Facebook’s top execs took home hefty bonuses in the second half of 2020, partially as a reward for the company’s ‘election integrity efforts’

Mark Zuckerberg at Georgetown University
Facebook CEO Mark Zuckerberg.

  • Facebook executives got 110% bonuses in the second half of 2020, according to a new SEC filing.
  • The bonuses were partially tied to Facebook’s “election integrity” efforts.
  • CEO Mark Zuckerberg doesn’t participate in the employee bonus program.
  • Visit the Business section of Insider for more stories.

Facebook CEO Mark Zuckerberg’s two lieutenants got a big pay day for their work around last year’s election: COO Sheryl Sandberg and CFO David Wehner got just shy of $1 million in bonus compensation for the second half of 2020.

Those bonuses, awarded at 110%, were at least partially tied to “election integrity efforts in connection with the U.S. 2020 elections,” according to an SEC filing from the company first spotted by The Information.

Ahead of the November 2020 elections, Facebook rolled out a number of measures intended to curb misinformation and promote voting.

The company added labels to all posts about voting that came from federal elected officials and candidates, it paused political ad buying for months, and opened an information center intended to inform users about voting laws. Those efforts were apparently considered a success if the bonus payouts are any indication.

Read more: Some Lululemon retail employees say there is an environment of ‘toxic positivity,’ where workers feel pressure to share personal information with managers and constant feedback can feel like bullying

In the years following the 2016 US presidential election, Facebook struggled with how to moderate speech and advertising from politicians and political campaigns.

CEO Mark Zuckerberg has remained steadfast in his argument that political advertising is equivalent to political speech, and that political speech shouldn’t be moderated by the social media giant.

“In a democracy it’s really important that people can see for themselves what politicians are saying so they can make their own judgments,” Zuckerberg said in a late 2019 interview with CBS This Morning cohost Gayle King. “I don’t think that a private company should be censoring politicians or news.”

Following the 2020 US election, as former President Donald Trump repeatedly insisted that the election had been “stolen” and Trump supporters stormed the US Capitol building, Facebook took the unprecedented step of outright banning Trump from its platforms.

“The shocking events of the last 24 hours clearly demonstrate that President Donald Trump intends to use his remaining time in office to undermine the peaceful and lawful transition of power to his elected successor, Joe Biden,” Zuckerberg said in January. “The risks of allowing the President to continue to use our service during this period are simply too great.”

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The SEC says it’s looking closely at the wild earnings projections attached to many SPAC offerings

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst
FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door

The US Securities and Exchange Commission issued a warning to blank-check companies presenting projections that only give an optimistic outlook of future growth. The agency added that it will “look carefully” at SPAC filings and disclosures as well as those of their private targets.

John Coates, the agency’s acting director for the corporation finance division, said on Thursday that a company would be on “shaky ground” if it only disclosed favorable projections and omitted “equally reliable but unfavorable projections.”

Special purpose acquisition companies or SPACs have been booming, enabling many pre-revenue startups to go public. SPACs are essentially shell companies seeking to merge with private companies with the intention of taking them public. SPACs are often considered a cheaper, faster alternative to a traditional IPO.

SPAC sponsors have also generally been allowed to more freely give projections of future growth than is allowed for companies going public via traditional IPO, which are not allowed to broadcast future sales or earnings.

Coates pointed to the Private Securities Litigation Reform Act safe harbor, a legal liability SPACs often refer to when making optimistic forward-looking statements.

“This…is the reason that sponsors, targets, and others involved in a de-SPAC feel comfortable presenting projections and other valuation material of a kind that is not commonly found in conventional IPO prospectuses,” he said, referring to the safe harbor.

This, he said, raises significant investor protection questions, and is why he is calling on the agency to treat SPAC deals with the same level of scrutiny as IPOs.

“Any simple claim about reduced liability exposure for SPAC participants is overstated at best, and potentially seriously misleading at worst,” Coates said. “Indeed, in some ways, liability risks for those involved are higher, not lower, than in conventional IPOs, due in particular to the potential conflicts of interest in the SPAC structure.”

Coates added that while projections are woven into the fabric of business combinations, they have to be fair. Forward-looking information, he said, can be “untested, speculative, misleading or even fraudulent, as reflected in the limitations on the PSLRA’s liability protections.” He floated the possibility of having guidance about how projections and related valuations should be presented.

SPACs have attracted a number of high-profile investors including famed fund manager Bill Ackman and billionaire Chamath Palihapitiya. Celebrities have also joined the bandwagon, with icons such as baseball star Alex Rodriguez and tennis legend Serena Williams backing recent SPAC offerings.

Regulators have recently turned their eye to the soaring market. On March 11, acting SEC Chair Allison Herren Lee said that SPAC returns don’t warrant the “hype” they’re getting.

Last year, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But by the fourth month of 2021 alone, data already show 306 SPACs that raised $98.3 billion, comprising 79% of all public offerings.

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The SEC’s ‘crypto mom’ says it would be foolish for the US government to ban bitcoin since people can’t be stopped from trading in it

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Bitcoin advert on a London bus during the third lockdown of the coronavirus pandemic.

  • The SEC’s “crypto mom” Hester Peirce said it would be foolish for the US government to ban bitcoin.
  • It’s hard to stop people from trading digital assets even if the government restricts efforts, she said.
  • Peirce is optimistic that the SEC’s new chairman will make a key difference to crypto ETF approval.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

SEC commissioner Hester Peirce said at a virtual event on Wednesday that the possibility of a bitcoin ban has passed and governmental attempts to do so would be pointless.

“I don’t see how you could ban it,” she said at an “Investing in Crypto” event hosted by MarketWatch. “A government could say it’s not allowed here, but people would still be able to do it,” she added, saying it would be hard to stop anyone from trading in digital assets. “So I think it would be a foolish thing for the government to try to do that.”

Peirce, who hopes 2021 will mark a turning point for crypto regulation, said she wasn’t sure whether a bitcoin exchange-traded fund would be approved just yet since the SEC is in a period of transition. She won the nickname “crypto mom” in 2018 after disagreeing with the SEC’s decision to reject a bitcoin ETF application by the Winklevoss twins.

Regulatory veteran Gary Gensler’s nomination for SEC chairman was approved by the Senate Banking Committee last month. His confirmation will make a big difference to whether a crypto ETF gets approved, Peirce said.

Peirce thinks the US is behind the curve in regulating digital assets in comparison to other countries. But she’s optimistic about Gensler’s knowledge of crypto, and expects to have productive conversations about the space with other regulators soon enough.

“Our approach has been much more of a ‘say no and tell people to wait’ approach, so we need to turn that around, be willing to work to build a framework that is appropriate for this industry,” she said.

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US SEC official warns SPAC dealmakers of the risks and complexities tied to blank-check mergers

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A US markets watchdog official on Wednesday cautioned blank-check company dealmakers about the risks and governance issues that come with raising capital through special-purpose acquisition companies (SPACs).

Paul Munter, the acting chief accountant at the Securities and Exchange Commission, said timelines of such transactions are part of the challenges for private companies that merge with SPACs. That is because their development may still be in early stages.

“Many SPAC acquisition targets may be at an earlier stage in the entity’s development compared to companies that pursue a traditional IPO,” he said in a statement, adding target companies should have a plan to address the demands of becoming public on a speedy timeline.

Munter urged market participants to carefully consider risks, complexities, and challenges in the space, including the consideration of whether target companies are prepared to go public.

SPACs have raised $97 billion across 298 IPOs so far this year, exceeding the previous year’s record of $83 billion raised, according to data from SPACInsider.com.

But March was a rough month for companies in the space as firms and individual investors grew increasingly cautious over SPAC investing. 93% of SPACs that went public in the last few weeks of the month were trading below par value, or $10 per share. JPMorgan said SPAC acceleration may be hitting a peak and could slow for the rest of the year.

Munter made his statement about a week after the regulator wrote to Wall Street banks to seek voluntary information on their SPAC dealings.

“Given the explosion in popularity of SPACs, it’s no surprise that enforcement is asking questions – this is the beginning of what I expect will be heightened scrutiny of trading and disclosures to investors arising from the surge of these transactions,” Doug Davison, partner at law firm Linklaters, said.

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The SEC has awarded nearly $200 million to individual whistleblowers in 2021, beating its annual record

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The Securities and Exchange Commission has given out nearly $200 million in rewards to whistleblowers in 2021, surpassing its annual record.

The regulator awarded $500,000 to a whistleblower on Monday bringing this year’s total number of award recipients to 40 individuals, another record, according to a press release.

The most recent whistleblower action “allowed the Commission and another agency to quickly file actions, shutting down an ongoing fraudulent scheme.” Specific details on the “fraudulent scheme” or the whistleblower’s identity weren’t revealed by the SEC.

The SEC has now awarded roughly $760 million to 145 individuals since issuing its first award in 2012.

The goal of the whistleblower program at the SEC is to “minimize the harm to investors, better preserve the integrity of the United States’ capital markets, and more swiftly hold accountable those responsible for unlawful conduct.”

The Office of the Whistleblower was established by Congress on July 21, 2010 in Section 922 of the Dodd-Frank Act.

Whistleblowers are eligible for an award under the act if they voluntarily provide the SEC with “original, timely, and credible information” that leads to a “successful enforcement action.” Awards for whistleblowers can range from 10%-30% of the money collected when sanctions exceed $1 million.

Payments to whistleblowers are made out of an investor protection fund established by Congress. The fund is financed entirely through “monetary sanctions paid to the SEC by securities law violators.”

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Elon Musk deleted a tweet implying Tesla could be the world’s largest company ‘within a few months’

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Elon Musk.

  • On Friday, Elon Musk implied on Twitter that Tesla could soon become bigger than Apple.
  • Musk quickly deleted the tweet, but not before many users screenshotted and shared it.
  • In 2018, the SEC filed a charge against Musk because of his tweets about Tesla.
  • See more stories on Insider’s business page.

Tesla CEO Elon Musk deleted a tweet on Friday that implied Tesla would become a bigger company than Apple, the world’s largest company, “within a few months”

The conversation on Twitter about Tesla’s market value was started by an account called @WholeMarsBlog. The account often promotes Tesla content and wrote “Tesla is going to be bigger than Apple.”

Musk responded to the tweet indicating that he agreed.

“I think there is a >0% chance Tesla could be the biggest company,” Musk tweeted.

Another user said “I love the direction of that arrow!” Musk responded, “Probably within a few months,” implying the company could soon become more larger than Apple. Tesla’s $584 billion market value was about 30% of Apple’s $2.01 trillion at Friday’s prices.

Musk deleted the tweet shortly after it was sent. He left his original response, but many users took screenshots of his deleted tweet and shared them.

While Tesla and Apple don’t directly compete, that could soon change as the iPhone giant reportedly plans to release its own autonomous electric car by 2024.

JP Morgan analysts have said Tesla may lose its dominance in the electric car industry as more prominent brands step in and take market share. In February, Tesla showed signs it was losing its lead, as the Mustang Mach-E cut into sales.

This is not the first time Musk’s tweets have gotten him in hot water

Some Twitter accounts called for other users to delete their screenshots of Musk’s deleted tweet, out of fear the CEO might face repercussions.

On Thursday, the National Labor Relations Board asked Musk to delete a tweet about Tesla employee’s union efforts. As of publication the tweet is still up.

“Nothing stopping Tesla team at our car plant from voting union,” Musk wrote in 2018. “Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets 22.”

Earlier this month, a Tesla investor sued Musk and the company’s board, claiming Musk’s “erratic” tweets violate a settlement agreement with the Securities and Exchange Commission.

And in 2018, the SEC charged Tesla’s CEO with securities fraud for tweeting that he would take Tesla private if the stock hit $420. As a result of the charge, Musk stepped down as chairman of the company and agreed to steps that would allow his public statements related to Tesla to be screened, though he was not forced to admit any guilt.

Musk’s impact on the stock market via Twitter is well documented. Last year, he tweeted“Tesla stock is too high imo,” and the stock dropped 10%.

He has also been very vocal on social media about investing, including helping to push GameStop stock during the GameStop frenzy, as well as continually promoting bitcoin and dogecoin on his account.

It is unclear whether Musk deleted the tweet on his own or was asked to take the tweet down as part of the the prior SEC agreement.

Tesla did not respond to a request for comment.

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The SEC’s ‘Crypto Mom’ Hester Peirce says selling fractionalized NFTs could be illegal

Commissioner Peirce participates in a U.S Securities and Exchange Commission open meeting
  • SEC commissioner Hester Peirce reminded issuers not to accidentally create investment products.
  • Selling fractionalized NFTs, or NFT baskets could turn them into securities, which are tightly regulated.
  • ‘Crypto mom’ Peirce also thinks the Howey test is not a good way to see if digital assets are securities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Securities and Exchange Commission ‘crypto mom’ Hester Peirce said issuers of non-fungible tokens must be careful they do not accidentally create investment products when selling fractions, or derivatives, of these digital collectors items.

“People are being very creative in the types of NFTs they’re putting out there,” Peirce, who is an SEC commissioner and cryptocurrency supporter, said at Draper Goren Holm’s Security Token Summit on Thursday.

NFTs are designed to be unique and non-fungible, so they are less likely to be securities, Peirce said. However, considering the creative approaches some issuers have been developing, people should be asking questions and being careful, she said.

When selling fractions of individual NFTs, or NFT baskets, “you better be careful that you’re not creating something that’s an investment product, that’s a security”, the so-called “Crypto Mom” said. “The definition of security can be pretty broad,” she said.

NFTs, or non-fungible tokens, have soared in popularity recently and are selling for large sums of money. NFTs are data units, often digital content like a tweet, a meme, a piece of art, or music. Twitter founder Jack Dorsey’s first ever tweet, for example, sold for $2.9 million as an NFT and digital artist Beeple sold a work for almost $70 million, a record high for digital art.

Peirce said the Howey test, which is used to determine whether or not an asset is a security, does not work well for digital assets, as its basic logic does not apply in the same way as it does to physical assets.

Peirce stated the SEC is considering how, and whether, to refine her proposed safe-harbor policy and a revised plan would likely be presented soon. She said she hopes to collaborate with incoming SEC chairman Gary Gensler on this topic and is engaging with the approaches followed by other countries and regulators to help devise a potential regulatory framework.

Peirce’s safe-harbor policy would allow issuers of crypto assets and funds to claim exemption from SEC regulations for three years to protect them from token distribution being classed as securitization immediately. Digital asset investors and creators have shared concerns that SEC regulation would prevent them from being able to set up a broad, decentralized financial system.

“I don’t know how it will all play out, and again, I have a lot to learn from what’s going on in Europe, also what’s happening in Asia, what’s happening in the Caribbean. You know, there are a lot of places that are taking much more forward-looking approaches than we and by ‘forward-looking’, I mean really trying to provide some clarity.”

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SoftBank is under investigation by the SEC following its risky ‘Nasdaq whale’ investments

masayoshi son softbank

The Japanese investing conglomerate SoftBank, which has holdings in household names like Apple, Amazon, Tesla, Uber, DoorDash, and Sprint, is under investigation by the Securities and Exchange Commission, Vice News reported Wednesday.

The agency’s acknowledgment of its investigation follows reporting by the Financial Times last year that revealed SB Northstar, which is controlled by SoftBank CEO Masayoshi Son, as the “Nasdaq whale” behind secretive, risky multibillion-dollar bets on tech stocks during last summer’s market rally.

The SEC disclosed the investigation in response to a public records request from Think Computer Foundation founder Aaron Greenspan, according to the legal transparency group PlainSite.

Greenspan had asked for “any investigative materials” about SoftBank or its web of companies “specifically relating to SoftBank’s trading of stocks and derivatives on those stocks,” according to PlainSite. After initially denying that it had any relevant records, the SEC responded to Greenspan’s appeal by saying that it had records, but couldn’t share them, because “the investigation from which you seek records is active and ongoing.”

SoftBank and the SEC did not respond to requests for comment on this story.

SoftBank faced intense pressure from its major shareholders to unwind its risky options positions after SB Northstar posted $3.7 billion in losses in November, which included $2.7 billion in derivatives losses, the Financial Times reported in November. SoftBank eventually relented to that pressure.

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With GameStop’s stock price still exploding, the ailing game retailer is considering selling new units to fund its future

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WallStreetBets is the name of the popular Reddit forum where the initial GameStop short squeeze began.

  • GameStop’s stock price is still wildly inflated at just over $180 per share as of Tuesday afternoon.
  • The ailing retailer may take advantage of that inflated price by selling new units, it said Tuesday.
  • Those sales would fund the company’s ongoing “transformation” led by activist investor Ryan Cohen.
  • Visit the Business section of Insider for more stories.

Ailing video game retailer GameStop has yet to cash in on the ongoing stock bubble impact its stock.

As of Tuesday afternoon, GameStop was trading at just over $180 per share – a tenfold increase over where it was before the bubble. But that could be about to change, according to a new SEC filing from GameStop.

“Since January 2021,” the filing says, in reference to when the stock bubble emerged, GameStop leadership has been “evaluating” whether it should “potentially sell shares.”

Read more: These are the kinds of charlatans who show up when Wall Street gets weird

One major issue with GameStop selling its own stock during a bubble is, of course, perception: GameStop leadership knows the current stock value is massively inflated, and selling stock right now could look pretty bad.

The filing acknowledges as much with a list of factors that are impacting its decision, including “capital needs and alternative sources and costs of capital available to us, market perceptions about us, and the then current trading price.”

Any money the company made from those sales could be used “to fund the acceleration of our future transformation initiatives,” the filing says. GameStop is currently amidst a “transformation” led by activist investor, board member, and former Chewy CEO Ryan Cohen.

As the leader of a new committee at the company, Cohen is attempting to do for GameStop what he did with Chewy: take on and defeat Amazon in a specific category of ecommerce.

At Chewy, it was pets. At GameStop, of course, it’s gaming.

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Activist investor Ryan Cohen, of RC Ventures, owns 12.9% of GameStop’s shares.

Just over two years ago, in early 2019, GameStop’s stock value fell off a cliff: It dropped from about $16 per share to under $4.

And it stayed in that range for just shy of two years.

Even in 2020, while the video-game business (including GameStop) had huge gains during coronavirus lockdowns, GameStop’s stock price remained in the gutter. As recently as last August, the largest video-game retail chain in the world had a stock value of less than $5 per share.

But in the second half of 2020, with big financial names like Cohen and Michael Burry buying up shares in the ailing retailer, things started looking up. The company’s share value gradually increased until it outright surpassed its pre-collapse value in late 2020.

And then things got really weird: Between January 20 and January 26, GameStop’s stock value leaped from just over $35 per share to north of $140 per share. By January 27, it hit new highs of over $325 per share – an over 8,000% increase from just a few months ago.

Two months later, it’s late March and GameStop’s stock value still hasn’t returned to pre-bubble levels: As of this afternoon, it was trading at just over $180.

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.

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The SEC’s ‘crypto mom’ Hester Peirce hopes 2021 will be a turning point for crypto regulation in the US as she says authorities are spending too much time on its illegal uses

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SEC commissioner, Hester Peirce.

  • The SEC’s “crypto mom” Hester Peirce is hopeful 2021 will be a turning point for US crypto regulation.
  • She said authorities must look at the flipside of cryptocurrencies, rather than focusing on their illicit uses.
  • The SEC’s “ever-moving goalposts” are unfair to firms that plan to launch crypto products, she said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

SEC commissioner Hester Peirce said at a virtual conference last week she hopes 2021 will be a “turning point” for crypto regulation in the US.

Peirce, who has been nicknamed “crypto mom” for her support of digital assets, said US authorities have been spending an unreasonable amount of time focusing on the illegal uses of the technology, rather than on its protective value.

She outlined an exceedingly positive view of cryptocurrencies at the British Blockchain Association’s conference on March 15, saying their ability to function without the need for financial intermediaries could help those “living under the threat of harm by their families, people in their communities, or repressive governments.”

“The disproportionate focus on illicit uses and the underestimation of the protective uses of crypto is one example of how evidence-based rulemaking is not yet the norm in crypto-regulation,” she said. “We can do better, and I hope that this year will mark a turning point for the United States, which in turn may spur other countries similarly to take a more sensible approach to crypto regulation.”

She offered her view on the SEC’s decision-making over approval of crypto exchange-traded products, given that at least 10 firms have filed and so far failed to gain approval for the much-anticipated product. Meanwhile, three exchange-traded funds have already won regulatory approval in Canada.

She said the SEC’s constantly moving goalposts for applicants are “unfair to innovators who spend ever-increasing amounts of money on attorneys and quantitative experts only to find that they have failed to hit a target that has moved once again.”

Peirce thinks regulators should offer more clarity so that traditional financial institutions can engage with cryptocurrencies more confidently. She said massive interest is pressuring the SEC to deal with difficult questions.

“A final regulatory lesson then is that the regulatory work is only just beginning,” she said.

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