News

SEC NEWS AND SPEECHES—Risk Alert highlights invest - 09 May 2022

The most commonly observed deficiencies related to Section 204A and Rule 204A-1, the Code of Ethics Rule. The SECs Division of Compliance has issued an alert to provide investment advisers, investors, and other market participants with information concerning deficiencies related to Section 204A of the Investment Advisers Act of 1940 and the Code of Ethics Rule, (Rule 204A-1), thereunder. Section 204A and Rule 204A-1.All investment advisers,
View Detail

TOP STORY—N.D. Ill.: Judge declares CFTC struck fo - 19 April 2022

After more than two years of silence, Judge Robert Blakely has issued a scathing rebuke to the CFTC which confirms an earlier finding of the agencys contempt for willfully violating the confidentiality provisions of an August 2019 settlement order. Judge Robert Blakey of the North District of Illinois has issued an order confirming a prior contempt finding against the CFTC. The judge stated that the agency had willfully violated the unambiguou
View Detail

RUDDY GREGORY ADVISES VERTEX ENERGY ON SUCCESSFUL - 01 April 2022

Ruddy Gregory is pleased to announce that after advising refining company Vertex Energy, Inc. (NASDAQ: VTRN) on a major transaction, the company announced today, April 1, 2022, the completion of the acquisition of the Mobile, Alabama refinery and related marine terminal and logistics assets from Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), Shell UA, Inc. and Shell Chemical LP. At closing, Vertex acquired approximately $165 million
View Detail

ENFORCEMENT—8 representatives question SEC’s habit - 18 March 2022

A bipartisan group of congresspersons believe the SECs use of investigations to gather information from crypto and blockchain firms could violate the Paperwork Reduction Act. A group of eight U.S. Representatives—half Republicans, half Democrats—wrote to SEC Chair Gary Gensler to learn more about the agencys use of document requests to gather information from cryptocurrency and blockchain firms that are not within its jurisdiction.
View Detail

FCM and IB Members—FinCEN updates its list of FATF - 18 March 2022

Notice to Members I-22-11 On March 10, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a news release announcing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member futures commission merchants (FCM) and introducing brokers (IB) should review this release to ensure that their AML programs have the most current information on FATF-identified jurisdictions
View Detail

TOP STORY—SEC fines 12 additional firms in second - 17 February 2022

With a total of 42 firms now having been sanctioned for significant Form CRS lapses, the SEC might now turn its focus to specific deficiencies identified in a December 17 staff statement. In a second enforcement sweep targeting Form CRS shortcomings, the SEC imposed sanctions against six investment advisers and six broker-dealers for failing to deliver customer relationship summaries to retail investors by the required deadline. Some responden
View Detail

BROKER-DEALERS—FINRA annual examinations report di - 14 February 2022

The report also takes a look at problems FINRA found with some mobile apps communications with customers and firms supervision of activity on those apps. FINRA published the 2022 report on its examinations and risk monitoring program in which it discusses its efforts on newer SEC rules such as Regulation Best Interest and Form CRS, as well as cybersecurity threats and the proliferation of securities trading through mobile apps. The report, whi
View Detail

TOP STORY—Proposed rules enhance regulation of pri - 10 February 2022

Proposed rules on cybersecurity risk management and enhancing the regulation of private fund advisers were approved 3-1. The SEC has proposed two sets of new rules under the Investment Advisers Act concerning the regulation of private fund advisers and cybersecurity risk management. The proposed new rules and regulations regulating private funds would, among other changes, require private fund advisers to provide quarterly statements detailing
View Detail

SWAPS—CFTC provides no-action relief for complianc - 04 February 2022

The no-action position effectively adds approximately six months to compliance dates for the 2020 amendments to the swap data reporting regulations. The CFTC's Division of Data issued a no-action letter extending the compliance dates for the 2020 amendments to the swap data reporting rules. The rule amending regulations concerning the swap data recordkeeping and reporting requirements for swap data repositories has a compliance date of May
View Detail

Extension of relief from the on-site annual inspec - 01 February 2022

Notice to Members I-22-05 Due to COVID-19, NFA allowed Members to conduct all calendar year 2020 and 2021 annual inspections of branch offices and guaranteed introducing brokers (IB) remotely (see Notices to Members I-20-35 and I-21-25). NFA is extending the relief provided in Notices I-20-35 and I-21-25 through the end of 2022. Although Members must conduct the required annual inspection of each branch office and guaranteed IB by December 31
View Detail

INVESTMENT ADVISERS—Exams Division issues Risk Ale - 31 January 2022

The Division is encouraging private fund advisers to review their practices, and written policies and procedures to address the issues identified in the alert. The Exams Division has released a Risk Alert with its Observations from Examinations of Private Fund Advisers. (January 27, 2022). The alert provides an overview of certain compliance issues observed in examinations of registered investment advisers that manage private funds (private fu
View Detail

TOP STORY—Commission proposes enhanced Form PF rep - 27 January 2022

Amendments to Form PF would require reporting within one day if an event signals risk to the broader financial system. Regulation ATS would cover Communications Protocol Systems. The SEC has voted to propose amendments to enhance private fund reporting and, separately, to bring more Alternative Trading Systems under Regulation ATS. The proposed amendments to Form PF would require current reporting of certain stressors that could harm investors
View Detail

TOP STORY—Gensler has SEC taking closer look at PE - 21 January 2022

The SEC may be poised to look more closely at private equity firms and hedge funds as part of larger focus on market efficiency. SEC Chair Gary Gensler, in aspeechto an audience at the Exchequer Club of Washington, D.C., suggested that a wider agency focus on the efficient markets component of the agencys core mission could produce a staff recommendation regarding, among other things, the fees and expenses associated with private equity firms
View Detail

Maryland Adopts I-A Rep. Continuing Education Requ - 11 January 2022

The Maryland Securities Division, like some other states, has adopted a continuing education requirement for investment adviser representatives, along with amending investment adviser and investment adviser representative written examination requirements. As adopted, registered investment adviser representatives must, for each reporting period: (1) complete six credits of Regulatory and Ethics and Content offered by an authorized provider, with a
View Detail

FORMS AND FILINGS—SEC provides observations regard - 05 January 2022

The SEC provided observations regarding relationship summaries filed by broker-dealers and investment advisers offering services to retail investors. The SEC issued astatementregarding Form CRS disclosures required of broker-dealers and investment advisers offering services to retail investors. The statement describes observations of the Standards of Conduct Implementation Committee based on its review of filed relationship summaries from a di
View Detail

ENFORCEMENT—SEC and CFTC fine JPMorgan $200 millio - 21 December 2021

JPMorgan employees routinely used personal communications means to discuss business matters, circumventing books and records requirements and ultimately hindering SEC and CFTC investigations. In parallel settled proceedings, the SEC and CFTC imposed civil penalties totaling $200 million against JPMorgan Chase Bank N.A. and affiliated entities for serious recordkeeping failures that impeded the regulators ability to investigate potential violat
View Detail

Action required: NFA adds virtual currency and mic - 06 December 2021

Notice to Members I-21-42 NFA Members must complete the Annual Questionnaire annually and update it throughout the year to reflect significant changes in business activity. Due to recent increased interest and activity in virtual currency and micro contract products, NFA has updated the Questionnaire to address Members' spot/physical virtual currency, virtual currency derivatives and micro contract transactions. NFA requires all CPO, CT
View Detail

TOP STORY—Gensler calls for more investor protecti - 02 December 2021

In a fireside chat with his direct predecessor at the DACOM Summit, Chair Gensler urged crypto trading and lending platforms to talk with the SEC about operating within the securities rules. In a conversation at theDigital Asset Compliance & Market Integrity Summit, SEC Chair Gary Gensler repeatedly stressed that innovations like crypto and DeFi will not survive outside of the regulatory framework. Outside of public policy norms, people ge
View Detail

VIRTUAL CURRENCIES—President signs infrastructure - 17 November 2021

The bipartisan infrastructure bill contains mostly traditional transportation funding but also contains a cryptocurrency transaction reporting provision that may presage further Congressional regulation of blockchain activities. President Joe Biden signed into law the Infrastructure Investment and Jobs Act (H.R. 3684) thus ending a months-long odyssey resulting in a compromise bill that passed theSenatefirst in August by a vote of 69-30 and th
View Detail

INVESTMENT ADVISERS—SEC amends rule on inflation a - 15 November 2021

The SEC amended Advisers Act Rule 205-3, a rule that permits investment advisers to charge performance-based compensation to qualified clients. According to the SECsfact sheet, the SEC amended Rule 205-3 to streamline the process relating to the adjustment of the assets-under-management and net worth tests for qualified client status and to ensure that the rule text remains consistent with the inflation adjustment orders issued by the SEC. Rul
View Detail

INVESTMENT ADVISERS—Division of Examinations issue - 15 November 2021

The Division has supplemented a previously issued Advisory Fees Risk Alert by providing greater detail on compliance issues observed during the recent Advisory Fees Initiative examinations. The SEC's Division of Examinations has issued aRisk Alert supplementing a previously published Advisory Fees Risk Alert by providing greater detail on certain compliance issues observed during the recent Advisory Fees Initiative examinations, including
View Detail

TOP STORY—Gensler comments on private funds regula - 15 November 2021

The SEC chair spoke about the importance of certain of these funds to our capital markets and potential Commission action in this area. In prepared remarks for a recent summit, SEC Chair Gary Gensler discussed why funds such as private equity and hedge funds matter to the capital markets. He said that they matter because such funds are large, and theyre growing in size, complexity, and number. The size and transaction activities of these funds
View Detail

TOP STORY—OCIE outlines compliance issues with adv - 12 November 2021

OCIE staff issued a deficiency letter to nearly every adviser it examined, with problems most often relating to compliance programs, portfolio management, and performance advertising. In a series of examinations to assess the practices of investment advisers providing robo-advisory services, the SECs Office of Compliance and Inspections (OCIE) observed a number of compliance issues which it has outlined in a new risk alert. Along with the defi
View Detail

INVESTMENT ADVISERS—SEC advisory committee adopts - 04 November 2021

The meeting was the last for the Asset Management Advisory Committee, formed in 2019 to advise the SEC on issues pertaining to asset management. At its final meeting, the SECs Asset Management Advisory Committee unanimously adopted recommendations from two of its subcommittees. One of the sets of recommendations highlights principles for regulation in the technologically evolving investment advisory industry, while the second aims to support a
View Detail

President’s Working Group recommends Congress quic - 04 November 2021

In the absence of such action, the group recommends that the FSOC consider steps it could take to address the risks of stablecoins. Congress should quickly enact legislation to ensure that payment stablecoins are subject to a prudential federal framework on a consistent and comprehensive basis, according to areportfrom the Presidents Working Group on Financial Markets (PWG), the Federal Deposit Insurance Corporation, and the Office of the Comp
View Detail

FCM and IB Members—FinCEN updates its list of FATF - 01 November 2021

Notice to Members I-21-34 On October 26, 2021, the Financial Crimes Enforcement Network (FinCEN) issued a news release announcing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member futures commission merchants and introducing brokers should review this release to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/
View Detail

INVESTMENT ADVISERS—Examinations staff reviews Div - 21 October 2021

As is the case in other SEC divisions and offices, the Examinations staff is taking a closer look at issues related to ESG and climate risk. This years SEC Speaks conference presented by the Practising Law Institute featured a discussion by several senior officials in the SECs Division of Examinations. The officials outlined several areas of focus in upcoming examinations, including advisers to private funds, the Commissions new marketing rule
View Detail

ENFORCEMENT—Enforcement staff gives update on Divi - 19 October 2021

The SEC will continue to pursue cases of unregistered digital tokens. Members of the SECs Division of Enforcement staff spoke at the Practising Law Institutes recent SEC Speaks conference on cyber-related issues, including digital token enforcement. The staff discussed how the Division pursues digital token-related cases as well as SEC victories in federal court over offerings made by Kik and Telegram. Cyber unit update.Kristina K. Littman,
View Detail

ENFORCEMENT—SEC signals tougher approach to invest - 18 October 2021

The Enforcement Division will be resurrecting the policy of requiring admissions in the most egregious cases. At this years Practising Law InstitutesSEC Speaks, top officials in the Division of Enforcement indicated that the staff will be taking a harder line in its approach to investigations and remedies sought. In addition to placing some restrictions on the Wells process such as the submission of white papers, the staff will also be seeking
View Detail

Effective date for amendments to NFA's Interpretiv - 14 October 2021

Notice to Members I-21-28 NFA's Interpretive Notice entitled Registration Requirements: Branch Offices requires each commodity pool operator (CPO), commodity trading advisor (CTA), futures commission merchant (FCM), retail foreign exchange dealer (RFED) and introducing broker (IB) Member to list its branch offices, as defined in the Interpretive Notice, on its Form 7-R. In March 2020, due to the COVID-19 pandemic, NFA issued Notice to Memb
View Detail

CFTC’s reparations jurisdiction extends to registe - 11 October 2021

The CFTC's reparations jurisdiction extended to a party who was registered in one capacity as to a particular entity but whose alleged violation was committed while acting solely on behalf of a different, non-registered entity. The CFTC reversed the dismissal of the fraudulent-solicitation claim against a registered person. The CFTC held that the CFTCs reparations jurisdiction extended to a party who was registered in one capacity as to a
View Detail

TOP STORY—E.D. Pa.: Dirks personal benefit test no - 11 October 2021

The court declined to import theDirkspersonal benefit test from Exchange Act cases into insider trading cases brought under Title 18. A district court rejected a proposed jury instruction that the personal benefit test applies to securities fraud charged under Title 18. The defendant in this case was charged with securities fraud for participating in an insider trading scheme. The government maintained that it does not have to prove that a tip
View Detail

CFTC fines Kraken for illegal digital asset transa - 04 October 2021

The CFTC levied a $1.25 million penalty on Payward Ventures, which does business as digital asset exchange operator Kraken, for illegal off-exchange trading and for failing to register as a futures commission merchant (FCM). The agency found that Kraken, which consented to cease and desist from further Commodity Exchange Act violations, illegally offered margined retail commodity transactions in digital assets, including Bitcoin (In the Matter of
View Detail

Ruddy Gregory Advises Vertex Energy on Two Success - 26 July 2021

Ruddy Gregory is pleased to announce that it hasrecentlyadvised refining company Vertex Energy (NASDAQ: VTNR) ontwo major transactions. In May, the firm advised Vertex Energy in its acquisition of a Mobile refinery in Alabama from Royal Dutch Shell for $75M. This acquisition is regarded to be the largest and most significant transaction completed by Vertex, thus allowing Vertex to become a leading regional supplier of both renewable and conve
View Detail

States seek to block DeFi firm’s interest-bearing - 26 July 2021

Decentralized finance company BlockFi faces enforcement actions in New Jersey, Texas, and Alabama for offering unregistered cryptocurrency products. Three states have now initiated enforcement proceedings against cryptocurrency lending and trading firm BlockFi, Inc. for alleged violations of state securities laws. In separate proceedings, New Jersey, Texas, and Alabama have each alleged that the New Jersey-based firms interest-earning cryptocu
View Detail

FCM and IB Members—FinCEN updates its list of FATF - 26 July 2021

On July 1, 2021, the Financial Crimes Enforcement Network (FinCEN) issued a news release announcing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member futures commission merchants (FCM) and introducing brokers (IB) should review this release to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and r
View Detail

NFA Coronavirus Update - Extension of relief from - 21 July 2021

Due to COVID-19, NFA allowed Members to conduct all calendar year 2020 annual inspections of branch offices and guaranteed introducing brokers (IB) remotely (seeNotice to Members I-20-35). NFA understands that Members may find it difficult to complete on-site annual inspections for calendar year 2021 since their staff may be in various stages of transitioning back to the office or still working remotely. Therefore, NFA is extending the relief pro
View Detail

The Arkin Group: China’s move to limit cryptocurre - 01 June 2021

Last week, the Chinese Communist Party (CCP) State Council ordered a halt to cryptocurrency trading and mining within its borders, claiming that the ban would better protect its citizens from fraud and lower financial risks and speculative trading. In response to the new policy, the value of Bitcoin and Ethereum - ecosystems heavily dependent on mining activity in China - tumbled and the coins posted their largest one-day loss since the onset of
View Detail

CFTC Staff Publishes Updated Responses to FAQs Reg - 01 June 2021

Release Number 8390-21 The Commodity Futures Trading Commissions Market Participants Division (MPD) today published updated responses to frequently asked questions regarding CFTC Regulation 4.27 and Form CPO-PQR (FAQs). These FAQs update the 2015 FAQs that addressed issues on Form CPO-PQR from filing mechanics and deadlines to more technical questions. [See CFTC Press Release No.7273-15] In October 2020, the CFTC adopted a Final Rule amend
View Detail

INVESTOR EDUCATION—SEC staff weighs in on CFTC reg - 13 May 2021

The SECs Division of Investment Management statement urges continued investor vigilance despite increased trading volumes and growing open interest in Bitcoin futures markets overseen by the Commodity Futures Trading Commission. The SECs Division of Investment Management (IM) issued a statement addressing a number of issues funds registered under the Investment Company Act investing in the Bitcoin futures markets should consider. The IM statem
View Detail

SEC Intends to Raise Threshold for Performance-Bas - 13 May 2021

According to a May 10, 2021 release from the Securities and Exchange Commission (the Commission or SEC), an investment adviser may not charge clients a performance-based fee unless the client has a net worth of at least $2.2 million. The Commission is mandated by 17 C.F.R. § 275.205-3(e) (Rule 205-3) to adjust the dollar amount thresholds set forth in the rule every five years. The Investment Advisers Act of 1940 (the Advisers Act) genera
View Detail

INVESTMENT ADVISERS—NASAA report provides a snapsh - 23 April 2021

The annual report from NASAA's Investment Adviser Section includes an updated profile of state-registered firms and offers compliance guidance related to the pandemic. The North American Securities Administrators Association (NASAA) has released its annual report on the state-registered investment adviser industry and the related activities of state securities regulators. The report also discusses the challenges faced by the advisory indus
View Detail

Alternative funds organization foresees hedge fund - 15 April 2021

Increased industry optimism has been driven partly by a perceived light at the end of the tunnel regarding the COVID-19 pandemic as well as a more predictable presidential administration in the U.S. The Alternative Investment Management Association (AIMA) has released its Hedge Fund Confidence Index (HFCI) for the first quarter of 2021. The HFCI indicates a high level of confidence in the hedge fund industry for the next 12 months. According t
View Detail

VIRTUAL CURRENCIES—Commissioner Peirce revisits sa - 15 April 2021

Clarity in the realm of digital currency will be crucial, according to the official. SEC Commissioner Hester Peirce has released a statement on GitHub providing an updated version of her token safe-harbor proposal from February 2020. According to the commissioner, the safe harbor is designed to provide network developers with a three-year grace period within which they can facilitate participation in and the development of a decentralized netw
View Detail

Gensler confirmed as next SEC permanent chair - 15 April 2021

Gensler will be pressed almost immediately to deal with growing issues surrounding SPACs along with longer-range policy choices on climate risk disclosures and digital asset securities. The Senate has confirmed Gary Gensler to be the next permanent chair of the SEC by a vote of 53-45. Gensler, like former SEC Chair Mary Schapiro before him, once was chair of the CFTC, which is why very few members of the Senate Banking Committee doubted his cr
View Detail

Effective date for NFA rules establishing CPO noti - 14 April 2021

Notice to Members I-21-15 NFA recently adopted Compliance Rule 2-50 and a related Interpretive Notice entitled Compliance Rule 2-50: CPO Notice Filing Requirements, which require commodity pool operator (CPO) Members to file notice with NFA when a market or other event affects a commodity pool's ability to fulfill its participant obligations. This rule and Interpretive Notice will become effective on June 30, 2021. Similar to NFA notifi
View Detail

Division of Examinations issues ESG Risk Alert - 13 April 2021

The Risk Alert tells what the Division's examinations will focus on and gives examples of both good and bad practices. The SEC's Division of Examinations has issued a risk alert highlighting its recent observations from exams of firms offering ESG products and services. The alert gives the Division's observations of deficiencies and internal control weaknesses derived from examinations of ESG investing by advisers and funds. The
View Detail

2d Circuit: Insider trading conviction based on ND - 07 April 2021

While the defendant and the company in which he traded dealt at arms length, his agreement to keep information confidential was enough to establish the fiduciary duties that in turn supported a guilty verdict for insider trading. The Second Circuit Court of Appeals upheld the conviction of a defendant who tipped information about a company that his fund was acquiring. Despite an arms-length relationship between the defendant and the company hi
View Detail

Effective date for NFA's swap dealer capital requi - 31 March 2021

Notice to Members I-21-14 On September 15, 2020, the CFTC adopted final rules imposing minimum capital and financial reporting requirements for swap dealers (SD) that are not subject to the rules of a prudential regulator (Covered SDs). These rules establish an October 6, 2021 compliance date. The Commodity Exchange Act requires that NFA adopt rules establishing minimum capital and other financial requirements for its Members, which are at lea
View Detail

BROKER-DEALERS—SEC staff highlight deficiencies in - 30 March 2021

The SECs Division of Examinations is reminding broker-dealers of their obligations under anti-money-laundering requirements. In a new risk alert, staff of the SECs Division of Examinations shared their observations from examinations of broker-dealers and mutual funds regarding their compliance with anti-money-laundering (AML) regulatory requirements. Staff found some deficiencies in firms policies and procedures, and in their implementation of
View Detail

Effective date for proposed Interpretive Notice re - 24 March 2021

Notice to MembersI-21-13 NFA recently adopted an Interpretive Notice entitled NFA Compliance Rules 2-9 and 2-36: Members' Use of Third-Party Service Providers. The Interpretive Notice requires each Member outsourcing regulatory functions to adopt and implement a supervisory framework over its outsourcing function to mitigate outsourcing-related risks. The Interpretive Notice will become effective on September 30, 2021. To assist Members
View Detail

ENFORCEMENT—Controversy looms as Coinbase agrees t - 23 March 2021

The agreed order, which found that Coinbase had engaged in false, misleading, and inaccurate reporting, as well as wash trading, prompted Commissioner Dawn Stump to issue a concurring statement raising serious concerns about the CFTCs appropriate role in the digital asset space. At 4:46 pm this past Friday afternoon, the CFTC issued an order filing and settling charges against Coinbase Inc., a digital asset exchange operator, finding reckless
View Detail

FCM and IB Members—FinCEN updates its list of FATF - 16 March 2021

Notice to Members I-21-12 On March 11, 2021, the Financial Crimes Enforcement Network (FinCEN) issued anAdvisoryannouncing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member futures commission merchants (FCM) and introducing brokers (IB) should review this Advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with
View Detail

Newly minted Exam Division announces 2021 prioriti - 04 March 2021

In particular, the Division will enhance focus on climate-related risks and other ESG issues. The SECs newly classified Division of Examinations has announced its 2021 examination priorities, including an enhanced focus on climate-related risks. The Division also will focus on conflicts of interest for brokers in connection with Regulation Best Interest and investment adviser fiduciary duties. The Division will look at risks relating to FinTec
View Detail

INVESTMENT ADVISORS—Division of Examinations issue - 02 March 2021

Citing risks associated with digital asset securities and distributed ledger technology, the Risk Alert outlines areas of focus for upcoming examinations of firms compliance programs. The SECs Division of Examinations, in its first major Risk Alert since being elevated to division status from the Office of Compliance Inspections and Examinations in December, has published guidance for investment advisers, broker-dealers, exchanges, and transfe
View Detail

COMMODITY FUTURES—S.D.N.Y.: Consent order closes N - 26 February 2021

This order concludes the CFTC's first enforcement action against an exchange for violations arising from disclosures of material nonpublic information by exchange employees. The CFTC announced that former energy broker Ron Eibschutz has consented to sanctions for soliciting confidential information from NYMEX employees. The consent order found that Eibschutz aided and abetted the NYMEX employees' illegal disclosures. Eibschutz consente
View Detail

ALTERNATIVE INVESTMENT FUNDS—SEC issues report on - 12 February 2021

The information is drawn from reports on filings of Form PF and aggregated to preserve anonymity and protect proprietary information. The SEC has released the most recent statistics and private fund trends gathered from filings of Forms PF and Forms ADV. The information, which reflects data from the third calendar quarter of 2018 through the second calendar quarter of 2020, includes aggregated data on from Form PF filers with numbers that are
View Detail

BROKER-DEALERS—New FINRA report highlights exam fi - 03 February 2021

FINRAs new combined report on exam findings and priorities provides compliance insights drawn from its ongoing regulatory operations. The Financial Industry Regulatory Authority (FINRA) has released a new annual report that seeks to provide insights from the SROs examination findings and priorities that member firms can use to improve their compliance efforts. The report highlights several key areas that impact the compliance programs of broke
View Detail

Remote Online Testing Available for Candidates See - 19 January 2021

Noticeto Members I-21-03 FINRA administers the futures industry proficiency exams on behalf of NFA including the Series 3, Series 30, Series 31, Series 32 and Series 34. Beginning today, candidates may choose to take these exams either at a local test center or remotely proctored online. Online testing will be delivered and remotely proctored by FINRA's testing provider, Prometric. Prometric allows candidates to use a personal or firm-prov
View Detail

Member obligations under NFA Bylaw 1101 and Compli - 14 January 2021

Notice to Members I-20-02 The CFTC requires any person that claims an exemption from CPO registration under CFTC Regulation 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5), an exclusion from CPO registration under CFTC Regulation 4.5 or an exemption from CTA registration under 4.14(a)(8) (collectively, exemption) to annually affirm the applicable notice of exemption within 60 days of the calendar year end. Persons that fail to file the affirmat
View Detail

SEC SEEKS TO ENCOURAGE INNOVATION BY ADDRESSING CU - 05 January 2021

On December 23, 2020, theSecurities and Exchange Commissionissued a statement, directed to special purpose broker-dealers, provides that the Commission will not bring an enforcement action against the BD for a five-year period so long as certain circumstances apply. In an effort to encourage innovation in the robust and ever-expanding digital asset space, the SEC recently issued a statement and request for comment regarding the operation of it
View Detail

SEC ADOPTS MODERNIZED MARKETING RULE FOR INVESTMEN - 05 January 2021

The SECs new merged rule on adviser marketing communications replaces rules on advertising and cash solicitation that were adopted in 1961 and 1979, respectively, while the Rule 144 proposal seeks to ensure that holders of market-adjustable securities are not acting as conduits for unregistered sales. Rules that govern investment adviser advertisements and payments to solicitors are set to be modernized now that the SEC has finalized reforms u
View Detail

SEC's OCIE Addresses Broker-Dealer & Adviser Large - 21 December 2020

The SECs Office of Compliance Inspections and Examinations (OCIE) addressed broker-dealer and adviser large trader obligations in a recent annoucement. Individuals and entities should remain vigilant in assessing circumstances and meeting filing obligations in connection with large trader status. The SECs OCIE recently discussed examinations focused on broker-dealers and investment advisers compliance with Exchange Act Rule 13h-1. OCIE note
View Detail

CFTC NEWS AND SPEECHES—CFTC approves electronic tr - 14 December 2020

In its last open meeting for 2020, the Commission voted to finalize long-awaited rules around electronic trading and bankruptcy reforms for FCMs and clearinghouses, as well approving a number of other final regulations. The Commission finalized rules on electronic trading risk principles, as well as approving long-awaited Part 190 bankruptcy regulations. Prior to the meeting, the agency also approved six other final rules on a seriatim basis,
View Detail

CPO Members—Changes to the NFA Form PQR - 04 December 2020

NFA Compliance Rule 2-46 requires, with limited exceptions, commodity pool operator (CPO) Members to file NFA Form PQR on a quarterly basis with NFA for each pool that it operates. CFTC Regulation 4.27 imposes similar CPO reporting requirements by requiring CPOs to file CFTC Form CPO-PQR. In October, the CFTC adopted several amendments to CFTC Regulation 4.27. The CFTC's final rule: Eliminates certain schedules and questions from its
View Detail

A New Approach to the Application of Securities La - 01 December 2020

The Investment Lawyer - a Wolters Kluwer journal publication that cover various legal andregulatory issues existent within the investment management industry - has just published its November 2020 Journal. Cameron Scullen, an associate-attorney with our firm, contributed an article in the November 2020 Journal that discusses the application of federal securities laws to digital assets. The latter addresses the need to develop a new test that will
View Detail

INVESTMENT ADVISERS—OCIE and its director review i - 23 November 2020

Particularly in these unique times, CCOs need backup to meet obligations. The SECs Office of Compliance Inspections and Examinations has issued a risk alert to provide an overview of notable compliance issues related to Advisers Act Rule 206(4)-7 (the Compliance Rule). Times have changed, but the need for investor protection remains the same, according the staff. Compliance rule. Under Rule 206(4)-7, it is unlawful for a registered investme
View Detail

INVESTMENT ADVISERS—SEC’s Compliance, Enforcement - 20 November 2020

Division directors amazed by their staffs extraordinary output during the pandemic and emphasize their successfully coordinated efforts. Peter Driscoll, the SECs Compliance Inspections and Examinations Office (OCIE) Director opened the November 19, 2020 10th annual Compliance Outreach program (for Investment Adviser and Investment Adviser Senior Officers) by remarking upon the effects that COVID-19 has had on the Commissions various Divisions,
View Detail

SEC adopts electronic signature use, electronic ad - 18 November 2020

The Commissions technology can now accept electronic signatures and facilitate electronic administrative proceeding documentation. The SEC voted to adopt rules and rule amendments permitting electronic signatures to authenticate SEC-filed documents, along with facilitating electronic service and filing in connection with Commission administrative proceedings. The rule amendments additionally require redaction of sensitive personal information.
View Detail

NFA Update: FCM and IB Members—FinCEN reissues and - 12 November 2020

On November 6, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an Advisory announcing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies, with updates to two jurisdictions. NFA Member FCMs and IBs should review this Advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AM
View Detail

OCIE’s Multi-Branch Initiative uncovers compliance - 11 November 2020

An examination of nearly 40 investment advisers and their branch offices revealed that policies and procedures often fail to respond to the unique challenges of operating from geographically diverse locations. The SECs Office of Compliance Inspections and Examinations released a risk alert detailing its observations from the Multi-Branch Initiative, a series of examinations of investment advisers operating from geographically dispersed locatio
View Detail

SEC approves exempt offerings rule benefitting sma - 05 November 2020

The SECs exempt private offerings rule to enhance small business capital raising efforts receives commissioner approval and dissent. The SEC voted 3-2 to approve a final rule comprising a year-long 400-page proposal to harmonize 10 long-time exempt offering provisions, by relaxing certain restrictions on them to make the exemptions more available to small- and medium-sized businesses for capital raising purposes. The final rule changes vote
View Detail

Order addresses requests concerning the expansion - 05 November 2020

The Commission provided exemptions in response to five of six requests and set October 6, 2021 as the expiration date for existing temporary exemptions. The SEC issued a release on November 2, 2020, granting exemptions from certain sections and rules of the Securities Exchange Act of 1934 and setting the expiration date for existing temporary exemptions (Release No. 34-90308, November 2, 2020). The SEC had issued a previous order extending
View Detail

NIBA October 2020 Journal Publication - 02 November 2020

The National Introducing Brokers Association (NIBA) has just published its October 2020 Journal. The October publication is dedicated to providing further insight on various cybersecurity issues existing in todays market-place. Cameron Scullen, an associate-attorney with our firm, contributed such an article for the NIBA journal, which can be accessed at this link. The latter addresses the importance of building strong cybersecurity when operatin
View Detail

CFTC Chairman Tarbert initiates sweeping reorganiz - 02 November 2020

The chairman asserts that the organizational changes will enhance the CFTCs operational effectiveness. The CFTC will be implementing a reorganization whereby four new operating divisions will be created: the Division of Data, the Markets Participants Division, the Legal Division, and the Division of Administration. According to the agencys announcement issued just days in advance of the presidential election, negotiations were completed to enh
View Detail

CFTC’s DSIO issues advisory providing guidance to - 29 October 2020

The CFTCs Division of Swap Dealer and Intermediary Oversight issued an advisory letter which provides guidance to market participants on how the agencys requirements apply to digital currencies deposited by customers. The CFTCs Division of Swap Dealer and Intermediary Oversight (DSIO) issued an advisory to letter to FCMs regarding the holding of virtual currency in segregated accounts. The advisory provides guidance to FCMs on how to hold and
View Detail

CFTC-SEC agreement seeks to address ‘Bad Actor Dis - 29 October 2020

The CFTC and SEC chairmen have signed a joint letter establishing a pilot program to take on problems created by the statutory disqualification provisions of SEC Regulations A and D. CFTC Chairman Heath Tarbert Chairman and SEC Chairman Jay Clayton have executed a joint letter agreement to address certain complications that have arisen in CFTC enforcement matters as a result of the SEC bad actor disqualification provisions contained in SEC Reg
View Detail

SEC gives broker-dealers violating the customer pr - 29 October 2020

No-action letter draws criticism from Commissioners Lee and Crenshaw who believe the six-month grace period presents an unacceptable risk to investors. In an unusual move, Commissioners Allison Herren Lee and Caroline Crenshaw have issued a statement in opposition to a no-action position taken by the staff of the SECs Division of Trading and Markets. The no-action relief addresses programs through which broker-dealers borrow fully paid and exc
View Detail

SEC Staff Updates Form CRS FAQs - 12 October 2020

The changes clarify the form requirements regarding the disciplinary history of a firms and their associated financial professionals. The SEC staff has added to its frequently asked questions relating to the filing of Form CRS and the relationship summary required of broker-dealers and investment advisers. According to the staff of the Division of Investment Management and the Division of Trading and Markets, filers may not change headings
View Detail

Commission Proposes Conditional Exemption from Bro - 09 October 2020

Proposal is intended to assist small businesses in raising capital by clarifying the limited activities in which finders may engage without registering. The SEC voted 3-2 to propose a limited, conditional exemption from broker registration requirements for finders who assist issuers with raising capital in private markets from accredited investors. Finders identify and sometimes solicit potential investors in order to connect small busines
View Detail

CFTC enforcement director departs after record-bre - 09 October 2020

Despite a pandemic, enforcement actions at an all-time high. On October 6, 2020, the Commodity Futures Trading Commission announced a record-breaking year in the agencys Division of Enforcement and that the Division of Enforcement Director, James McDonald, will depart the agency on October 8, 2020. According to the CFTC, as director of Enforcement Division since April of 2017, McDonalds leadership drove the Division to identify and
View Detail

Legislators Introduce Bills to Address Confusion R - 09 October 2020

The Digital Commodity Exchange Act and the Securities Clarity Act are intended to clarify when and how securities laws and commodities regulations apply to digital assets, according to sponsors. Congressman David Schweikert (R-Ariz) has introduced the Digital Commodity Exchange Act of 2020 (DCEA) to create a single, opt-in national regulatory framework for digital commodity trading platforms under the CFTC jurisdiction. Separately, Tom Emm
View Detail

Coronavirus Update—Expiration of Temporary Relief - 09 October 2020

In April 2020, the CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) issued ano-action lettergranting temporary relief to registrants and applicants for registration listing a principal, and for applicants for associate person (AP) registration, from the fingerprinting requirements in CFTC Regulations3.10(a)(2)(for natural person principals) and3.12(c)(3)(for APs). NFA issued similar relief from the fingerprinting requirements
View Detail

BitMEX charged with operating an illegal crypto de - 05 October 2020

The CFTC alleges that the cryptocurrency derivatives platform violated the Commodity Exchange Acts registration, KYC, and AML provisions, while the DOJ has indicted the owners for evading the Bank Secrecy Act. The CFTC has charged three individuals and five entities that own and run the Bitcoin Mercantile Exchange (BitMEX) cryptocurrency trading platform with operating an unregistered trading platform and violating multiple market integrity an
View Detail

NFA Coronavirus Update--Relief from the On-Site An - 05 October 2020

Notice to Members I-20-35 October 1, 2020 Coronavirus Update—Relief from the On-Site Annual Inspection of Branch Offices and Guaranteed IBs NFA's Interpretive Notice 9019 – Compliance Rule 2-9: Supervision of Branch Offices and Guaranteed IBs and Interpretive Notice 9053 – Forex Transactions require Members with branch offices and/or guaranteed introducing brokers (IB) to conduct an annual on-site inspection of each b
View Detail

BLOCKCHAIN—OCC says banks, thrifts may engage in s - 05 October 2020

In an interpretative letter, the agency said that national banks and thrifts may receive deposits from stablecoin issuers, including deposits that constitute reserves for a stablecoin associated with hosted wallets, and may also engage in any activity incidental to receiving these deposits. The Office of the Comptroller of the Currency hasissuedaninterpretive letterclarifying the authority of national banks and federal savings associations to
View Detail

Coronavirus (COVID-19) Update—Extension to Certain - 24 September 2020

NFA Notice to Members I-20-32 September 15, 2020 The CFTC recently issued no-action letter 20-26 extending through January 15, 2021, certain no-action relief issued in response to the COVID-19 pandemic. The relief, previously set to expire on September 30, 2020, applies exclusively to certain regulatory obligations of FCMs, RFEDs (i.e., FDMs), IBs and SDs. NFA is also extending through January 15, 2021 similar relief for Members that are in c
View Detail

SEC’s OCIE sees uptick in ‘credential-stuffing’ at - 24 September 2020

The SECs Office of Compliance Inspections and Examinations has observed an increase in credential-stuffing cyber attacks against investment advisers and broker-dealers which heightens firms financial, regulatory, legal, and reputational risks. Recent examinations conducted by the SECs Office of Compliance Inspections and Examinations (OCIE) have found an increase in the number of credential-stuffing cyber attacks against SEC-registered investm
View Detail

ABL Insights September 2020 Issue Published - 24 September 2020

The Alliance of Business Lawyers (ABL) has just published its first issue of the ABL Insights newsletter, a quarterly newsletter for ABL Members and their respective clients that provides insights that span across the globe. The purpose of this newsletter is to further ABLs goals of sharing legal industry related information that can be absorbed and utilized by ABL Members and their clients. You can accessthe September, 2020 ABL Insights newsl
View Detail

CFTC unanimously approves four final regulations a - 24 September 2020

The CFTC voted 5-0 to finalize a number of rules which aim to improve swap data reporting, as well as a supplemental measure that furthers the modernization of the agencys bankruptcy regulations. CFTC Chairman Heath Tarbert led off a virtual open meeting that lasted over five hours, without interruption, observing that data is the lifeblood of our markets. Those comments were a prelude to an agenda-packed meeting where the Commission unanimous
View Detail

N.D. Ill.: CFTC notes success against Illinois sof - 16 September 2020

After the failed criminal prosecution of Jitesh Thakkar for his involvement with spoofer and purported flash crash trader Navinder Sarao, a parallel CFTC case comes to an end with the entry of a consent order against Edge Financial and the charges dropped against Thakkar. The often-acrimonious legal battle between the CFTC and software developer Jitesh Thakkar, and his company, Edge Financial Technologies, Inc. has come to end. The corporate d
View Detail

U.S.: Analysts seek SCOTUS review of insider tradi - 15 September 2020

Two hedge-fund analysts asked the Supreme Court to review a Second Circuit holding that the government can avoid proving a personal benefit when it prosecutes insider trading under the criminal code. Investment fund analysts who were convicted of wire fraud for trading on regulatory information are appealing that conviction to the Supreme Court. The petitioners for writ of certiorari argue that theDirkspersonal-benefit test applies equally to
View Detail

CFTC provides guidance on compliance evaluations i - 15 September 2020

The guidance is designed to assist both Commission staff and companies in evaluating compliance programs and cultivating corporate cultures of compliance. The CFTC Division of Enforcement staff has issued new guidance outlining factors that it will consider while evaluating compliance programs in connection with enforcement activities. In the-first-of-its-kind guidance issued by the division, the staff noted that effective corporate compliance
View Detail

Climate change poses major risk to stability of th - 10 September 2020

The extensive report, issued by a subcommittee of the CFTCs Market Risk Advisory Committee, examines climate change-related financial risks and offers key policy recommendations. The CFTCs Climate-Related Market Risk Subcommittee of the Market Risk Advisory Committee (MRAC) released its report titledManaging Climate Risk in the U.S. Financial System. Thesubcommitteevoted unanimously 34-0 to adopt the report. According toa CFTC release, the rep
View Detail

CFTC provides Swap Dealers transitioning away from - 02 September 2020

Three divisions of the Commodity Futures Trading Commission have issued updated no-action letters to reduce regulatory burdens associated with the upcoming transition for swap dealers moving away from utilizing various interbank offer rates. The CFTCs Division of Swap Dealer and Intermediary Oversight (DSIO), Division of Market Oversight (DMO), and Division of Clearing and Risk (DCR) each issued revised no-action letters providing additional r
View Detail

SEC adopts an Expanded Definition of “Accredited I - 01 September 2020

The SEC adopted a regulatory amendment designed to expand who may be an accredited investor. On August 26, 2020, the revision to the accredited investor definition was adopted seriatim by a divided Commission in a 3-2 vote. (Amending the Accredited Investor Definition, Release No. 33-10824, August 26, 2020). Accredited investor definition. The centerpiece of the revised definition of accredited investor is its expansion of the types of p
View Detail

FinCEN issues additional FAQs to address questions - 21 August 2020

NFA Notice I-20-31 On August 3, 2020, the Financial Crimes Enforcement Network (FinCEN), in consultation with the federal functional regulators, published newFrequently Asked Questions(FAQs) on its website regarding customer due diligence (CDD) requirements for covered financial institutions. These FAQs clarify the regulatory requirements related to obtaining customer information, establishing a customer risk profile, and performing ongoing mo
View Detail

FinCEN clarifies BSA enforcement, stresses importa - 21 August 2020

As the primary regulator and administrator of the Bank Secrecy Act, FinCEN issued a statement setting forth its approach to enforcing rules and regulations implemented under the BSA. The Financial Crimes Enforcement Network has released a statement setting forth its approach to enforcing the rules and regulations within the Bank Secrecy Act (BSA). The statement follows an earlier joint statement by the federal banking regulators—Office o
View Detail

SEC and FDIC Adopt Final Rule on the Orderly Liqui - 13 August 2020

On July 24, 2020, the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) adopted a final rule required by the Dodd-Frank Act clarifying and implementing provisions relating to the orderly liquidation of certain brokers or dealers (covered broker-dealers) in the event the FDIC is appointed receiver under Title II of the Dodd-Frank Act. By statute, the liquidation of a covered broker-dealer must be acco
View Detail

FinCEN Advisory on Cybercrime and Cyber-Enabled Cr - 13 August 2020

The Financial Crimes Enforcement Network (FinCEN) issued an advisory on July 30, 2020, to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. The advisory contains descriptions of COVID-19-related malicious cyber activity and scams, associated financial red flag indicators, and information on reporting suspicious activity. The advisory addresses the primary means by
View Detail

CFTC Approves Final Rule Amending Registration and - 13 August 2020

At its open meeting on June 4, 2020, the Commodity Futures Trading Commission unanimously approved a final rule amending the Commodity Pool Operator (CPO) registration exemption found in Regulation 4.13. The final rule generally prohibits persons who have, or whose principals have, incurred any of the relevant statutory disqualifications articulated in the Commodity Exchange Act from seeking to claim a Commodity Pool Operator (CPO) registration e
View Detail

OCIE OUTLINES COVID-19 COMPLIANCE CONSIDERATIONS F - 13 August 2020

Based on its outreach and interaction with registered brokers and investment advisers, OCIE staff offers recommendations concerning COVID-19-related issues and risks, including the heightened potential for misconduct. In its 2020 interactions with broker-dealers and investment advisers, the SECs Office of Compliance and Inspections (OCIE) has observed a number of operational, technological, and other challenges brought on by the pandemic. OCIE
View Detail

CFTC Approves Final Swap Dealer Capital Rule, Comp - 13 August 2020

The Commodity Futures Trading Commission at its open meeting on July 22, 2020 approved a final rule regarding new capital and financial reporting requirements for swap dealers (SDs) and major swap participants (MSPs). Adoption of this rule marks the completion of the CFTCs required rulemakings under Section 731 of the Dodd-Frank Act, which was enacted 10 years ago this week. Final rule: capital requirements of swap dealers and major swap parti
View Detail

Effective date for NFA rule amendments related to - 22 July 2020

NFA Compliance Rule 3-14 sets forth the types of penalties that an NFA disciplinary panel may impose at the conclusion of an NFA disciplinary proceeding. NFA recently amended this rule to increase the maximum monetary penalty to $500,000 per rule violation. This increase is intended to further deter violations of NFA requirements and provide NFA's disciplinary panels with the flexibility needed in assessing penalties. NFA also made several ot
View Detail

NFA SWAPS PROFICIENCY REQUIREMENTS MUST BE COMPLET - 22 July 2020

Reminder, NFAs Swap Proficiency Requirements must be successfully completed by individuals registered as APs at FCMs, IBs, CPO and CTAs who engage in swaps activity subject to the CFTCs jurisdiction as well as individuals acting as APs at swaps dealers. Individuals approved as swap APs on January 31, 2021 (the Compliance Date), must have satisfied the Swaps Proficiency Requirements to remain approved as a swap AP after the Compliance Date. Indivi
View Detail

FCM and IB Members—FinCEN reissues and updates its - 21 July 2020

On July 14, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an Advisory announcing that the Financial Action Task Force (FATF) reissued its list of jurisdictions with strategic AML/CFT deficiencies, with updates to two jurisdictions. NFA Member FCMs and IBs should review this Advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AML p
View Detail

Coronavirus (COVID-19) Update—Extension to Relief - 21 July 2020

The CFTC's Division of Swap Dealer and Intermediary Oversight (DSIO) recently issued Staff Letter No. 20-20 extending its temporary relief provided in CFTC Staff Letter No. 20-16. This relief was granted to registrants and applicants for registration listing a principal, and for applicants for associated person (AP) registration from fingerprinting requirements. The temporary relief, originally scheduled to expire on July 23, 2020, now extend
View Detail

SEC OCIE risk alert highlights private-fund advise - 01 July 2020

Many identified deficiencies may have caused investors in private funds to pay more in fees or to remain unaware of relevant conflicts of interest, OCIE said. The SECs Office of Compliance Inspections and Examinations has issued a risk alert in connection with examinations of registered investment advisers managing private equity funds and hedge funds. The alert primarily addresses common deficiencies and compliance issues related to fees and
View Detail

New York launches series of virtual currency initi - 01 July 2020

The initiatives include a State University of New York-related virtual currency program, a Department of Financial Services proposal of a virtual currency conditional licensing authority, guidance regarding licensees ability to self-certify, and additional resources to help currency market participants launch and operate in New York. Superintendent of Financial Services Linda A. Lacewell announced that the New York State Department of Financia
View Detail

U.S.: Disgorgement not exceeding amount of net pro - 25 June 2020

The Supreme Court upheld the SEC's ability to seek disgorgement in civil proceedings as a form of equitable relief, so long as the award is limited to the net profits of the wrongdoer and funds go to victims. Answering a question left open in Kokesh v. SEC, the Supreme Court held that a disgorgement award that does not exceed a wrongdoer's net profits and is awarded for victims is permissible equitable relief. Writing for the Court in
View Detail

SEC OCIE Releases Risk Alert RE: LIBOR Transition - 24 June 2020

The OCIE issued this risk alert to provide registrants with information about the scope and content of their registrant preparedness analysis examinations. The Commissions Office of Compliance Inspections and Examinations identified registrant preparedness for the transition away from LIBOR as an examination program priority. The OCIE has now issued this Examination Initiative: LIBOR Transition Preparedness to provide registrants with addition
View Detail

Amendments to NFA Interpretive Notice 9045—Complia - 19 June 2020

NFA Compliance Rule 2-9(c) and Interpretive Notice 9045—FCM and IB Anti-Money Laundering Program require all futures commission merchants (FCM) and introducing brokers (IB) to develop and implement an anti-money laundering (AML) program reasonably designed to achieve compliance with the Bank Secrecy Act and its implementing regulations. This includes obligations related to the Customer Identification Program (CIP) and Beneficial Ownership (
View Detail

CFTC extends work-from-home COVID-19 relief to Sep - 16 June 2020

An extension of no-action relief provides flexibility as financial services personnel return to the office. As states continue to lift COVID-19 closures and workplaces cautiously reopen, the CFTC is easing the transition for financial services firms and infrastructure by extending relief from certain regulatory requirements until September 30. The relief applies to a broad range of market participants and relates particularly to requirements t
View Detail

NFA UPDATE COVID-19--QUARTERLY REPORT REGULATORY R - 09 June 2020

On March 23, 2020, the NFA issued Notice to Members I-20-05, which provided an update on the regulatory relief available to CPOs and CTAs during the ongoing global pandemic caused by COVID-19. The regulatory relief extended thedue dates for the quarterly reports for period ending March 31, 2020. CPOs The NFA extended the due date for the March 31, 2020 Form PQR until July 15, 2020. CTAs The NFA extended the due date for the March 31,
View Detail

CFTC approves final rule closing loophole for bad - 08 June 2020

At an open meeting of the CFTC, the full Commission unanimously approved a final rule relating to registration and compliance requirements for CPOs and CTAs prohibiting exemptions for those persons subject to certain statutory disqualifications. At a recent Commodity Futures Trading Commission open meeting held via conference call in accordance COVID-19 social distance protocols, the CFTC voted 5-0 to approve a final rule amendment to Regulati
View Detail

Mark Ruddy named President of the Alliance of Busi - 08 June 2020

On May 21st, the Alliance of Business Lawyers (ABL) announced that Mark Ruddy was named to lead the association as President for a three-year term. When asked about his new position, Mark stated, I am excited about this opportunity. We live in a globalized world and our clients demand services that embrace multiple jurisdictions. Our expertise together with our privileged partnerships with Integra International, a leading association of global
View Detail

CFTC approves proposed CPO exemption rule and inte - 02 June 2020

At an open meeting of the CFTC, the full Commission unanimously approved a proposed regulation relaxing registration requirements for foreign CPOs, as well as an interim final rule extending margin compliance requirements for swap dealers and major swap participants. At a recent CFTC open meeting held via conference call in accordance COVID-19 social distance protocols, the CFTC unanimously approved two matters before it. The first agenda item
View Detail

Senators urge CFTC subcommittee to consider climat - 28 May 2020

Senators Sheldon Whitehouse and Brian Schatz have strongly recommended that clear standards around climate-related risks be included in a soon to be issued report by the CFTCs Climate-Related Market Risk Subcommittee. Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) have issued a pair of letters to Bob Litterman, the chairman of the Climate-Related Market Risk Subcommittee of the CFTCs Market Risk Advisory Committee (MRAC). In those
View Detail

CFTC issues first public guidance on determining c - 26 May 2020

The Division of Enforcements memorandum represents the first such guidance since the agency published penalty guidelines over 25 years ago. Staff of the CFTCs Division of Enforcement has issued new guidance outlining the factors the division considers in recommending the civil monetary penalties to be imposed by the agency in CFTC enforcement actions. The guidance, which generally reflects the existing practice within the division, represents
View Detail

N.D. Cal.: New fraud action alleges ‘brazenly lawl - 26 May 2020

Rampant fraud at the Seychelles-based crypto trading platform causes artificial prices that spread like forest fires through the cryptocurrency ecosystem, a new lawsuit alleges. A complaint filed in the Northern District of California alleges that BitMEX, a cryptocurrency products trading platform based in the Seychelles, has engaged in a truly staggering amount of unlawful activity, spreading artificial prices to other trading platforms and w
View Detail

NFA COVID-19 UPDATE-RELIEF FROM FINGERPRINTING REQ - 27 April 2020

NFA Notice to Members I-20-20 April 27, 2020 Due to concerns regarding the spread of COVID-19, NFA temporarily suspended its fingerprinting services in March. NFA understands that this action, along with the measures taken by federal, state and local governments to restrict the movement of, and contact among, individuals, makes it difficult for individuals to obtain fingerprints and comply with both CFTC and NFA fingerprinting requirements.
View Detail

CYBER PRACTICES CONTINUE TO CONCERN STATE SECURITI - 27 April 2020

NASAAs annual report on state-registered investment advisers notes an uptick in deficiencies related to cybersecurity. The North American Securities Administrators Association (NASAA) has released its annual report concerning the oversight of more than 17,000 state-registered investment advisers by state securities regulators. Although overall deficiencies fell for this reporting period, coordinated examinations of state-registered advisers in
View Detail

CTA MEMBERS: AMENDMENTS TO NFA COMPLIANCE RULE 2-2 - 24 April 2020

Notice to Members I-20-18 April 22, 2020 CTA Members: Amendments to NFA Compliance Rule 2-29 and related Interpretive Notice now effective NFA Compliance Rule 2-29 and Interpretive Notice 9003 – NFA Compliance Rule 2-29: Communications with the Public and Promotional Material require, among other things, that past performance used in promotional material be presented net of all commission, fees and expenses. NFA recently amended the
View Detail

COVID-19: THE CFTC PROVIDES FURTHER RELIEF TO MARK - 24 April 2020

DSIO provides no-action relief for futures commission merchants and introducing brokers regarding net capital treatment of loans obtained under the Paycheck Protection Program. In a further response to the COVID-19 (coronavirus) pandemic, the CFTC's Division of Swap Dealer and Intermediary Oversight issued a no-action letter on the treatment of covered loans under the CARES Act. Subject to certain conditions, the DSIO will not recommend en
View Detail

COVID-19: SEC extends relief for regulatory filing - 27 March 2020

The SEC extended recent filing period exemptions, and the Division of Corporation Finance issued Topic No. 9 on disclosure considerations and other matters related to the COVID-19 outbreak. The SEC has extended earlier exemptive orders providing relief from reporting and proxy delivery requirements for those affected by the COVID-19 outbreak. Earlier conditional reporting relief from the reporting and proxy delivery requirements for public com
View Detail

Client Alert: VIRTUAL CURRENCIES – CFTC clarifies - 26 March 2020

The CFTCs interpretive guidance provides welcome clarity on when certain leveraged digital asset transactions qualify for an exception from many requirements under the Commodity Exchange Act. The CFTC has issued interpretive guidance to clarify how the actual delivery exception applies to leveraged spot retail commodity transactions involving digital assets like bitcoin and ether. The guidance sets out two primary factors in determining if act
View Detail

Client Alert: COVID-19 NFA Update -- Regulatory Re - 23 March 2020

On March 23, 2020, the NFA issued Notice to Members I-20-15, which provides an update on the regulatory relief available to CPOs and CTAs during the ongoing global pandemic caused by COVID-19. The NFA's notice is reproduced below. Notice to Members I-20-15 March 23, 2020 Coronavirus (COVID-19) Update—Regulatory Relief for CPOs and CTAs On March 20, 2020, the CFTC issued a no-action letter to commodity pool operators (CPO)
View Detail

CFTC’s DSIO provides COVID-19 related relief to ma - 18 March 2020

The CFTCs Division of Swap Dealer and Intermediary Oversight issued several no-action letters detailing regulatory relief which are geared towards keeping futures and derivatives markets functioning smoothly in response to the COVID-19 crisis. In response to the COVID-19 (coronavirus) pandemic, the CFTCs Division of Swap Dealer and Intermediary Oversight (DSIO), issued five no-action letters which provide temporary, targeted relief to futures
View Detail

Client Alert: Coronavirus Update—NFA Branch Office - 13 March 2020

Due to the novel coronavirus, COVID-19, the NFA is providing temporary relief from the NFAs branch office requirements for member firms who adopt contingency plans providing for APs to temporarily work from a location not listed as a branch office, without a branch manager. The NFA recognizes that a number of its members are considering implementing contingencies pursuant to their business continuity plans that would permit employees, includin
View Detail

Client Alert: COVID-19 – NFA issues Notice to Memb - 13 March 2020

On March 4, 2020, the National Futures Association (NFA) issued an advisory notice to its members regarding the new coronavirus, COVID-19. The NFA stated that NFA and CFTC staff have been in regular contact regarding these and other developing issues, including the possible need for regulatory relief, and in the event that regulatory relief is necessary, NFA and CFTC staff intend to take a practical approach that will give its members appropriate
View Detail

Client Alert: COVID-19 – FINRA Provides Guidance o - 13 March 2020

FINRA reminds member firms to consider creating a pandemic-related business continuity plan (BCP). Regulatory Notice 20-08, issued by FINRA, provides guidance and regulatory relief to member firms for some requirements, with the caveat that as the threat of the virus decreases, member firms should expect to return to meeting any regulatory obligations for which relief has been provided. Rule 4370. The rule requires a member firm to create,
View Detail

Client Alert: COVID-19 - SEC to provide filing rel - 13 March 2020

The SEC announced that it will allow some companies an extended filing period to meet hardships that may arise from the spread of novel coronavirus while also reiterating best practices regarding transactions in company stock during periods of company crises. The SEC announced that it will allow companies affected by the global spread of novel coronavirus (COVID-19) to delay certain filings by up to 45 days. An SEC press release announcing the
View Detail

Relief from CTA-PR filing requirement for CTAs tha - 10 March 2020

NFA Notice to Members I-20-09 March 2, 2020 Relief from CTA-PR filing requirement for CTAs that solely direct trading of pools for which the firm operates as a registered or exempt CPO The CFTC recently amended CFTC Regulation 4.27 to no longer require commodity trading advisors (CTA) that solely direct trading of pools for which the firm operates as a registered or exempt commodity pool operator (CPO) to file the Form PR. This relief is e
View Detail

VIRTUAL CURRENCIES—CFTC advisory committee delves - 10 March 2020

Officials from two traditional banks as well as a DAO (decentralized autonomous organization) described their organizations stablecoins, including functioning, benefits, and regulatory oversight. A recent meeting of the CFTC Technology Advisory Committee (TAC) took an in-depth look at the particular form of virtual currency known as stablecoins. Chaired by Commissioner Brian Quintenz, who sponsors the TAC, the panel received an overview from a
View Detail

SEC publishes observations on cybersecurity and re - 27 February 2020

The SEC Office of Compliance Inspections and Examinations (OCIE) encourages market participants to review their practices, policies and procedures with respect to cybersecurity and operational resiliency. The observations, issued on January 27, 2020, relate to cybersecurity and operational resiliency practices taken by market participants. The OCIE observations highlight certain approaches taken by market participants in the areas of govern
View Detail

Texas adopts cybersecurity incident procedures for - 26 February 2020

Texas is the latest state to require broker-dealer and investment adviser firms to take steps to protect their customers and clients account information from cybersecurity breaches. The Texas State Securities Board has adopted certain notification procedures that dealers and investment advisers must undertake when a cybersecurity incident is triggered, effective February 27, 2020. Cybersecurity incident procedures. Definitions. A cybersecur
View Detail

Office of Compliance Inspections and Examinations - 25 February 2020

On January 7, 2020, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) issued Press Release 2020-4. The focus on investment advisers and broker-dealers, as well as security and fintech, reflects OCIE`s assessment of risks and policy matters arising from recent market and regulatory developments. The SEC`s Office of Compliance Inspections and Examinations has published its annual examina
View Detail

DSIO issues follow-up statement concerning annual - 24 February 2020

The Division of Swap Dealer and Intermediary Oversight acknowledged that its December advisory has presented challenges for chief compliance officers seeking to adapt existing reporting procedures for 2020 submissions. In an apparent effort to alleviate concerns among registrants required to file a Chief Compliance Officer Annual Report, DSIO Director Joshua Sterling has issued a statement regarding the Divisions December 2019 advisory which h
View Detail

The SEC Intends to Focus its Adviser Exams on Robo - 21 February 2020

In its annual examination priority report, the Securities and Exchange Commission unveiled that it intends to prioritize investigating each of digital assets and automated investment advice existing in the securities industry. The agency staff has shifted the focus of its examinations in 2020 to technology. In addition to other priorities mentioned in its annual examination priority report, the agency put a special emphasis on each of digital
View Detail

2d Cir.: Dirks personal benefit not required in so - 20 February 2020

The government can avoid proving a personal benefit when it prosecutes insider trading under the criminal code, a Second Circuit panel held. Affirming convictions for insider trading, the Second Circuit held that the Dirks personal-benefit test does not apply in criminal prosecutions under the wire fraud and securities fraud provisions of Title 18 of the U.S. Code. The court also held that confidential government information may constitute pro
View Detail

VIRTUAL CURRENCIES—IOSCO report sizes up issues, r - 19 February 2020

Report does not mandate regulatory action, but suggests tools regulators might use in addressing the issues that crypto-assets present. A new report prepared by the International Organization of Securities Commissions (IOSCO) offers assistance to global regulators that are wrestling with how to handle crypto-assets trading platforms (CTPs) within their existing regulatory frameworks. The report, which includes tools that regulators could consi
View Detail
OCIE highlights observations, common deficiencies from fund exams
Jessen Gregory Named To Super Lawyers Rising Stars list for 2019
SEC directors address Enforcement Division matters including cybersecurity

SEC, FINRA offer guidance on custody of digital as - 08 July 2019

The SEC and FINRA issued new guidance addressing emerging digital asset models. It recognizes that while the general rules of securities custody apply regardless of whether securities are paper or digital form, existing securities regulations do not necessarily fit perfectly with the custody needs of those handling digital asset securities. The guidance divides digital asset security landscapes into noncustodial and custodial; among the noncustod
View Detail

8. CFTC issues report focuses on swap dealer de mi - 08 July 2019

The report defines on-venue swaps as those executed on an exchange, swap execution facility, or designated contract market. The data used for this report by the CFTC was collected using a swap-dealer to be defined as a person who is deemed to be a swap dealer shall be deemed to be a swap dealer with respect to each swap it enters into, regardless of the category of the swap or the persons activities in connection with the swap. The previous de
View Detail

CFTC broadens path for proprietary traders to act - 27 June 2019

The CFTC issued no-action relief for registered floor traders in an attempt to open up swap dealing to new sources of liquidity. Therelief eliminates ambiguity for market participants wishing to engage in swaps activity in their capacity as a floor trader, encouragingnew liquidity providers to trade cleared swaps on registered venues without regulatory uncertainty, benefiting market participants seeking to access liquid, competitive cleared swaps
View Detail

CFTC amends Part 30 rules on the sale of foreign f - 25 June 2019

The CFTC unanimously approved a proposed rule to its Part 30 exemption program. The part 30 exemption program gives US customers increased access to foreign futures trading markets; people located outside the U.S., who are subject to a comparable regulatory framework in the country in which they are located, may seek an exemption from the application of certain CFTC regulations, including those with respect to registration.However, the issue with
View Detail

SEC issues long-awaited final rules on capital, ma - 21 June 2019

Brought upon by the Dodd-Frank Act, the SEC is adopting capital and margin requirements for security-based swap dealers and major security-based swap participants. This will create a stricter control and more structure for security-based swap dealers by enhancing segregation between security-based swap dealers and major security-based swap participants. This stricter control will protect investors and the market more generally by helping central
View Detail

CFTC issues whistleblower alert on insider trading - 18 June 2019

The CFTC has provided specific direction for reporting improper use of material nonpublic information. They are offering financial awards and protections to members of the public who report any misconduct with the information. The CFTC has defined improper use of material nonpublic information as 1) trading on the basis of material nonpublic information when it breaches any past agreements or 2) trading on the basis of material nonpublic informat
View Detail

SEC adopts Regulation Best Interest, Form CRS summ - 05 June 2019

The SEC voted in favor of adopting a controversial proposal to enact Regulation Best Interest (BI) to require advisors and brokers to disclose certain information to retail investors. Regulation BI has three main components: the disclosure obligation, the care obligation, the conflict-of-interest obligation, and the compliance obligation. The disclosure obligation says broker-dealers must disclose material facts about the relationship and recomme
View Detail

FinCEN issues guidance on convertible virtual curr - 09 May 2019

FinCEN released an interpretive guidance of preexisting regulations to apply to certain business models involving money transmission of substitutes for currency, specifically, convertible virtual currency. The guidance is in response to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of multiple variations of businesses dealing in CVCs.This guidance lists specific examples of busines
View Detail

SEC OIG Issues Recommendations on Adviser Examinat - 29 August 2017

The SECs Office of the Inspector General has issued a report discussing its findings during an audit of the Office of Compliance Inspections and Examinations investment adviser examination completion process. While noting the overall effectiveness of OCIEs controls, the OIG found certain areas of concern in its reporting and documentation processes and recommended improvements to examination reviews and approvals and documentation of meetings and
View Detail

This website uses cookies to ensure that we give you the best experience on our website. This cookie data is anonymous, read about how we use cookies and how you can control them in our Cookie Notice. Otherwise, we’ll assume you’re OK to continue. Find out more.

OK