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Category Archives: Securities and Commodities

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Financial Institution Regulation, Securities and Commodities

Crypto.com Sues the SEC in Texas ­– Arguments and Implications for the Cryptocurrency Industry

On October 8, 2024, Crypto.com filed a civil complaint against the Securities and Exchange Commission (“SEC”) and each of its Commissioners in the Eastern District of Texas seeking declaratory and injunctive relief.  Crypto.com sued the SEC after the regulator sent it a Wells notice, indicating the Division of Enforcement intended to recommend an enforcement action… Continue Reading
Compliance, Financial Institution Regulation, Securities and Commodities

Spring Has Sprung for Recent Reg NMS Reporting Changes

On March 6, the SEC released its long-anticipated adopting release amending Rule 605.[1]  Separately, in late February, FINRA issued Regulatory Notice 24-05 discussing new FINRA Rule 6151, which requires member firms to provide Rule 606 reports to FINRA. The following provides a brief overview of these recent moves by both regulators.   … Continue Reading
Securities and Commodities

Education Department to Hold Owners, Individuals, Board Members Liable for Higher Education Institutions

Today, the U.S. Department of Education announced it will hold individuals representing corporations or other legal entities, including a member of the board of directors or a chief executive officer, personally liable for the institution of higher education in certain circumstances. Federal Student Aid will require them to sign an institution’s program participation agreement to… Continue Reading
Compliance, Securities and Commodities

SEC Issues Risk Alert on Reg BI Deficiencies Identified During Exams

On Jan. 30, the U.S. Securities and Exchange Commission’s Division of Examinations released a Risk Alert identifying perceived weaknesses in broker-dealers’ compliance with the disclosure, care, conflicts of interest and compliance obligations of Regulation Best Interest. Read on for highlights from the alert and how they reflect the SEC’s evolving expectations during examinations… Continue Reading
Enforcement and Prosecution Policy and Trends, Securities and Commodities

SEC Speaks 2022: Ongoing Efforts to Restore Public Trust, Aggressive Enforcement Agenda

Securities and Exchange Commission officials highlighted a commitment to restoring trust in the agency and aggressive enforcement during the recent SEC Speaks conference. See our alert for analysis of their comments and stated enforcement priorities, which addressed crypto markets, aggressive use of remedies, creditworthy cooperation, the Wells process, aggressive litigation, disgorgement efforts, municipal securities, gatekeeper… Continue Reading
Enforcement and Prosecution Policy and Trends, Securities and Commodities

SEC Focus on Private Fund Advisers Continues With the Publication of EXAMS Risk Alert

On January 27, 2022, the Division of Examinations (“EXAMS”) of the U.S. Securities and Exchange Commission (“SEC”) published a Risk Alert with its Observations from Examinations of Private Fund Advisers. This Risk Alert is one of a series of signals of the SEC’s focus on private fund advisers under Chairman Gensler, including Form PF amendments… Continue Reading
Financial Institution Regulation, Securities and Commodities

2021 Brought SEC Focus on Crypto Exchanges and Lending Platforms

This past year, the U.S. Securities and Exchange Commission followed through on its commitment to aggressively enforce securities laws in digital assets markets. As a result, it sharpened its focus on cryptocurrency exchanges and lending products. Read on for an overview and analysis of SEC activity in cryptocurrency and what to expect in 2022. About… Continue Reading
Securities and Commodities

SEC Advisory Fees Focus Continues as Reflected in Division of Examinations Risk Alert and Chair Gensler Comments

Recent comments from U.S. Securities and Exchange Commission (SEC) Chair Gensler at the Institutional Limited Partners Association Summit and an SEC Division of Examinations (EXAMS) Risk Alert published on the same day highlight the ongoing focus of the SEC on advisory fees, both in the institutional and retail spaces. In Chair Gensler’s remarks, he expressed… Continue Reading
Anti-Bribery and Corruption, Sanctions, Trade Embargo, and Export Controls, Securities and Commodities

The Perils of Global Expansion: World’s Largest Ad Agency Sanctioned $19 Million for FCPA Violations, Insufficient Controls

Global expansion without adequate controls is asking for trouble. That’s the lesson of a $19 million settlement between WPP, the world’s largest advertising agency, and the U.S. Securities and Exchange Commission (SEC) to resolve alleged violations of the Foreign Corrupt Practices Act (FCPA). According to an SEC order memorializing the settlement, WPP’s trouble began when… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

FINRA’s Important Reminder to Firms—Don’t Forget to Supervise Third-Party Vendors

Overview Broker-dealers, like most companies, rely on third-party vendors for a wide variety of functions.  This common practice of outsourcing does not relieve a broker-dealer of its regulatory compliance and supervision obligations over the outsourced functions.  Accordingly, management and supervision of third-party vendors present important issues that merit careful attention from regulatory, compliance, and legal… Continue Reading
Securities and Commodities

A New Avenue for Defendants in Securities Fraud Class Actions: Supreme Court Holds “Generic” Nature of Statements Is “Important Evidence” of Price Impact at Class Certification

Monday, the U.S. Supreme Court issued a highly anticipated ruling holding that the generic nature of an alleged misrepresentation may be important evidence of price impact to rebut the Basic presumption of reliance and thus should be considered at class certification. See our post on the Class Action Countermeasures blog.… Continue Reading
Compliance, Securities and Commodities

SEC 2021 National Exam Program Examination Priorities

On March 3, 2021, the Securities and Exchange Commission’s Division of Examinations (EXAMS) (formerly the Office of Compliance Inspections and Examinations (OCIE) released its 2021 examination priorities. Notably, while the majority of the examination priorities echo OCIE priorities from prior years, this year’s EXAMS priorities include a greater focus on climate-related risk and environmental, social,… Continue Reading
Fraud, Deception and False Claims, Securities and Commodities

Responses Matter: Securities Fraud Sentence Shows the Value of a Sound Response to a Government Investigation

It’s an old lesson in government investigations, but one worth repeating. Conduct during an investigation can matter as much as the conduct under investigation – sometimes even more. High-profile prosecutions of the past have shown the severe consequences of mistakes in responding to government investigations. Martha Stewart went to prison not for insider trading but… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

CFPB’s “Change of Direction” After One Month: New Goals, More Attorneys

In the month since he became Acting Director of the Consumer Financial Protection Bureau, David Uejio has implemented a “change of direction” at the agency, making sweeping announcements on a weekly basis. Read our complete commentary on McGuireWoods’ Consumer FinSights blog, which assesses where the CFPB stands after the Biden administration’s first month and the likely… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

Consolidated Financial Account Reports and Use of Vendors: FINRA Continues Regulatory Scrutiny – What’s Old is New

Overview Consolidated financial account reports can offer a broad – all-encompassing — view of customers’ investments regardless of where the assets are held and may even include non-securities assets. Customers often demand them and firms and financial advisers provide them. FINRA has had these types of communications to customers on its radar screen for years.… Continue Reading
Securities and Commodities

Congress Affirms and Extends SEC’s Disgorgement Powers

On January 1, 2021, the United States Senate joined the House of Representatives in overriding President Trump’s veto, and the National Defense Authorization Act (NDAA) became law. The NDAA was passed chiefly to authorize appropriations for military activities of the Department of Defense. The NDAA also includes a provision codifying the U.S. Securities and Exchange… Continue Reading
Compliance, Securities and Commodities

Pitfalls to Avoid in Investment Adviser Compliance Programs: SEC OCIE Risk Alert

On November 19, 2020, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a risk alert, OCIE Observations: Investment Adviser Compliance Programs, to provide the industry with insights regarding their findings in their examinations relating to Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Advisers Act”) or the Compliance Rule.… Continue Reading
Compliance, Financial Institution Regulation, Securities and Commodities

OCIE Finds Supervision Failures at Multiple-Branch Office Investment Advisers

On November 9, 2020, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced the results of its examination of nearly 40 SEC-registered investment advisers that operate multiple branch offices (the “Risk Alert”). Most of the firms examined conducted their advisory business out of at least 10 branch offices. OCIE observed a wide range of… Continue Reading
Financial Institution Regulation, Securities and Commodities

Yet Another Mutual Fund Fee Issue or “Death by a Thousand Cuts”: FINRA Sweep of Rights of Reinstatement Waivers

What is the Issue? It may not be “death by a thousand cuts” but it may feel like it, as yet another mutual fund fee issue is being raised by the regulators. FINRA issued a “targeted examination letter” focused on Rights of Reinstatement (“RoR”) due to customers in certain mutual fund sales and purchases. RoRs… Continue Reading
Compliance, Securities and Commodities

2020 NASAA Fintech and Cyber Security Symposium – A Download of Key Comments

On October 27, the North American Securities Administrators Association[1] held its 2020 symposium on Fintech and Cybersecurity. A key theme of the symposium was the impact that the pandemic has had on fintech, cybersecurity, and regulating the financial markets  –  given that regulators and securities industry professionals are largely working from home. The panelists also… Continue Reading

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