Category Archives: Compliance

FINRA Holds Regulator Forum on Distributed Ledger Technology

FINRA recently held a Blockchain Symposium which included a Regulator Forum with representatives from FINRA, OCC, CFTC, the Federal Reserve  and the SEC.  The regulators discussed the work they have undertaken to assess the use of DLT in the financial services industry, and the regulatory considerations associated with potential uses of DLT. The Symposium follows FINRA’s publication of a report earlier this year discussing the implications of DLT for the securities industry and soliciting comments from market participants.

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Additional contributor to this post:

Issa J. Hanna,  issahanna@eversheds-sutherland.com

The Final Rule: The Fifth Request for Public Comments

On June 29, 2017, the Department of Labor released a request for information, seeking public comments yet again on its new “investment advice” fiduciary definition and related exemptions which became applicable on June 9.

  • This is the fifth request for public comments under the Administrative Procedure Act since DOL undertook this rulemaking in October 2010, and the second in the last four months.
  • There could be a sixth iteration later this year, in connection with any proposed changes to the Final Rule and/or delay of the January 1, 2018, date for compliance with the full conditions of the Best Interest Contract Exemption, the Principal Transaction Exemption and PTE 84-24.
  • In addition, on June 1, US Securities and Exchange Commission Chair Jay Clayton issued a statement requesting comments on the standard of conduct under the securities laws that should be applicable to investment advisers and broker-dealers serving retail investors, which includes retirement investors.

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Additional contributor to this post:

W. Mark Smithmarksmith@eversheds-sutherland.com

 

Sleuthing Through State Elder Financial Exploitation Laws— A Morass for Broker-Dealers

The issues for broker-dealers are complicated because a good deal of research (or sleuthing) needs to be undertaken to grasp the breadth of potential liability a broker-dealer may face for not reacting to an indication of senior exploitation among the broker-dealer’s client base. This is an area where red flags mean everything and consistency in the law is a goal still to be achieved. In short, each state endeavors to protect its elderly and vulnerable populations from financial exploitation in its own unique way. A broker-dealer cannot wait until a particular case of potential financial exploitation presents itself; the complexity of determining the broker-dealer’s obligations under state law, if not researched in advance, could cause a broker-dealer to unwittingly expose itself to civil and/or criminal liability.

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Additional contributors to this post:

Holly H. Smith,  hollysmith@eversheds-sutherland.com

The Final Rule: June 9 is the Launch Date After All

With its announcements of May 22, 2017, starting with an op-ed in The Wall Street Journal, the Department of Labor confirmed that, absent last-minute action in the courts or by Congress, its new “investment advice” fiduciary definition and related exemptions will become applicable on June 9, on the terms specified on April 4. DOL also updated its stated enforcement policy for 2017 and released a third set of FAQs, which primarily address transition period issues.

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Additional contributor to this post:

W. Mark Smithmarksmith@eversheds-sutherland.com

FINRA Publishes New Guidance on Social Networking Websites and the Application of Rule 2210

In Regulatory Notice 17-18, FINRA provided additional guidance, in the form of 12 FAQs, on its earlier regulatory notices relating to the use of social media and the application of FINRA Rule 2210 (Communications with the Public). Specifically, the FAQs expand on the areas of recordkeeping, third-party posts and the use of hyperlinks to third-party sites. FINRA acknowledged that the use of social media and digital communications has expanded in the time since the last regulatory notice on the use of social media by member firms, which was in Regulatory Notice 11-29 in 2011.

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Additional contributor to this post:

Bradley Bermanbberman@mofo.com