Category Archives: Enforcement

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.

Compliance, Enforcement, Regulatory, Standard of Care

Proposed bipartisan legislation aims to clarify the crypto regulatory landscape

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New, sweeping bipartisan legislation proposes to define the contours of regulating digital assets and the crypto industry. Among other things, the bill:

  • Gives the CFTC primary jurisdiction over digital assets and exchanges, limiting the SEC’s ability to regulate the industry;
  • Calls for federal and state cooperation in monitoring and regulating the various aspects of the industry, including tax and money transmitter issues; and

Includes a number of measures designed to address cybersecurity and ESG concerns.

Read more here.

Compliance, Enforcement, Regulatory

DOJ brings first-ever NFT “insider trading” case

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The US Department of Justice and Federal Bureau of Investigation announced the first-of-its kind indictment of an “insider trading” scheme involving non-fungible tokens (or NFTs).

  • A former employee of an online marketplace for NFTs allegedly used confidential business information for personal financial gain.
  • The charged individual used new blockchain technologies to conceal the proceeds of the alleged illicit activity.
  • The DOJ brought charges without characterizing NFTs as securities.

Read more here.