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 June 9, 2023.
House Unanimously Passes Bill to Expand Accredited Investor Pool – Author Mark Schoeff Jr.
The House of Representatives has unanimously approved two bills aimed at expanding the criteria for accredited investors, allowing more individuals to invest in private securities. The Fair Investment Opportunities for Professional Experts Act would deem as accredited investors those with certain licenses or professional backgrounds, such as brokers and investment advisers. The Accredited Investor Definition Review Act grants the SEC discretion to determine the certifications or credentials needed for accreditation and requires the agency to review the definition every five years.
U.S. Crypto Crackdown Reaches Fever Pitch as SEC Sues Coinbase – Author Austin Weinstein
The SEC has filed a lawsuit against Coinbase Global, the largest cryptocurrency exchange in the United States, accusing it of operating an illegal exchange. The SEC alleges that they allowed users to trade unregistered securities in the form of various crypto tokens, thereby evading the agency’s regulations. This move comes as part of the SEC’s broader crackdown on the cryptocurrency industry, with Chairman Gary Gensler advocating for increased oversight of tokens. The regulatory scrutiny, coupled with warnings to banks about the risks associated with cryptocurrencies, may make it more challenging for US citizens to engage in crypto trading and investments.
SEC’s Cybersecurity Proposals Draw Protests of Too Much, Too Fast – Author Dan Shaw
Financial industry groups, including the Financial Services Institute, Investment Adviser Association and Investment Company Institute, have requested additional time to review and potentially comply with three comprehensive cybersecurity rules proposed by the SEC. While these organizations generally support the objectives of the SEC’s cybersecurity proposals, they seek some modifications. The proposed rules, which aim to update regulations dating back over 20 years, collectively span over 1,200 pages. The industry groups are seeking an extended period to thoroughly analyze the rules before implementing any changes.
FINRA Uses Fine Proceeds of $48.1 Million to Help Fund Improvements – Author Mark Schoeff Jr.
FINRA, the broker-dealer self-regulator, has announced the allocation of funds collected from fines in 2022 to strengthen its examination and enforcement efforts. With $48.1 million in fines collected, FINRA supplemented this amount with $63.3 million from reserves and excess operating revenue, resulting in a total of $111.4 million available for various initiatives. Of this total, $89.2 million was allocated to capital initiatives aimed at upgrading technology and data management for improved oversight of member brokerages. Another $22.2 million was earmarked for investor education.
Firms Brace For SEC Spotlight on Electronic Communications – Author Bill Simpson
The SEC has fined two firms for their failure to adhere to record-keeping requirements, as part of a broader crackdown on firms’ use of off-channel communications. Regulators, including the SEC and FINRA, have indicated that electronic communications will be a focus of their examinations, with outcomes expected later this year. The Consumer Financial Protection Bureau has also published a Policy Statement on Abusive Acts or Practices, emphasizing the need for firms to monitor marketing practices. The Department of Justice is taking a tough stance on missing text messages during investigations, indicating the need for robust policies and procedures.