Back in June 2019, Matt Levine wrote a column for Bloomberg Opinion called “Everything Everywhere Is Securities Fraud.” The idea stuck so well that people still repeat it. A public company does something bad (it contributes to global warming, an executive gets accused of harassment, customer data leaks, even the way it treats killer whales) and sooner or later shareholders sue it for securities fraud. The theory is simple: the company told investors everything was fine, it wasn’t, and the stock dropped.
Seven years later, here is my reply, from somebody who actually buys stocks and crypto with his own money. Which has in many cases held shares like Bitfarms for 7 months only to watch 40% value just about realize a complete capitalization of ” A loser ” evaluation going public. Also I was defrauded in CHSD no recovery btw and I have so much evidence many do wonder why it takes me so long to give someone 25 years in prison.
Where he’s right
Securities law has become the catch-all. If there’s no specific law that punishes a company for a bad act, there’s almost always a statement somewhere, in an annual report, on an earnings call or in a press release, that made things sound better than they were. Lawyers can sue on that. The cases are fairly easy to file and the damages can be huge, because they’re measured by how far the stock fell, not by how much harm the bad act did.
And here’s the part people forget: even telling the truth fast doesn’t always save you. Levine pointed out that a company that discloses the bad thing right away can still get sued, on the theory that it never disclosed the conditions and weak spots that let the bad thing happen in the first place. So there’s basically no clean exit. If something goes wrong, there was always a sentence you should have written earlier.
His bigger point is the one that matters. He called securities fraud “a universal regulatory regime.” In other words, anything bad a public company does, or that happens to it, is also securities fraud, and it’s often easier to punish it that way than to regulate the bad thing directly. Securities lawsuits end up standing in for rules that lawmakers never wrote.
This isn’t just a joke from a columnist. Legal researchers have studied it too. Emily Strauss at Duke Law wrote a paper called “Is Everything Securities Fraud?” looking at what she calls event-driven securities suits, where the lawsuit follows a disaster instead of an accounting scandal.
Where I push back
Here’s what bothers me as a small investor. When a company settles one of these suits, who pays? The company does. And who owns the company? The shareholders. So in a lot of cases the people who still own the stock are paying the people who used to own it, and the lawyers take a big cut in the middle. The guy who lost a few hundred dollars gets a cheque for pennies, years later, if he even notices the claim form.
That isn’t justice for the little guy. It’s a toll booth. Securities fraud became the tool for everything because it’s the tool that pays, not because it’s the best way to fix the actual problem. If securities fraud really is the universal regulator, then it’s a regulator that sends the bill to the wrong people. The executives who caused the mess usually keep their bonuses. The polluter keeps polluting. The shareholders, including the small ones who had nothing to do with it, pay the fine.
The fraud most people actually meet
The other thing is that most regular people never get hurt by a misleading sentence in a 10-K. They get hurt in their inbox. This week I got a phishing email pretending to be my brokerage, asking me to “secure” my account. Last month it was a fake “funds recovery” pitch promising to hand back crypto I never lost, if I would just send my phone number. None of that gets a class action. Nobody’s suing the guy running a phishing kit from a rented server.
So yes, everything everywhere is securities fraud if you’re a public company with deep pockets. For ordinary investors the real fraud is cruder, faster and almost never punished. That’s the gap I care about.
Crypto makes it even messier
In crypto, the fight for years hasn’t been whether something was fraud but whether it was a security at all. If everything a public company does wrong becomes securities fraud, then the question “is this token a security?” decides whether a whole set of rules applies or none of them do. That’s a strange way to protect anyone.
My approach is boring on purpose. I say what I own. I hold positions in some of the things I write about, including tokens tied to my own project, and I say so every time. I put the numbers and the method out where anyone can check them. If you’re reading this, do the same with anything you buy: read the disclosures, keep your records, and never hand your login or a “release fee” to anyone who emails you first.
If you want to see how I do it
Over at Strategic Crypto Reserve I try to keep things out in the open. There’s a plain-English walkthrough on how a crypto reserve actually gets put together, my notes on which reserve strategies hold up and which don’t, a board of live charts for the companies building AI data centers, and my BigBear.ai write-up, position disclosed up front. And if you’re on the building side, you can put real numbers on an AI build before anyone sells you a dream.
This is my opinion, not legal or investment advice.