Category Archives: Regulatory

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.

Read More Here

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.

Read More Here

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.

Read More Here

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.

Read More Here

Additional contributor to this post:

W. Mark Smithmarksmith@eversheds-sutherland.com

Senior Investors Focus of New “Principal Consideration” in FINRA Sanctions

Last month, FINRA’s National Adjudicatory Council (NAC) introduced new Sanction Guidelines which allow the NAC and FINRA staff to take into consideration the “undue influence” of registered individuals over vulnerable customers in determining appropriate sanction levels. The last update to the Guidelines occurred approximately two years ago, and included changes related to unsuitable recommendations and misrepresentations. Last month’s changes to the Guidelines provide for the first time a “principal consideration that analyzes whether a respondent has exercised undue influence over a customer.” Now listed as a specific factor for adjudicators and FINRA staff to consider in determining appropriate sanctions is  “[w]hether the respondent exercised undue influence over the customer.”

Read More Here

Additional contributors to this post:

Bruce M. Bettigole, brucebettigole@eversheds-sutherland.com

Sarah Razaq Sallis, sarahsallis@eversheds-sutherland.com