News & Events – Bates Research

Just before Christmas, the SEC issued new guidance on compliance with the broker-dealer/investment adviser-mandated Client Relationship Summary Form (“Form CRS”). The release provides significant detail on disclosure topics as well as the content, format and posting requirements for the Form. In this article, we review the latest highlighted concerns and key takeaways.

Get the top takeaways to help you deconstruct the SEC's 400-plus-page adopting release of the new Marketing (and Solicitor) Rule. Read this helpful summary from Bates Compliance’s recent Webinar featuring Managing Directors and leading Compliance Consultants Linda Shirkey and Rhonda Lear Davis, CAMS, CFE. Learn about key provisions and practical ways to conform oversight, recordkeeping and disclosure requirements under the rule.

How SEC Regulation Best Interest (“Reg BI”) became the prevailing federal standard for broker-dealer investment recommendations to clients is a long and complicated story. However, as of its June 30th, 2020 implementation date, Reg BI is the rule, which means that compliance with the rule’s requirements is mandatory and enforceable. In an unpleasant surprise for regulators and rule advocates, results from a recent NASAA reexamination initiative conclude that “broker-dealer firms still are not abiding by the Reg BI rule now in effect.” The report was greeted with strong industry reaction. In this article, Bates takes a look at what NASAA found and how it is being received.

Government entities have begun in earnest to address concerns over the rapidly expanding crypto marketplace. Congress has passed the Infrastructure Investment and Jobs Act, and the President’s Working Group on Financial Markets issued a substantial report on a framework for regulating stablecoins. These actions on taxation and oversight are the first real steps toward regulation of an industry that SEC Chair Gary Gensler only recently likened to the "Wild West." In this article, Bates takes a closer look at the soon-to-be-new law on digital asset taxation and the proposed regulations on stablecoins amid the broader debate on crypto regulation.

On October 6, 2021, in his first speech as SEC Enforcement Division, Director Gurbir Grewal urged participants at a PLI Broker/Dealer Regulation and Enforcement Conference to take a “proactive approach” and engage in real “cooperation” in order to “promote better conduct among market participants.”

Remember 2010? Prince William and Kate got engaged. Tiger Woods apologized. BP Deepwater Horizon exploded. And Mark Zuckerberg was named Time Magazine’s “Person of the Year.” Also in February 2010, the SEC issued guidance to public companies on climate change-related disclosure obligations. Fast forward over ten years later and on September 22, 2021, the SEC Division of Corporation Finance (“Division”) reminded issuers about complying with that 2010 guidance. 

In September 2021, NASAA published two reports that have implications for the protection of senior investors, including an analysis of the status of NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation by states that have adopted it or parts of it and a presentation of coordinated examination results of investment adviser firms by state securities regulators, which found “serious deficiencies” in policies and procedures to protect seniors, among other findings.

Regulators have moved from statements to guidance to alerts and now to enforcement and rulemaking in their efforts to gain some degree of control over the exuberant Special Purpose Acquisition Company (“SPACs”) marketplace. As highlighted in our white paper, published in late April 2021, the SEC had been prolific in stating its concerns about SPACS.

FINRA remained busy through the end of Summer with several important regulatory actions. New actions included issuing updated guidance on supervision of third-party vendors, requesting feedback on a report by the Office of Financial Innovation (“OFI”) concerning broker-dealer approaches to cloud computing, and raising additional alarms about a phishing campaign using fraudulent FINRA email domains.

Bates Group recently hosted employment litigators and experts for a CLE program to discuss the effects that current and future employment issues have had on workforce reintegration, supervisory activity, mental health and substance abuse, disciplinary actions, and Form U5 language and terminations. Panelists included financial services industry leaders and Bates Group Experts who shared what they are seeing today and what employers and employees can expect going forward in the post-COVID work environment. Bates looks at the highlights and insights from the program.

Legislators, administrators and regulators have publicly advocated for government intervention to protect consumers and investors from cryptocurrency price volatility and the fraud and money laundering that has proliferated across digital platforms. With the passage of the bipartisan infrastructure bill in the U.S. Senate, comprehensive regulation of the industry seems inevitable. Meanwhile, SEC Chair Gensler’s recent remarks on crypto assets demonstrate the regulator’s focus on addressing gaps and protecting investors.

On July 21, 2021, the SEC Division of Examination issued two new risk alerts on Wrap Fee Programs and Principal and Cross Trading. The alerts were based on the latest observations of compliance deficiencies drawn from extensive examinations. The Division stated that the new alerts should be considered alongside earlier priorities and observations from 2019. In this article, Bates reviews the Division’s recent findings and guidance.

The White House, Congress, federal and state law enforcement agencies and regulators are mobilizing to combat the threat of ransomware. In the wake of high-profile attacks on businesses of all sizes, the Biden administration has made the issue a priority. In this article we focus on the significant recent administrative, legislative and regulatory efforts to confront ransomware, including: strengthening the digital resilience of critical infrastructure, the launch of a new interagency website to support the private sector’s cyber defenses, a $10 million “Rewards for Justice” program to catch cybercriminals, bipartisan cyber legislation, and SEC and NYSDFS developments, to name few.

With the recent publication of its of national priorities for anti-money laundering and countering the financing of terrorism ("AML/CFT"), the Financial Crimes Enforcement Network ("FinCEN") fulfilled one of the core mandates under the Anti-Money Laundering Act of 2020: the establishment and dissemination of national AML priorities. The 12-page document is the product of consultations among the U.S. Treasury Secretary and Attorney General, federal regulators, state financial regulators, and national security agencies. In this article, Bates takes a look at the newly published policy, each of FinCEN’s national priorities, and what your firm and clients need to know. 

Early last month, FINRA proposed new amendments to rules on the financial exploitation of seniors and other vulnerable individuals. The changes have implications for state rules protecting seniors as well. The SEC, FINRA and NASAA have also announced a joint training program designed to help firms comply with Senior Safe Act requirements. The program has compliance implications for firms seeking to utilize FINRA’s safe harbor rule 2165. In this article, Bates takes a closer look at the proposed changes and what they could mean for your firm.

The Financial Crimes Enforcement Network (FinCEN) today issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy.