Under the leadership of U.S. Securities and Exchange Commission Chairman Jay Clayton, the SEC’s Division of Enforcement has made the protection of Main Street investors its overarching priority. On March 23, 2020, Division of Enforcement Co-Directors Stephanie Avakian and Steven Peikin issued a statement to financial market participants re-emphasizing the SEC’s commitment to safeguard the
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FinCEN Issues Statement to Financial Institutions on BSA/AML Compliance During COVID-19 Pandemic
The Financial Crimes Enforcement Network (FinCEN) released a statement to financial institutions on March 16, 2020, concerning the COVID-19 pandemic. The statement covered two main topics:
First, FinCEN
SEC Continues Compensation Disclosure Focus With FAQs and Enforcement
On Oct. 18, 2019, the Securities and Exchange Commission (SEC) Division of Investment Management staff published Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation (FAQs). Many in the industry view the FAQs as overdue SEC guidance in an area that has been a focus of the SEC Division of
Ready or Not, Prepare to Start Answering Questions About Reg BI Compliance
On June 5, 2019, the SEC adopted Regulation Best Interest (“Reg BI”), which requires broker-dealers and associated persons to make recommendations regarding securities transactions (or investments involving securities) that are in the “best interest” of their retail clients. The SEC also adopted Form CRS, requiring broker-dealers and investment advisers to provide a brief relationship summary
SEC Adopts Regulation Best Interest
On June 5, 2019, the Securities and Exchange Commission adopted, by a 3-1 vote, Regulation Best Interest (“Reg BI”) which, in the words of Chairman Clayton, would “substantially enhance the broker-dealer standard of conduct beyond existing suitability obligations.” The Chairman also noted: “the standard of conduct draws from key fiduciary principles and cannot be satisfied
D.C. Circuit Vacates SEC Sanctions, Says Negligent Omissions Are Not ‘Willful’ Under Advisers Act
On April 30, the U.S. Circuit Court of Appeals for the District of Columbia Circuit vacated a Securities and Exchange Commission order imposing sanctions. The court held that an investment advisory firm and its owners did not violate Section 207 of the Investment Advisers Act of 1930, 15 U.S.C. § 80b-7, by negligently omitting material
SEC OCIE Highlights Potential Deficiencies in Firm Privacy Policies
On April 16, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert highlighting Regulation S-P compliance deficiencies and issues it found in recent examinations of broker-dealers and investment advisers. Regulation S-P is the primary SEC rule detailing the safeguards these firms must take to protect customer privacy. The Risk Alert provides
FINRA Issues New Guidance Regarding Customer Communications Relating to Departing Registered Representatives
As recognized by new guidance from the Financial Industry Regulatory Authority (FINRA), the departure of a registered representative often prompts customer questions about the departing representative and the continued servicing of a customer’s account. In light of the continued frequency of movement of registered representatives from, or among, member firms, FINRA issued guidance on April
Key Lessons for Colleges and Universities from Operation Varsity Blues
On March 12, 2019, the United States Attorney’s Office for the District of Massachusetts announced federal criminal charges in “Operation Varsity Blues,” the largest college admissions case ever prosecuted by the Department of Justice. Fifty people have been charged for their involvement in what prosecutors describe as a nationwide conspiracy to get the children of
Positive FCA Enforcement Trend for Defense Contractors: DOJ Reaffirms Commitment to Exercise Statutory Authority to Dismiss
Following recent changes to Department of Justice policy regarding individual accountability in government investigations of corporate wrongdoing, DOJ has recently further demonstrated its willingness to consider a flexible approach in applying the False Claims Act.
In a January 28, 2019 speech by Deputy Associate Attorney General Stephen Cox to the 2019 Advanced Forum on