News – Bates Research

Bates Research  |  06-17-21

SEC Chair Gary Gensler’s Rulemaking Priorities Emerge

On June 11, 2021, the White House Office of Information and Regulatory Affairs released a Unified Agenda of Regulatory and Deregulatory Actions containing the latest official list of the SEC’s regulatory rulemakings. The list includes proposed items the agency will undertake in the near future, which reflect the emergent priorities of the independent agency’s Chair Gary Gensler, who was sworn in on April 14, 2021. In this article, Bates takes a look at a few of the proposed items positioned for regulatory action this year.

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Bates Research  |  06-11-21

Regulating Cryptocurrency: New Players, New Urgencies

In an op-ed in the Wall Street Journal on June 6, 2021, former SEC Chair Jay Clayton and former Undersecretary of the Treasury Brent McIntosh warned against the “serious risk of both overregulation and underregulation” of cryptocurrencies. They were responding to a rapidly changing financial marketplace in which innovative and complex digital products and services have become mainstream. They were also responding to recent statements by legislators, administrators and regulators advocating for a more comprehensive framework of government intervention to protect consumers and investors from price volatility and the fraud and money laundering that has proliferated across digital platforms. In this article, we review some of the recent pronouncements concerning cryptocurrency regulation, including the latest considerations on the development of a U.S. central bank digital currency.

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Bates Research  |  06-03-21

Regulators Get Tough on Reg BI and Form CRS Phase Two Compliance – Part 2: Reg BI

As we previously relayed in Part 1 of this article, the honeymoon period in which firms needed to show merely a “good faith” effort at compliance with Reg BI and Form CRS requirements has come to an end. The SEC and FINRA have made clear that the regulators are moving to the next, more aggressive examination phase to ensure compliance with the new standard. Part 2 of our article focuses on commentary from FINRA’s 2021 Annual Conference concerning Reg BI and what firms should expect during examinations in Phase Two.

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Bates Research  |  06-03-21

Regulators Get Tough on Reg BI and Form CRS Phase Two Compliance – Part 1: Form CRS

The honeymoon period in which firms needed to show merely a “good faith” effort at compliance with Regulation Best Interest (“Reg BI”) and Customer Relationship Summary Form (“Form CRS”) requirements has come to an end. At a recent session on Reg BI and Form CRS Observations during FINRA’s 2021 Annual Conference, speakers from the SEC and FINRA made clear that the regulators are moving to the next, more aggressive examination phase to ensure compliance with the new standard. In this two-part article, Bates examines regulator comments and expectations, and what firms can expect in Phase Two. In Part 1, we look at developments concerning Form CRS.

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Bates Research  |  05-20-21

FINRA Warns Members of Increase in Online Account Takeovers and to Follow Rules on Arbitration Agreements; Seeks Diversity and Inclusion Improvements

In a sign of ramped-up concern, FINRA urged members to ensure that cybersecurity programs and practices are in place to protect customers from online account takeover attempts. The regulator also issued Notices reminding firms to follow disclosure and other rules on pre-dispute arbitration agreements and asking market participants for comments on any rules that may create unintended barriers to diversity and inclusion in the broker-dealer industry.

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Bates Research  |  05-13-21

NASAA Touts Latest Model Rules on Compliance, Continuing Education for Investment Advisers; Offers Guidance on Cybersecurity

In its April 2021 Investment Adviser Section Report highlighting 2020 activities, the North American Securities Administrators Association ("NASAA") promoted the November 24, 2020 adoption of two model rules: a broad rule on compliance to ensure that advisers cover the full range of investor concerns in their written policies and procedures, and a long-debated proposed rule on continuing education to ensure that advisers are knowledgeable of current regulatory requirements and best practices. The report also offers information on a newly developed Cybersecurity Checklist for Investment Advisers. In this article, Bates examines these new rules in light of NASAA's annual report and continuing guidance.

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Bates Research  |  05-06-21

DOL Releases New Guidance on Cybersecurity and on Exemptions for Investment Advice Fiduciaries

In December 2020, the Department of Labor adopted regulations on investment advice for retirement accounts under ERISA, providing a class exemption for persons who are fiduciaries under ERISA and allowing them to receive compensation and engage in otherwise prohibited transactions on behalf of retirement investors, employee benefit plans and investment advice providers. The regulation has a long regulatory history and became effective on February 16, 2021. On April 13, 2021, the DOL issued guidance to address detailed implementation questions. In addition, on April 14, 2021, the DOL issued cybersecurity guidance for ERISA plan sponsors, fiduciaries and record-keepers, as well as for plan participants and beneficiaries. In this article, Bates takes a closer look and reviews the new DOL guidance, including details to guide your implementation and the cybersecurity protocols for your firm to follow.

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Bates Research  |  04-23-21

SEC Elevates ESG in New Alert Focusing on Disclosures, Observations and Effective Practices

In a significant number of directed actions, the SEC has communicated that it intends to move aggressively to encourage ESG investing and to develop frameworks for compliance. The emphasis on ESG-related compliance in the alert follows from the agency’s elevated focus on climate change as an emergent priority. It also stems from a host of moves by SEC Acting Chair Allison Herren Lee on the subject, including the creation of an ESG taskforce, the issuance of investor guidance on ESG funds, and the adoption of a new strategic approach, among others. In this article, we highlight current compliance triggers in the context of recent SEC ESG-related activity.

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Bates Research  |  04-15-21

Momentum Building on Cannabis: New York Passes Marijuana Regulation and Taxation Act, Congress Closer to Passing SAFE Act

Federal and state legislation to legalize cannabis and regulate related businesses moved forward this month with a bipartisan reintroduction of the federal Secure and Fair Enforcement (“SAFE”) Banking Act and the passage of a New York law creating a regulatory licensure and taxation framework for producers, distributors, and retailers of marijuana. The implications of these actions are significant. In this article, we look at the New York law and revisit the bipartisan SAFE Act, two efforts that cover the spectrum on cannabis regulation. Learn how these developments might impact your firm and clients.

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Bates Research  |  04-09-21

AML Watch: FinCen Seeks Comments on Beneficial Ownership Reporting, SEC Issues Alert on SARs Compliance Deficiencies and Guidance

The new Anti-Money Laundering Act (AMLA), which became law on January 1, 2021, expanded the Bank Secrecy Act regulatory framework, requiring substantial attention to additional regulator guidance and AMLA-related proposed rulemakings. On April 1, 2021, FinCEN issued an Advance Notice of Proposed Rulemaking (ANPRM) on beneficial ownership reporting. On March 29, 2021, the SEC Division of Examinations issued a risk alert on AML program compliance, and, in particular, red flag areas where broker dealers can improve their suspicious activity monitoring and reporting. In this article, Bates takes a closer look at these two new AML developments and what it means for your firm.

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