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11-20-17

Seeking Sunlight for Investors,  SEC Chair Addresses Five Areas of Focus

With the latest cyber crises momentarily at bay, SEC Chair Jay Clayton is taking the opportunity to address both short- and long-term agency priorities. In a speech before the Practising Law Institute’s 49th Annual Conference on Securities Regulation, Mr. Clayton continued to set forth the agency’s near-term, narrowly focused retail and institutional regulatory priorities and articulated longer-term elements of a five-year strategic plan.

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11-08-17

President Signs New Elder Abuse Prevention and Prosecution Law as NASAA Rolls out New Guidance

Political momentum continues to drive lawmakers’ efforts to combat elder financial abuse. In our last report on the subject, Bates considered the current state of play as indicated by the North American Securities Administrators Association’s (NASAA) survey results on (i) firm practices and policies applicable to senior customers and (ii) state securities regulator perspectives on senior financial fraud. Since then, federal and state legislatures have enacted bipartisan laws to expand agency authority over elder abuse and to better cope with guardianship issues. 

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11-01-17

SEC Enforcement Leadership Sets Priorities

Co-Directors of the SEC Division of Enforcement, Stephanie Avakian and Steven Peikin, addressed enforcement priorities at a Securities Forum held in Washington, D.C. last week. Ms. Avakian’s formal remarks emphasized that the SEC will refocus its enforcement efforts toward the protection of retail investors and on a new integrated approach to cyber-related crime. Mr. Peikin, in widely-reported comments, described a shift in enforcement tactics, while also acknowledging resource constraints. Details after the jump.

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FINRA Update: New Arbitration Proposals, Identifying High Risk Brokers

10-25-17

FINRA Update: New Arbitration Proposals, Identifying High Risk Brokers

In two notices issued last week, the Financial Industry Regulatory Authority addressed a few longstanding issues. First, FINRA proposed expanding the legal options available to investors when filing a claim against an inactive firm or associated person. Second, FINRA requested comments on allowing compensated non-attorney representatives to continue to represent customers in disputes between investors and broker-dealers. Comments on both are due December 18, 2017. In addition, FINRA Executive Vice President of Regulatory Operations Susan Axelrod (at left) offers insight on how FINRA is identifying high risk brokers.

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New CFTC Commissioner Proposes “21st Century” Approach

10-18-17

New CFTC Commissioner Proposes “21st Century” Approach

At the CFTC a line has been drawn: the regulator will shift away from focusing on “regulating the last crisis” to ensure that they remain relevant in modern markets. Rather than reacting to market innovation, the CFTC sees a role for itself in advancing and promoting innovation. This new viewpoint was prominently discussed in the first public address of Brian Quintenz, newly sworn in as Commissioner of the CFTC. Mr. Quintenz challenged the entire approach undertaken by his predecessors toward regulating the activity of the sector.

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10-04-17

New SEC, State Regulator Initiatives and Filings Amid Cyber Breaches

Testifying at an oversight hearing before the Senate Banking Committee on September 26, 2017, SEC Chairman Jay Clayton addressed concerns over the SEC’s disclosure of a 2016 cyber-security breach involving its own EDGAR system for corporate filings, as well as the massive breach of the Equifax credit reporting agency database that put in jeopardy the personal information of over 140 million Americans. In response to these cyber incidents, the SEC is planning to utilize its new Cyber Unit, and New York State has propsed regulations that would give its Department of Financial Services the power to oversee credit reporting agencies.

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09-06-17

Senior Investors Update: New Developments Signal Tough Line on Elder Financial Abuse

A FINRA arbitration panel recently assessed over $1.5 million in costs, disgorgement and punitive damages against a privately held financial services and investment firm in relation to allegations of senior financial abuse and violations of state and federal securities laws (among other claims). The outcome of this case, together with a new North American Securities Administrators Association (NASAA) "Pulse Survey" of state securities regulators on the topic of senior financial fraud, and a newly announced National Association of Attorneys General senior financial fraud initiative are the latest chapters in the story of an industry working to address elder and vulnerable clients. Bates Group has been following both the federal and state efforts to help seniors and other vulnerable investors.

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08-24-17

SEC Data Analytics Team Strikes Again

The SEC is not slowing down in its extensive use of sophisticated data analytics to drive enforcement efforts. Last week, the agency brought charges against seven individuals who participated in complex insider trading schemes that netted millions of dollars in illegal profits. The case has garnered significant attention because the defendants were caught by the SEC using data analytics despite the defendants’ use of sophisticated methods and new communications technologies to evade detection. Bates has played a leadership role in the public discussion of the enforcement implications and use of big data analysis by the regulatory agencies. In this post we review some recent enforcement developments and the increasing role of the SEC’s Market Abuse Unit (MAU)’s Analysis and Detection Center (ADC).

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08-17-17

DOL Fiduciary Duty Rule: What Your Firm Should Do Now

The road to implementation of the Department of Labor’s fiduciary duty rule continues to be bumpy. The latest turn may mark yet another delay of the Rule. Specifically, the requirements of the Rule that took effect on June 9, 2017 may be extended from its original, full compliance date of January 1, 2018 to July 1, 2019. Today we report on the DOL’s recent moves and offer recommendations for financial services firms to consider as they navigate the ongoing regulatory and compliance uncertainty. 

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FINRA President and CEO Sets Forth Comprehensive Bad Actor Initiative

07-27-17

FINRA President and CEO Sets Forth Comprehensive Bad Actor Initiative

This is the second installment in our ongoing look at FINRA’s efforts to address high risk brokers, also referred to by FINRA as “bad actors.”  Our first installment discussed  the set of proposals recently approved by FINRA’s Board of Governors to identify high risk brokers and enhance tools for disciplinary actions, examinations and ongoing surveillance. In a speech before the Georgetown Center for Financial Markets and Policy, Robert Cook, President and CEO of FINRA, set forth FINRA’s comprehensive approach to the self-regulatory agency’s existing and developing programs and practices to protect investors and markets from bad actors.

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07-12-17

AML Update: Keeping an Eye on Developments

There are many diverse players and moving parts in the evolving anti-money laundering (AML) regulatory landscape. Since we last checked, there have been congressional hearings on the domestic compliance obligations mandated by the Bank Secrecy Act; the introduction of two bipartisan legislative initiatives; and the passing of a final deadline for member states to implement EU AML regulations into their national laws. The activity reflects the ongoing political dynamic of how best to address the scourge of money laundering and terrorist financing.

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07-06-17

2018 House Appropriations Budget Offers Insight into SEC Priorities

On June 28th, the U.S. House Appropriations Committee published a proposed $20.2 billion financial services and government budget bill covering, in part, 2018 funding for the Securities and Exchange Commission. A day earlier, in testimony before the House Subcommittee on Financial Services and General Government, SEC Chair Jay Clayton set forth the independent agency’s 2018 priorities.

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