The questions revolving around crypto assets typically begin with examining if a security is involved. The answer to that question is determined by applying the Howey test and frequently concluding that the asset is in fact a...more
Since crypto assets launched with the claim of being off the grid, one of the constant refrains has been that “the rules” defining what is a security and what is not are not clear....more
On March 27, 2023, the SEC’s Division of Examinations (the “Division”) issued a Risk Alert on its observations from examinations of newly-registered advisers. The Division focused on whether newly-registered advisers...more
Cyber security is an area that has rapidly evolved over the past few years. Once a threat that was considered obscure by some and not significant by others, it is now a key area of focus for many. The stakes today are by any...more
The Commission created Rule 10b5-1 plans two decades ago. The rule essentially creates a safe haven for those who in good faith trade securities and are not in possession of inside information....more
The Division of Examinations has revamped and updated its exam priorities according to its most recent release, 2023 Exam Priorities. Consistent with its typical approach the Division plans to focus on a blend of topics and...more
2/22/2023
/ Compliance ,
Derivatives ,
Examination Procedures ,
Fiduciary Duty ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Investment Companies ,
Investment Company Act of 1940 ,
Marketing ,
Private Equity Funds ,
Private Investment Funds ,
Registered Investment Advisors ,
Regulation BI ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC)
Things change, at least sometimes. Take Crypto assets. They began as a way to “get off the grid.” Over time some came on to the grid as their popularity increased. Others stayed off....more
12/15/2022
/ Criminal Prosecution ,
Crypto Exchanges ,
Cryptoassets ,
Cryptocurrency ,
Department of Justice (DOJ) ,
Digital Assets ,
Internal Controls ,
Investors ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Trading Platforms
The Commission filed its annual tabulation of Enforcement statistics in a Release dated November 15, 2022 (here). The array of statistic compiled in FY 2022 provides insight into the work of the Enforcement Division over the...more
Rule 606: EXAMS – the Division of Examinations – published a Risk Alert on November 10, 2022, providing its Observations Related to Regulation NMS Rule 606 Disclosures. That Rule requires broker-dealers to provide enhanced...more
The Financial Stability Oversight Council released its Report on Digital Assets Financial Stability Risks and Regulation on October 3, 2022. The Report was prepared in accord with Section 6 of President Biden’s...more
The Financial Stability Oversight Council released its Report on Digital Assets Financial Stability Risks and Regulation on October 3, 2022. The Report was prepared in accord with Section 6 of President Biden’s...more
One of the key complaints about the SEC by crypto enthusiasts is that the line between which crypto coins are securities and which are not is unclear. Many, for example, look at a coin and are puzzled – when is it a...more
10/13/2022
/ Advertising ,
Civil Monetary Penalty ,
Consent Decrees ,
Cooperation ,
Cryptoassets ,
Disgorgement ,
Howey ,
Influencers ,
Kim Kardashian ,
Securities ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Tokens ,
Securities Violations ,
Token Sales
The Division of Examinations issued a Risk Alert on September 19, 2022 focused on Advisers Act Rule 206(4)-1, the Advertising Rule, adopted on December 22, 2020. The Rule becomes effective on November 4, 2022....more
9/23/2022
/ Advertising ,
Compliance ,
Disclosure Requirements ,
Effective Date ,
Form ADV ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Marketing ,
New Rules ,
Policies and Procedures ,
Risk Alert ,
Securities and Exchange Commission (SEC)
Complex financial products continue to present difficult issues for the Commission. In many instances the products involved are so complex that is may be questionable if any amount of policies, procedures and...more
8/3/2022
/ Complex Financial Products ,
Consent Decrees ,
Enforcement Actions ,
ETFs ,
Futures ,
Hedges ,
Index Funds ,
Investors ,
Leveraged Finance ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Stock Markets
The Commission and others have periodically cautioned investors and market professionals about complex products and educating Main Street investors about them to minimize their risk. Chair Gensler, for example, has delivered...more
The Commission’s rule writing calendar may be about to have a meltdown. The agency is considering a number of significant rule writing-proposals covering important areas. A number of those proposals are controversial,...more
6/17/2022
/ Best Execution ,
Broker-Dealer ,
Capital Markets ,
Climate Change ,
Corporate Governance ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
Equity Markets ,
Financial Industry Regulatory Authority (FINRA) ,
MSRB ,
Publicly-Traded Companies ,
Retail Investors ,
Securities and Exchange Commission (SEC) ,
Technology ,
Transparency
Climate and ESG have become key topics of conversation at the SEC. The Commission’s publication of proposed rules for public companies which would require that certain climate related information be disclosed by issuers...more
Analyzing the trends of SEC enforcement is key for many companies, particularly when evaluating their compliance systems. The work of the Enforcement Division during the first quarter of 2022 should be considered in the...more
Cybersecurity and the related disclosures can be critical issues for any company in today’s environment. This question is at the center of a recent decision by the Fourth Circuit Court of Appeals....more
4/28/2022
/ Corporate Counsel ,
Corporate Governance ,
Cybersecurity ,
Data Privacy ,
Data Protection ,
Disclosure Requirements ,
Dismissal With Prejudice ,
False Statements ,
Marriott ,
Personal Data ,
Popular ,
Rule 10(b) ,
Securities Exchange Act
SPACs have become a very popular investment vehicle. In many respects they are the vehicle of choice for IPOs these days. One of the reasons SPACs may popular - perhaps the IPO vehicle of choice - is their simplicity compared...more
The Division of Examinations announced its 2022 Exam Priorities in a release dated March 30, 2022. The 2022 priorities are, as usual, a blend of traditional considerations from past programs mixed with new and at times...more
The Beginning -
Crypto assets were initially “off the grid,” and many early proponents celebrated the promise of their regulatory independence. While conventional assets were governed by a virtual alphabet soup of federal...more
Cooperation is frequently touted as the “secret sauce” that can help an issuer or individual facing potentially harsh regulatory scrutiny and sanctions for wrongful conduct mitigate the resolution of the action. Different...more
SPACs are popular investment vehicles. The number of IPOs involving these investment vehicles has increased significantly in recent years. For example, from 2019 to 2021, the number has increased by about a factor of 10....more
The new Director of the Enforcement Division, Gurbir Grewal, assumed his position during the Third Quarter of 2021. Even if he hits the ground running it typically takes time to adjust to the environment. ...more
11/3/2021
/ Conflicts of Interest ,
Cryptocurrency ,
Enforcement Actions ,
Enforcement Statistics ,
False Statements ,
Financial Fraud ,
Insider Trading ,
Investment Adviser ,
Misrepresentation ,
Municipal Bonds ,
Price Manipulation ,
Safeguards Rule ,
Securities and Exchange Commission (SEC)