From our friends at SEC3, their December Regulatory Roundup, where they provide practical advice on the latest regulatory headlines. They start this issue with the SEC’s 2024 enforcement results, which fell somewhat short after its 2023 banner year. They also say goodbye to SEC Chair Gary Gensler, who tendered his resignation after Donald J. Trump won his presidential bid. Given the president-elect’s views on government, I expect the next chair to have a less aggressive regulatory agenda. For firms following the ongoing drama in the Fifth Circuit Court of Appeals about the Corporate Transparency Act, the current answer as of December 26 is that the requirements to report Beneficial Ownership are stayed. But stay tuned since that answer may change once again. Finally, they have included a few enforcement cases, one on the misappropriation of client funds and two on cherry-picking. Read more here.
Category Archives: Standard of Care
August Regulatory Updates
From our friends at SEC3 , the August regulatory updates you need to know about:
- More Flack on WhatsApp, Hypothetical Performance SmackDown, A Timely Warning on the Pay-to-Play Rule, and Updates to Qualifying Venture Capital Fund Exemption
- 26 More Firms Slammed with $390 Million in Fines for Failure to Retain Texts and Chats
- Adviser Ordered to Stop Using Hypothetical Performance on Public Website
- Adviser Pays $95,000 Fine for Pay-to-Play Foot Fault in a Timely Reminder this Election Season
- Venture Capital Funds Adjustment for Inflation
Read all about them here.
SEC’s Division of Examinations 2024 Priorities
The five key areas that the Division will be examining in 2024 are:
- Climate and ESG-related risks
- Cybersecurity and operational resilience
- Financial technology (Fintech) and digital assets
- Conflicts of interest and fiduciary duties
- Market structure and market events
You can find the full report here.
Celebrating the SEC at 90!
Good people, important problems and workable laws – celebrating the SEC at 90!
On July 17, PLI hosted The SEC at 90: A Celebration and Retrospective in our New York Conference Center. The program, chaired by longtime Securities faculty Clifford Kirsch, featured SEC Commissioner Hester Peirce, author Diana Henriques (Taming the Street and The Wizard of Lies), former SEC Commissioners Robert J. Jackson, Jr. and Troy Paredes, and other expert panelists. Speakers discussed the SEC’s formation, challenges it faces, opportunities in the next 90 years and beyond, and where SEC practice has been, is, and will be.
Common Mistakes in Client Referral Arrangements
According to Richard Chen, RIAs are still making these 3 common mistakes when it comes to client referral arrangements.
1. SEC-registered advisers who pay parties more than $1,000 per year for referrals are sometimes not considering communications made by those referring parties as their own advertisements that are subject to the SEC Marketing Rule. 2. RIAs are not vetting referral sources to ensure they are not statutorily disqualified (i.e., subject to certain criminal or regulatory sanctions).
3. RIAs are still utilizing parties to refer clients for compensation even if those referring parties are not appropriately registered as investment adviser representatives in the states where they are soliciting clients.