Category Archives: Enforcement

Compliance, Enforcement, Regulatory, Standard of Care

SEC’s Division of Examinations 2023 Priorities

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The SEC’s Division of Examinations recently released its Examinations Priorities 2023 report.  In fiscal year 2022, they examined approximately 15% of the registered investment adviser population, and over 360 broker-dealers examinations, and, together with FINRA, they examined nearly half of the approximately 3,500 registered broker-dealers in fiscal year 2022.  They continue to focus on their “four pillars”:  (1) promote compliance; (2) prevent fraud; (3) monitor risk; and (4) inform policy.

ACA’s take on the priorities can be found here.

 

 

Compliance, Enforcement, Regulatory, Standard of Care

SEC’s 2024 Investor Advocate Objectives Report

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Section 4(g) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78d(g), requires the Investor Advocate to file two reports per year with the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.  A Report on Objectives is due no later than June 30 of each year, and its purpose is to set forth the objectives of the Investor Advocate for the following fiscal year. This report contains a summary of the Investor Advocate’s primary objectives for Fiscal Year 2024, beginning October 1, 2023. A Report on Activities is due no later than December 31 of each year, and it describes the activities of the Investor Advocate during the preceding fiscal year. For Fiscal Year 2023, the activities and accomplishments of the Office will be reported not later than December 31, 2023. Here is a link to the FY24 Report on Objectives

Compliance, Enforcement, Standard of Care

Enforcement appears as messages disappear part II: Steep penalties imposed in personal messaging cases

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Sixteen firms settled with the Securities and Exchange Commission and Commodity Futures Trading Commission for failing to maintain and preserve business-related communications.

  • Total civil penalties for these settlements and similar actions brought in December 2021 exceed $2 billion.
  • The settlements stem from a risk-based investigation into whether broker-dealers, swap dealers, and other registrants are retaining business-related communications made on personal devices.
  • Companies can take certain proactive measures now to ensure their record retention policies and controls sufficiently mitigate risk stemming from employee use of text messaging applications, including third-party platforms such as WhatsApp, on their personal devices.

Read more here.

Compliance, Enforcement, Regulatory, Standard of Care

SEC’s IM Division announces it will allow Oct. 26, 2017 SIFMA no-action letter to expire on July 3, 2023

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From Morgan Lewis’ LawFlash, the SEC’s division of Investment Management’s announcement that it would allow its October 26, 2017 no-action letter to SIFMA to expire on July 23, 2023 “pulls the rug out from under ‘Hard Dollar’ research arrangements,” and raises questions about the possible investment adviser status of broker-dealers that, after that date, accept cash or “hard dollar” payments for research from investment managers subject to the EU Markets in Financial Instruments Directive II.

Read more here.

Compliance, Enforcement, Standard of Care

Recent SEC Settlement Suggests CCOs Have Target on Their Backs

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From Brian Rubin and Adam Pollet in Corporate Compliance Insights:

The SEC’s prosecution of chief compliance officers remains a fraught and controversial topic. A recent SEC enforcement settlement with a CCO and a registered investment adviser could raise even more questions about the role of CCOs and what standards the SEC uses in sanctioning them.

Read why here.