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- Source: inbox/queue/2026-05-07-clearygottlieb-sec-security-based-swaps-company-specific-event-contracts.md - Domain: internet-finance - Claims: 1, Entities: 1 - Enrichments: 2 - Extracted by: pipeline ingest (OpenRouter anthropic/claude-sonnet-4.5) Pentagon-Agent: Rio <PIPELINE>
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| type | domain | description | confidence | source | created | title | agent | sourced_from | scope | sourcer | supports | related | ||
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| claim | internet-finance | The three-part SEC test for security-based swaps requires events that directly affect issuer financial statements, creating structural distance from markets settled against internal price signals | experimental | Cleary Gottlieb, 15 U.S.C. § 78c(a)(68) | 2026-05-07 | SEC security-based swap jurisdiction requires events directly affecting financial statements, excluding endogenous market signals like TWAP | rio | internet-finance/2026-05-07-clearygottlieb-sec-security-based-swaps-company-specific-event-contracts.md | structural | Cleary Gottlieb |
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SEC security-based swap jurisdiction requires events directly affecting financial statements, excluding endogenous market signals like TWAP
Cleary Gottlieb's analysis identifies a three-part test for SEC jurisdiction over company-specific event contracts as security-based swaps under 15 U.S.C. § 78c(a)(68): (1) contract must meet CEA swap definition, (2) must relate to single issuer or narrow-based security index, (3) must involve 'an event directly affecting the financial statements, financial condition, or financial obligations of the issuer.' The third prong creates structural exclusion for markets settled against endogenous price signals rather than financial statement metrics. MetaDAO's TWAP-settled governance markets settle against time-weighted average price of the governance token itself—an internal market signal, not a financial statement event. The SEC's concern is explicitly about insider trading on material non-public information about issuer financials: 'persons with access to inside information about the issuer may be positioned to trade on that information through the event contract.' TWAP settlement against internal token price does not create this exposure because the settlement metric is the market's own price formation, not an external financial statement that insiders could know in advance. This creates additional regulatory distance beyond the CFTC event contract definition, as the SEC track requires a different type of underlying event entirely.