Home > News > Regulation > Kim Kardashian Agrees to Pay SEC $1.26 Million for Touting Crypto
Regulation

Kim Kardashian Agrees to Pay SEC $1.26 Million for Touting Crypto

Reality TV star also agreed not to promote digital tokens for three years for failing to disclose promotional payment.

By Michael Katz



Cryptocurrency hasn’t been a profitable investment for reality TV star Kim Kardashian. At least promoting it hasn’t been, as she owes the Securities and Exchange Commission $1.26 million for being paid $250,000 to promote a digital token on her Instagram account.

Kardashian settled charges filed by the SEC for touting to her 225 million Instagram followers a crypto asset security offered and sold by EthereumMax without saying that she was being paid for the promotion. Without admitting or denying the SEC’s findings, Kardashian agreed to pay approximately $260,000 in disgorgement for her promotional payment plus interest, as well as a $1 million penalty. Kardashian also agreed to not promote any crypto asset securities for three years, and to cooperate with the SEC’s ongoing investigation.

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“Kardashian fully cooperated with the SEC from the very beginning, and she remains willing to do whatever she can to assist the SEC in this matter,” Kardashian’s lawyer Michael Rhodes said in a statement released to media outlets. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”

Kardashian is the latest celebrity to be charged by the SEC and pay fines for touting a digital asset without disclosing their compensation. Boxer Floyd Mayweather Jr., music producer DJ Khaled, and actor Steven Seagal have all settled charges with the SEC in recent years. However, Kardashian is forking over far more than the others – more than twice as much as Mayweather, over four times as much as Seagal, and more than 10 times as much as DJ Khaled.

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement. “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”

According to the SEC’s cease-and-desist order, Kardashian promoted EthereumMax’s offering on Instagram with a post asking “Are you guys into crypto?” along with an introductory video stating that she had a “big announcement.” The post contained a link to the EthereumMax website, which provided instructions on how to purchase EMAX tokens.

“Kardashian did not disclose that she had been paid by EthereumMax or the amount of compensation she received from EthereumMax for making this post,” said the SEC’s order.

The SEC also noted in its cease-and-desist order that Kardashian’s crypto promotion occurred well after the regulator warned in a July 2017 investigative report that those who offer and sell securities must comply with the federal securities laws. The order also cited a statement issued later that year in which the SEC said that any “celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.” The SEC added that a failure to do so “is a violation of the anti-touting provisions of the federal securities laws.”

It is unclear whether Kardashian had read the 18-page SEC report or statement issued by the regulator four years earlier.

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Home > News > Newsmakers > The Case for ESG Investing, From NTAM’s Sustainability Chief
Newsmakers

The Case for ESG Investing, From NTAM’s Sustainability Chief

Julie Moret spells out the need to screen problem investments that could blow up.

By Larry Light



Sustainable investing lately has become politicized. Numerous GOP-controlled state governments have sought to ban ESG-oriented investing from public portfolios they control. Democratic state officeholders have pushed in the opposite direction.

The crux of the campaign against using environmental, social and governance investing precepts is that these supposedly will lead to poor results—when only financial assessments should be employed to pick investments. But to Northern Trust Asset Management’s Julie Moret, the objection is puzzling. “I don’t understand why they have called out [ESG investments] as non-financial,” she says in an interview.

ESG is “an additional screen” to be used in the prudent due diligence that an investment requires, says Moret, global head of sustainable investing and stewardship at NTAM.

Her argument is that ESG is a necessary component of risk management. The garment industry, for instance, uses a lot of water to dye clothes. The water’s disposal is an important element in how a clothing maker impacts its local community, she points out. An environmental problem could harm the company—something that may not be apparent in traditional financial statements.

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Investors “need to understand” how corporate actions “can lead to impairment and destruction” of a business they plug money into, she reasons.

“By not trying to understand” how ESG considerations factor in, investors “are not doing their fiduciary duty,” she declares.

On the other hand, to some, “ESG has become a panacea” in a quest “to find the perfect company,” Moret observes. No such company exists, she adds, and adopting ESG evaluation to find it “is simplistic.”

One problem, she finds, is that sustainability measures often are inadequate and “do not capture the whole pie.” An obstacle is that large companies are better at disclosing ESG risks than smaller ones, who lack the resources. In addition,  “The plethora of frameworks” to gauge ESG “can be confusing,” she notes. Two standout pathways to disclosure, she says, are provided by the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board.

Unfortunately, Moret says, “information gaps” can lead to “mispriced risk and inefficient capital allocation.”

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So Are ESG Investments Lousy, or Not?

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19 GOP Attorneys General Slam BlackRock Over ESG Investments

 

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