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On Our Radar: Crypto Regulatory and Enforcement Roundup

11-21-22

On Our Radar: Crypto Regulatory and Enforcement Roundup

Regulatory and enforcement activity has been brisk since nine federal agencies issued a “Comprehensive Framework for Responsible Development of Digital Assets” in response to President Biden’s Executive Order to collaborate on a “whole of government approach.” 

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The New Federal Digital Asset Framework: Where Are We Now?
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11-16-22

The New Federal Digital Asset Framework: Where Are We Now?

Since President Biden issued an Executive Order in March 2002 directing agencies to collaborate on a “whole of government approach” for ensuring the responsible development of digital assets, the market has been anticipating the release of the broader framework. The Framework, issued on September 16, 2022, remains a high-level mix of broad directives by nine separate federal agencies which support these goals. Bates has the highlights.

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State Securities Regulators Report on 2021 Enforcement Trends:  Digital Assets Investigations, Increase in Promissory Note Enforcement, Concerns About Metaverse Fraud
image: Alabama Securities Commission - Joseph P. Borg, Director

11-01-22

State Securities Regulators Report on 2021 Enforcement Trends:  Digital Assets Investigations, Increase in Promissory Note Enforcement, Concerns About Metaverse Fraud

NASAA, the North American Securities Administrators Association, published their 2022 Enforcement Report detailing data collected from 48 jurisdictions in 2021. This annual publication serves several purposes. Primarily, it is an attempt to aggregate the efforts undertaken by state regulators to protect the public from fraud. As Joseph Borg (NASAA 2021-2022 Enforcement Section Chair, pictured) states in his introduction, the report flags concerns about complex theft and misapplication, real estate and energy scams, cryptocurrency, non-fungible tokens, metaverse schemes, and more. Learn what to expect as state regulators assert their jurisdiction over new products, new markets and new marketplaces. Bates has the highlights.

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Preparing for an Independent Review of a Money Services Business’s (MSB) AML Program

10-21-22

Preparing for an Independent Review of a Money Services Business’s (MSB) AML Program

Independent reviews on AML risk are becoming more important, not only to ensure compliance with current regulation and the documentation of all efforts undertaken, but also to uncover systemic weaknesses and to provide corrective recommendations for management. In this article, Bates offers tips to help MSB firms navigate the process, including key elements of a review, timing, and selecting the right reviewer.

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FinCEN Publishes Final Beneficial Ownership Rule
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10-07-22

FinCEN Publishes Final Beneficial Ownership Rule

On September 30, 2022, FinCEN published first of three final rules (and related Fact Sheet) on the reporting requirements for beneficial ownership information. It goes into effect on January 1, 2024. Until then, FinCEN will be developing reporting forms and other guidance to help companies with their reporting compliance. We look at the highlights of the new reporting rule and what firms should do to prepare.

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How to Prepare for a Regulatory Examination: Bates’ Guide to Getting Ahead of Regulatory Exams

10-04-22

How to Prepare for a Regulatory Examination: Bates’ Guide to Getting Ahead of Regulatory Exams

Each year, the SEC and FINRA release Exam and Risk Monitoring Reports highlighting continuing and emerging concerns for the year. These agency communications serve as a potential notice of subjects scrutinized for future examinations. In this guide, Bates walks you through the exam process and break down what you need to know, including: anticipation and preparation, first contact, document production, interviews, and findings.

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Seeking to Integrate Reg BI Standards, NASAA Proposes Revisions to REITs and Other Guidelines
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09-19-22

Seeking to Integrate Reg BI Standards, NASAA Proposes Revisions to REITs and Other Guidelines

NASAA is reminding financial professionals that state regulators remain a force to be reckoned with in an increasingly complex financial marketplace. Describing a need to protect elderly investors from unsuitable products, a need to protect average investors from the risks of confusing contract terms and misleading marketing communications, and to address ongoing and persistent complaints of fraud, NASAA proposed revisions to its Guidelines on REITs. Bates looks at the four proposed revisions and what they could mean for your firm and clients.

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Private Funds: New Reporting Proposals from Regulators
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09-09-22

Private Funds: New Reporting Proposals from Regulators

As the size of the private funds market has grown, regulators have been increasingly concerned about the risk posed to investors. The sheer size of the market—and the state of the current disclosure framework covering it—has motivated regulators from both the SEC and CFTC to propose additional rule amendments to increase the regulatory oversight of private fund advisers and the funds they advise. Bates takes a look at key features of the SEC/CFTC proposal.

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2022 Summer Roundup – What You Missed, What Is Happening This Fall

09-02-22

2022 Summer Roundup – What You Missed, What Is Happening This Fall

Summer is coming to a quick close, and we hope you had a chance to get moving and enjoy some fun in the sun!

While you are celebrating the final days of summer, we’ve compiled our annual summer roundup of news that you may have missed, as well as a sneak peek of live and virtual events happening this fall. We’ve even included a bonus track at the end of our list to cap off your summer.

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New Developments for New York BitLicense Holders and Applicants
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08-25-22

New Developments for New York BitLicense Holders and Applicants

Responding to the growing popularity of Bitcoin and other cryptocurrencies, in 2015 the New York Superintendent of Financial Services came up with the idea for a new charter called BitLicense, based on the historic template for bank and trust charters. In this article, Bates expert Paul Nelson takes a look at the past, present, and future of the BitLicense program, in the larger context of today's crypto market.

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SEC Staff Offers Additional Guidance on BD and IA Conflicts of Interest
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08-18-22

SEC Staff Offers Additional Guidance on BD and IA Conflicts of Interest

On August 3, 2022, SEC staff issued new guidance addressing conflicts of interest under the Regulation Best Interest (“Reg BI”) standard for broker-dealers and the fiduciary standard for investment advisers. While the staff bulletin states clearly that the guidance is intended only to be a reflection of internal views on the subject, its tone, comprehensiveness (replete with numerous examples), and even its pragmatic question-and-answer format warrant careful attention. Read our full analysis for details on this new guidance and how it could impact your firm or clients.

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The SEC Marketing Rule - What You Need to Know
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08-02-22

The SEC Marketing Rule - What You Need to Know

The mandatory compliance deadline for the SEC marketing rule—which replaced the former Advertising Rule and the Cash Solicitation Rule—is November 4, 2022. Advisers should be reviewing, revising, and preparing to implement procedures and policies to prevent potential violations. There’s still time, but there’s also a lot to consider, as the rule consolidates previous SEC guidance, no-action letters and exam findings on questions concerning recommendations, testimonials, and the presentation of performance metrics. Here’s what you need to know.

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FINRA Proposes Updates to Supervisory Rule on Home Offices
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07-28-22

FINRA Proposes Updates to Supervisory Rule on Home Offices

FINRA has filed with the SEC proposed changes to FINRA Rule 3110 to add new Supplementary Material 3110.19 (Residential Supervisory Location). The changes allow a home office to be considered a non-branch “residential supervisory location” under certain conditions. By this proposal, FINRA is adapting to a new, post-pandemic model in which employees work at both conventional offices and in their private residences—a model which FINRA acknowledges is likely to “endure.” Read the full article for details on these proposed rule changes.

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Reg BI Makes FINRA’s Dispute Resolution Stats List and Other Notable Arbitration Developments

07-07-22

Reg BI Makes FINRA’s Dispute Resolution Stats List and Other Notable Arbitration Developments

An inevitable—if somewhat subtle—milestone was reached this month for Regulation Best Interest. Posted on FINRA’s monthly dispute resolution statistics page are numbers related to the top 15 security types in customer arbitrations, and coming in at number 14 (through May 2022) was Reg BI. Other recent developments in dispute resolution include movement on rule proposals concerning accelerating processes for elderly claimants, and amendments to align the arbitration code with a new federal law on sexual assault and harassment. FINRA also committed to producing a plan to enhance the transparency of the arbitrator selection process. In addition, the SEC has issued a new primer on arbitration and mediation. Here are the highlights to note.

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Contact Bates Group

Bates Group is with you every step of the way. Contact us today for more information on how our End-to-End Solutions can help your firm.