News & Events –

In its annual report of legal actions taken in FY2022 (ending September 30), the SEC noted its “robust enforcement” efforts to “impose penalties designed to deter future violations, establish accountability from major institutions, and order tailored undertakings that provide potential roadmaps for compliance by other firms.” The numbers bear out just how robust SEC enforcement efforts have been. In this article, Bates takes a look at the details in the new report.

Regulatory and enforcement activity has been brisk since nine federal agencies issued a “Comprehensive Framework for Responsible Development of Digital Assets” in response to President Biden’s Executive Order to collaborate on a “whole of government approach.” 

Since President Biden issued an Executive Order in March 2002 directing agencies to collaborate on a “whole of government approach” for ensuring the responsible development of digital assets, the market has been anticipating the release of the broader framework. The Framework, issued on September 16, 2022, remains a high-level mix of broad directives by nine separate federal agencies which support these goals. Bates has the highlights.

NASAA, the North American Securities Administrators Association, published their 2022 Enforcement Report detailing data collected from 48 jurisdictions in 2021. This annual publication serves several purposes. Primarily, it is an attempt to aggregate the efforts undertaken by state regulators to protect the public from fraud. As Joseph Borg (NASAA 2021-2022 Enforcement Section Chair, pictured) states in his introduction, the report flags concerns about complex theft and misapplication, real estate and energy scams, cryptocurrency, non-fungible tokens, metaverse schemes, and more. Learn what to expect as state regulators assert their jurisdiction over new products, new markets and new marketplaces. Bates has the highlights.

Independent reviews on AML risk are becoming more important, not only to ensure compliance with current regulation and the documentation of all efforts undertaken, but also to uncover systemic weaknesses and to provide corrective recommendations for management. In this article, Bates offers tips to help MSB firms navigate the process, including key elements of a review, timing, and selecting the right reviewer.

On September 30, 2022, FinCEN published first of three final rules (and related Fact Sheet) on the reporting requirements for beneficial ownership information. It goes into effect on January 1, 2024. Until then, FinCEN will be developing reporting forms and other guidance to help companies with their reporting compliance. We look at the highlights of the new reporting rule and what firms should do to prepare.

Each year, the SEC and FINRA release Exam and Risk Monitoring Reports highlighting continuing and emerging concerns for the year. These agency communications serve as a potential notice of subjects scrutinized for future examinations. In this guide, Bates walks you through the exam process and break down what you need to know, including: anticipation and preparation, first contact, document production, interviews, and findings.

NASAA is reminding financial professionals that state regulators remain a force to be reckoned with in an increasingly complex financial marketplace. Describing a need to protect elderly investors from unsuitable products, a need to protect average investors from the risks of confusing contract terms and misleading marketing communications, and to address ongoing and persistent complaints of fraud, NASAA proposed revisions to its Guidelines on REITs. Bates looks at the four proposed revisions and what they could mean for your firm and clients.

As the size of the private funds market has grown, regulators have been increasingly concerned about the risk posed to investors. The sheer size of the market—and the state of the current disclosure framework covering it—has motivated regulators from both the SEC and CFTC to propose additional rule amendments to increase the regulatory oversight of private fund advisers and the funds they advise. Bates takes a look at key features of the SEC/CFTC proposal.

Summer is coming to a quick close, and we hope you had a chance to get moving and enjoy some fun in the sun!

While you are celebrating the final days of summer, we’ve compiled our annual summer roundup of news that you may have missed, as well as a sneak peek of live and virtual events happening this fall. We’ve even included a bonus track at the end of our list to cap off your summer.

FINRA remained active this summer with a series of important proposed rule changes and risk-related compliance reminders. Here’s a summary to keep you up to date.

Responding to the growing popularity of Bitcoin and other cryptocurrencies, in 2015 the New York Superintendent of Financial Services came up with the idea for a new charter called BitLicense, based on the historic template for bank and trust charters. In this article, Bates expert Paul Nelson takes a look at the past, present, and future of the BitLicense program, in the larger context of today's crypto market.

Did Shakespeare get it right? Is past really prologue when it comes to your mutual fund share class selection, conflicts, and disclosures?  Find out how Bates can help you put the past in the past.  

On August 3, 2022, SEC staff issued new guidance addressing conflicts of interest under the Regulation Best Interest (“Reg BI”) standard for broker-dealers and the fiduciary standard for investment advisers. While the staff bulletin states clearly that the guidance is intended only to be a reflection of internal views on the subject, its tone, comprehensiveness (replete with numerous examples), and even its pragmatic question-and-answer format warrant careful attention. Read our full analysis for details on this new guidance and how it could impact your firm or clients.

The mandatory compliance deadline for the SEC marketing rule—which replaced the former Advertising Rule and the Cash Solicitation Rule—is November 4, 2022. Advisers should be reviewing, revising, and preparing to implement procedures and policies to prevent potential violations. There’s still time, but there’s also a lot to consider, as the rule consolidates previous SEC guidance, no-action letters and exam findings on questions concerning recommendations, testimonials, and the presentation of performance metrics. Here’s what you need to know.

FINRA has filed with the SEC proposed changes to FINRA Rule 3110 to add new Supplementary Material 3110.19 (Residential Supervisory Location). The changes allow a home office to be considered a non-branch “residential supervisory location” under certain conditions. By this proposal, FINRA is adapting to a new, post-pandemic model in which employees work at both conventional offices and in their private residences—a model which FINRA acknowledges is likely to “endure.” Read the full article for details on these proposed rule changes.