Securities and Exchange Commission

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The annual ALI-CLE Accountants’ Liability Conference occurred in Washington, D.C. on May 16 and 17, 2024 and was co-hosted by Junaid A. Zubairi, Chair of Vedder Price’s Government Investigations and White Collar Defense group, and Veronica Callahan of Arnold & Porter LLP. The conference featured a wide variety of speakers, including regulators from the Securities and Exchange Commission (“SEC”) and the Public Company Accounting Oversight Board (“PCAOB”), in-house counsel, outside counsel, and consultants.Continue Reading Highlights from 2024 ALI-CLE Accountants’ Liability Conference

On May 1, 2024, the Financial Industry Regulatory Authority (FINRA) proposed a new series of rules—FINRA Rule 6500 Series—regarding reporting of securities lending transactions pursuant to the requirements under new Rule 10c-1a under the Securities Exchange Act of 1934 which the SEC adopted on October 13, 2023. Rule 10c-1a requires “covered persons” to report specified information about “covered securities loans” (as these terms are defined in Rule 10c-1a) to FINRA by the end of the day on which a loan is made or modified, in accordance with rules that FINRA is required to adopt by May 2, 2024 and that detail the format and manner by which the loan information is reported. Continue Reading FINRA Proposes Rules Regarding SEC-Mandated Reporting of Securities Lending Transactions

On May 13, 2024, the SEC and FinCEN jointly proposed a new rule under the Bank Secrecy Act (BSA) that would impose new customer identification program (CIP) requirements on registered investment advisers and exempt reporting advisers.Continue Reading SEC and FinCEN Propose Customer Identification Program Requirements for Investment Advisers

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On May 16, 2024, the SEC adopted amendments to Regulation S-P to enhance and modernize consumer privacy protections in light of technological developments in how individuals’ personal information is collected, shared and maintained. Regulation S-P applies to broker-dealers (including funding portals), investment companies, registered investment advisers and transfer agents (“covered institutions”) and currently requires (1) covered institutions (excluding transfer agents) to adopt written policies and procedures that address administrative, technical and physical safeguards for the protection of customer records and information (the “safeguards rule”), and (2) covered institutions (including transfer agents) to properly dispose of consumer report information (the “disposal rule”). The amendments are described below.Continue Reading SEC Adopts Regulation S-P Amendments to Enhance Protection of Customer Information

In a 3-0 decision, the Fifth Circuit Court of Appeals vacated the SEC’s private fund adviser rules (“Final Rule”). Each component of the Final Rule was vacated, including the Private Fund Audit Rule, Private Fund Quarterly Statement Rule, Private Fund Adviser Restricted Activities Rule, Adviser-Led Secondaries Rule, Preferential Treatment Rule and Books and Records Rule Amendments. The original lawsuit was brought by several trade associations who sued the SEC over the Final Rule in imposition of undue regulatory burdens and costs.Continue Reading Fifth Circuit Vacates Private Fund Adviser Rules

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On April 17, 2024, the SEC’s Division of Examinations issued its latest risk alert regarding Rule 206(4)-1 of the Investment Advisers Act of 1940, known as the Marketing Rule. Following the examinations staff’s June 2023 and September 2022 risk alerts regarding areas of emphasis in examinations focused on compliance with the Marketing Rule, the latest risk alert highlighted initial observations from examinations of investment advisers’ compliance with the Marketing Rule and related rules under the Advisers Act. The risk alert focused on compliance with the Marketing Rule’s general prohibitions, Rule 206(4)-7 (the Compliance Rule), Rule 204-2 (the Books and Records Rule), and Form ADV disclosure requirements.Continue Reading SEC Staff’s Latest Marketing Rule Risk Alert Highlights Initial Observations from Examinations

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Chair/Commissioner Remarks and Litigation and Enforcement Trends

The U.S. Securities and Exchange Commission (the “SEC”) held its annual SEC Speaks conference—after a hiatus in 2023—on April 3 and 4, 2024 in Washington, D.C. The conference featured remarks from Chair Gary Gensler, Commissioner Hester Peirce, Commissioner Mark T. Uyeda, and Director of the Division of Enforcement (the “Division”) Gurbir S. Grewal, as well as panel discussions addressing current SEC initiatives, priorities, and enforcement trends for the upcoming year. The conference speakers and panels also provided an update on litigation, judicial, and legislative developments.Continue Reading Highlights from SEC Speaks 2024

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On February 13, 2024, the Financial Crimes Enforcement Network (FinCEN) issued a proposed rule1 that would extend certain anti-money laundering/countering the financing of terrorism (AML/CFT) program requirements to investment advisers registered with the Securities and Exchange Commission (SEC) and exempt reporting advisers (ERAs) with the SEC.

The proposed rule would require certain covered advisers…

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On November 14, 2023, the Securities and Exchange Commission (the “SEC” or the “Commission”) announced its enforcement results for fiscal year (“FY”) 2023, which ended on September 30, 2023.  The SEC’s FY 2023 results continued to reflect an aggressive approach to enforcement, reaching record highs in multiple enforcement metrics.  Specifically, the SEC announced that it brought 784 total enforcement actions, obtained orders totaling nearly $5 billion in financial remedies, and distributed nearly $1 billion to harmed investors.

SEC Chair Gary Gensler referred to the SEC’s Division of Enforcement as a “cop on the beat” that provided benefits to the investing public, while applauding the Division of Enforcement’s “effectiveness” during FY 2023.  Director of the Division of Enforcement Gurbir Grewal noted that the Division achieved results by “leveraging risk-based initiatives, seeking robust remedies, rewarding cooperation, protecting whistleblowers, or returning nearly a billion dollars to harmed investors.” Continue Reading SEC Releases Enforcement Highlights for Fiscal Year 2023