Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.
Stay up-to-date and in the know on everything happening in the compliance world as of January 5, 2024.
The Murky World of Crypto Compliance: What Advisors Need to Know – Author Tom Taulli
In 2023, the cryptocurrency landscape saw significant turmoil. Despite these challenges, the crypto market thrived, with Bitcoin yielding over 150% year-to-date returns, attracting cautious interest from investors. Advisers, navigating murky compliance issues, grappled with custody concerns, regulatory conflicts, and the difficulty of valuing digital assets.
‘“The market consensus regarding the Investment Adviser Code of Ethics rule is that financial institutions regulated by the SEC must monitor their employees’ holdings and transactions of securities to prevent insider trading, front-running, and other unethical activity,” says David Bliss, who is the chief product officer at COMPLY. He says his firm’s program can provide compliance teams with real-time “automated, comprehensive monitoring and violation tracking” for their employees’ cryptocurrency holdings and transactions.’
FCPA Compliance Report – John Gebauer and John Van Der Wal on Implementing Comprehensive Strategies for Regulatory Rule Compliance – Author Tom Fox
This article highlights a recent podcast featuring COMPLY’s John Gebauer and John Van Der Wal
“John Gebauer and John Van Der Wal are seasoned professionals in the financial industry, each with over three decades of experience and a focus on regulatory changes and compliance challenges. Gebauer believes that there is a need for stricter controls and requirements in the ESG space. He emphasizes the importance of firms having the necessary documents and procedures to back up their claims of being ESG advisors. Van Der Wal shares a similar perspective. He stresses the need for more controls and requirements in ESG advising, the importance of vendor due diligence, and the potential of AI and machine learning technologies in preventing inappropriate activity. Both Gebauer and Van Der Wal highlight the importance of staying up-to-date with changing rules and regulations in the financial industry. Join Tom Fox, John Gebauer, and John Van Der Wal on this episode of the FCPA Compliance Report to delve deeper into these insights.”
SEC Approval of Bitcoin ETFs Could Come This Week – Author Ric Edelman
The SEC may approve the first spot bitcoin ETFs, potentially launching by January 10, marking a historic moment for the crypto community. Predictions anticipate these ETFs to attract trillions in assets over the next few years, with estimates ranging from $150 billion from independent RIAs to trillions from various sources. Optimism stems from the belief that massive flows will drive bitcoin’s price to new heights. However, caution is advised as immediate price surges aren’t guaranteed upon ETF approval, and gradual asset flows may lead to initial disappointment. Financial advisers are expected to allocate 1-5% of client assets to these ETFs.
FINRA Moves to Tighten Brokers’ Ability to Borrow Client Money – Author Melanie Waddell
The Financial Industry Regulatory Authority (FINRA) is proposing a rule change to restrict brokers’ borrowing and lending with clients. Seeking to amend Rule 3240, which generally prohibits such transactions, FINRA aims to strengthen the prohibition, narrow exceptions, modernize family-related exceptions, and enhance notice and approval requirements. The proposal emphasizes the rule as a general prohibition and clarifies its applicability to pre-existing broker-client relationships. FINRA’s changes, submitted to the Securities and Exchange Commission, aim to ensure tighter control over brokers’ financial dealings with clients, safeguarding investor interests.
2023 was another big year for regulation. Here are 7 reasons why – Author Dan Shaw
In 2023, regulatory bodies, led by ambitious regulators, introduced significant rules impacting the financial industry. Proposals from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) covered diverse areas, including cybersecurity, artificial intelligence (AI), and working from home. The Investment Adviser Association expressed concerns about complying with 13 new regulations within two years, citing potential redundancies. The SEC implemented a cybersecurity rule and considered three more, while addressing the use of AI in financial planning. Regulatory victories, such as positive changes in work-from-home policies, were also notable developments.
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