institutional investors.” This implied a contradiction with the recent lawsuit, as six of the twelve assets considered securities by the commission were already listed on Coinbase’s trading platform at the time.
We want to hear your thoughts on Judge Failla’s stance regarding the SEC’s approval of Coinbase’s IPO. Share your insights in the comments section below.
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Frequently Asked Questions (FAQs) about SEC’s Approval of Coinbase IPO
What was Judge Katherine P. Failla’s critique of the SEC’s role in Coinbase’s IPO?
Judge Katherine P. Failla expressed skepticism about the SEC’s approval process for Coinbase’s IPO, suggesting that the agency could have been more thorough in its scrutiny of the company’s business model and operations. She questioned the notion that approval of the S-1 form meant “nothing,” arguing that the SEC could have flagged potential legal issues.
What did SEC attorney Peter Mancuso say in response to Judge Failla’s questions?
Peter Mancuso defended the SEC’s role by stating that the approval of an S-1 form doesn’t constitute a complete endorsement of a company’s entire operation. When questioned about whether the SEC could have asked Coinbase to register as a securities exchange, he said he couldn’t “really comment on that.”
How did Steven Peikin of Sullivan & Cromwell react to the SEC’s stance?
Steven Peikin challenged the SEC’s stance on the approval of Coinbase’s IPO. He argued that other judges have shared Judge Failla’s sentiment, asserting that the commission’s review and approval of a registration statement carry some legal significance.
What contradiction was pointed out in relation to Coinbase’s IPO approval and the recent lawsuit?
A contradiction was identified between the SEC allowing Coinbase’s shares to be sold to millions of investors, and the recent lawsuit suggesting that some assets listed on Coinbase’s trading platform were considered securities by the commission. This contradiction was used as part of Coinbase’s defense in the pre-motion conference.
5 comments
judge failla totally right. sec shudve done more checks b4 approving coinbase’s ipo. they had the power to stop it!
SEC needs 2 b more accountable! how can they say approving s1 form is like saying nothing? doesn’t make sense! failla raised valid concerns!
great to see judges like failla questioning the sec’s actions. they shudve looked deeper into coinbase’s operations b4 giving the greenlight. more scrutiny needed!
sec’s stance on coinbase ipo approval is questionable. other judges agree with failla that it carries legal weight. the contradiction with the recent lawsuit is concerning. sec needs to explain!
sec should’ve said “watch out, guys” to coinbase! they had the power to demand registration as a securities exchange. failla is right to be skeptical. sec needs to do better job!