Bridging the Week - February 2018 #3

by Katten Muchin Rosenman LLP

The United States Supreme Court made clear that, to take advantage of a key anti-retaliation protection of the Dodd-Frank Wall Street Reform and Consumer Protection Act, an employee whistleblower must identify potential securities law violations to the Securities and Exchange Commission, and not solely to his/her employer. This is not a good outcome for businesses. Separately, a bank was sanctioned over US $600 million by four federal regulators for not employing a sufficient number of anti-money laundering personnel, and capping the number of exception reports generated by its AML surveillance system to accommodate the reduced number of AML employees. Also, one non-United States financial services regulator endeavored to succinctly distinguish the functionality of different types of digital tokens that might be issued in connection with an initial coin offering and disclosed its current regulatory approach to each. As a result, the following matters are covered in this week’s edition of Bridging the Weeks:

  • Supreme Court Narrows Key Whistleblowing Protection (includes My View);
  • Bank Sanctioned US $613 Million for Capping Number of Suspicious Activity Reports (includes Compliance Weeds);
  • SEC Sues Bitcoin-Denominated Trading Platform for Operating an Unlicensed Securities Exchange; Principal Criminally Charged (includes My View);
  • CFTC and UK FCA Agree to Cooperate in Supporting Innovative FinTech Businesses (includes My View);
  • HK SFC Fines Brokerage Company HK $4.5 Million for Order Routing System Breakdown; UK FCA Publishes Observations on Best Practices in Algorithmic Trading (includes Compliance Weeds);
  • ICE Futures US Sanctions Trader US $100,000 for Alleged Spoofing Offense (includes Legal Weeds); and more.

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  • Supreme Court Narrows Key Whistleblowing Protection: The United States Supreme Court held that employee whistleblowers reporting potential securities law violations by their employers must expressly report such incidents to the Securities and Exchange Commission in order to benefit from a key anti-retaliation protection under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Solely reporting securities law violations to an employee's employer is not enough. This key benefit is the right of a whistleblower claiming retaliation to sue an employer directly in a federal court at any time within six years. (Click here to access the relevant Dodd-Frank provision at 15 US Code § 78u–6(h)(1)(B)(i), (iii)(I)(aa).) This is different from the anti-retaliation protections under the Sarbanes-Oxley Act adopted in 2002 which applies to all employees who report misconduct to the SEC, any other federal agency, Congress or an internal supervisor. Under Sarbanes-Oxley, a whistleblower must, within 180 days of an alleged retaliatory action, file a complaint with the Secretary of Labor, and only if the Secretary has not issued a final decision within 180 days (and then, only under certain conditions), may a claimant file a lawsuit in federal court. (Click here to access the relevant Sarbanes-Oxley provisions at 18 US Code § 1514A(b)(1) and 2(D).) The Court ruled that the plain language of Dodd-Frank restricts its anti-retaliation benefits to whistleblowers that provide information “to the Commission.” (Click here to access the relevant Dodd-Frank provision at 15 US Code § 78u-6(a)(6).) This is consistent with the intent of the law, said the Court, namely to motivate persons to tell the SEC of potential law violations. Prior to this Supreme Court decision, some US federal courts said that an employee reporting securities law violations to an employer alone was sufficient to invoke Dodd-Frank's key anti-retaliation protection. The name of this decision is Digital Realty Trust, Inc. v. Somers and the majority opinion was subscribed by five of the nine justices. There were two concurring opinions.

My View: This Supreme Court decision is not a favorable outcome for companies. No longer can an individual raise a concern with his/her employer regarding a potential securities law violation, knowing he/she has six years to file a lawsuit in a federal court if he/she subsequently believes that retaliatory measures were taken.  Instead such potential violation must be identified to the SEC. This could discourage employees to raise concerns exclusively with his/her employer. As a result, companies should consider this when adopting whistleblowing policies in order to encourage employees, notwithstanding, to raise potential securities law issues internally – although they must be careful not to engage in any activity or require the execution of any agreement – that limits employees’ federal law rights.

The SEC has actively pursued enforcement actions against firms that utilized confidentiality agreements that the agency believed discouraged employees from reporting potential violations of federal securities laws to it. (Click here for an overview of these enforcement actions in the article “More Firms Sanctions for Whistleblower Offenses by SEC” in the January 29, 2017 edition of Bridging the Week.)

Last year, the Commodity Futures Trading Commission amended its whistleblowing rules to augment anti-retaliation protections for whistleblowers. Simultaneously, the CFTC issued guidance that said it had the authority to bring enforcement actions against violators of its anti-retaliation rules, revoking a contrary 2011-issued interpretation. (Click here for background in the article “CFTC Strengthens Protections for Whistleblowing While You Work” in the June 4, 2017 edition of Bridging the Week.)

  • Bank Sanctioned US $613 Million for Capping Number of Suspicious Activity Reports: Four federal regulators imposed out-of-pocket sanctions on US Bancorp totaling US $613 million for alleged noncompliance with its anti-money laundering obligations from 2011 to 2015. The regulators were the US Department of Justice, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network of the US Department of Treasury. The regulators claimed that, during the relevant time, the bank failed to maintain an adequate staff level to conduct AML oversight and, to accommodate the inadequately sized staff, capped the number of alerts generated by its AML surveillance system. This, alleged the regulators, caused the bank not to identify many potential AML issues and not to make many required suspicious activity reports. The bank also took affirmative steps to cover up its deficiencies and mislead the OCC, claimed the OCC. The bank purportedly also filed incomplete currency transaction reports to FinCEN during the relevant time; these reports identify currency transactions that involve or aggregate in excess of US $10,000/day. In aggregate, the bank was assessed sanctions totaling US $803 million, but both FinCEN and DOJ gave some credit to payments made to other regulators. In connection with its resolution with the DOJ, US Bancorp entered into a deferred prosecution agreement.

Compliance Weeds: Applicable law and FinCEN rules require broker-dealers and other covered financial institutions (banks, Commodity Futures Trading Commission-registered future commission merchants and introducing brokers and SEC-registered mutual funds) to file a SAR with FinCEN in response to transactions of at least US $5,000 which a covered entity “knows, suspects, or has reason to suspect” involve funds derived from illegal activity; have no business or apparent lawful purpose; are designed to evade applicable law; or utilize the institution for criminal activity.

In July 2017, Electronic Transaction Clearing, Inc., a registered broker-dealer, agreed to settle charges brought by the Financial Industry Regulatory Authority that it failed to consider whether to file suspicious activity reports, as required, in response to red flags of possible suspicious conduct as well as for other violations. According to FINRA, ETC did not file such reports even after it restricted trading by certain of its customers after 30 instances where the firm identified problematic conduct, including prearranged trades or trading without an apparent economic reason. ETC agreed to pay a fine of US $250,000 to resolve FINRA’s charges. (Click here for background regarding FINRA’s charges in the article “Clearing Firm’s Failure to File Suspicious Activity Reports in Response to Red Flags Charged as Violation of FINRA Requirements” in the March 26, 2017 edition of Bridging the Week.)

Covered financial institutions should continually monitor transactions they facilitate; ensure they maintain and follow written procedures to identify and evaluate red flags of suspicious activities; and file SARs with FinCEN when appropriate. (Click here for a helpful overview of anti-money laundering requirements for broker-dealers, including SAR requirements. Click here for a similarly helpful compilation of AML resources for members of the National Futures Association.)

Moreover, covered institutions should ensure that problematic transactions identified by non-AML personnel (e.g., compliance staff) that may violate legal or regulatory standards are evaluated by AML personnel to determine whether a SAR should be filed with FinCEN. Indeed, the more consolidated a ledger a firm can maintain of potential problems identified across otherwise separate surveillance functions, the more likely a firm will be able to recognize and act holistically upon material red flags. Sounds like a great potential application of distributed ledger technology!

  • SEC Sues Bitcoin-Denominated Trading Platform for Operating an Unlicensed Securities Exchange; Principal Criminally Charged: The Securities and Exchange Commission filed a civil action in a federal court in New York City against Bitfunder, an alleged non-SEC-registered securities exchange that traded shares in virtual currency-related businesses, and Jon Montroll, the founder and developer of BitFunder, for operating an unlicensed securities exchange and engaging in fraud. Separately, Mr. Montroll was criminally charged by the US Department of Justice with lying to the SEC during sworn testimony and obstructing justice. According to the SEC, from December 2012 through November 2013, Mr. Montroll misappropriated customers’ Bitcoin; lied about a hack of the BitFunder ecosystem in the summer of 2013 that resulted in a loss of 6,000 Bitcoin; and raised funds for shares of a specific security – Ukyo.Loan — and misappropriated funds from these investments too. The DOJ claimed that Mr. Montroll lied to the SEC about the hack of BitFunder. The SEC seeks an injunction against the defendants, disgorgement and fines. In connection with his criminal charges, Mr. Montroll, if convicted, faces imprisonment for up to 20 years.

Unrelatedly, the SEC suspended trading in three companies that claimed they were involved with cryptocurrencies and blockchain technology because of concerns regarding “the nature of the companies business operations and the value of their assets.” The companies are: Cherubim Interests Inc., PDX Partners Inc. and Victura Construction Group Inc.

My View: As I indicated a few weeks ago, the SEC takes a very broad view of what constitutes a security. This view is principally premised on the agency’s interpretation of the landmark 1946 Supreme Court decision of SEC v. W.J. Howey (click here to access) that labeled as an investment contract (and thus, as a security) any (1) investment of money (2) in a common enterprise (3) with a reasonable expectation of profits (4) to be derived solely from the entrepreneurial or managerial efforts of others. The SEC argues that an investment contract could also exist when persons invest money in a project and expect profits through the appreciation in value of their investment attributable to the entrepreneurial or managerial efforts of others, even if such “profits” can be realized solely by investors reselling their investments. As a result, the SEC argues that an investment contract could include instruments that convey no traditional ownership rights on its holders or any direct rights to revenue – such as many digital tokens issued as part of ICOs. (Click here for background on the SEC’s views in the article “Non-Registered Cryptocurrency Based on Munchee Food App Fails to Satisfy SEC’s Appetite for Non-Security” in the December 17, 2017 edition of Bridging the Week.)

However, as I argued at a meeting of the Technology Advisory Committee of the Commodity Futures Trading Commission on February 14, under this approach, privately issued gold coins promoted by their issuers could potentially be deemed investment contracts by the SEC, as could special edition collectible automobiles hyped by their manufacturers. (Click here to access a video of the CFTC’s February 14 TAC meeting.) In these instances, purchasers would reasonably expect to realize a premium to ordinary market value if they resell their asset because of the entrepreneurial or managerial efforts of others designed to create buzz around their asset. This seems like an attenuated view of what should be considered a security, but it appears consistent with the SEC’s current reasoning. This view could potentially capture some virtual currencies within the definition of a security as well. (Click here to see this possibility raised in Question 9 in the CFTC’s request for comment in connection with its proposed guidance on “actual delivery” for retail commodity transactions involving virtual currencies (December 20, 2017) – at page 60341.)

Two weeks ago, the Swiss Financial Market Supervisory Authority (FINMA) endeavored to provide some clarity of its own oversight of different types of digital tokens – which it named "payment tokens," "utility tokens" and "asset tokens." (Click here to access the relevant FINMA guidance.) The regulator claimed that it was not the issuance of a token through an initial coin offering that made it a security; rather, it was the nature of the token that was issued.

According to FINMA, payment tokens are tokens intended to be used now or in the future as a means to acquire goods or services, or as a means of money or value transfer. Because such tokens are meant to act as a means of payment “and are not analogous in their function to traditional securities,” FINMA indicated that, going forward, it would not treat payment tokens (e.g., Bitcoin, Ether) as securities.

FINMA said that asset tokens represented assets such as a debt or equity claim on an issuer, or which enabled assets to be traded on a blockchain. These tokens would be treated as securities. Also, pre-financing and pre-sale phases of initial coin offerings that grant rights to acquire tokens in the future, would also be regarded as securities.

FINMA defined utility tokens as tokens “intended to provide access digitally to an application or service by means of a blockchain-based infrastructure.” The regulator indicated it would not consider utility tokens as securities if the tokens’ “sole purpose” was to confer digital access rights at the time of issue. However, if a utility token could additionally or only have an investment purpose at the time of issue, it would be treated as an asset token too.

Unfortunately, after providing some clearer lines than currently exists in the United States, FINMA muddied the waters by indicating that asset and utility tokens could also be payment tokens (i.e., hybrid tokens). In such cases, said the regulator,” the requirements are cumulative; in other words the tokens are deemed to be both securities and means of payment.”

However, there needs to be bright lines regarding the classifications of tokens to avoid the imposition of cumulative laws that could have the unintended consequence of stifling the development of decentralized distributed ledger technologies and applications as well as leaving investors unclear what they are purchasing and selling. FINMA has usefully advanced the dialogue by proposing some clearer tests to differentiate the nature of tokens; hopefully others can further this dialogue.

  • CFTC and UK FCA Agree to Cooperate in Supporting Innovative FinTech Businesses: The Commodity Futures Trading Commission and the UK Financial Conduct Authority entered into a cooperation arrangement to share information related to innovative FinTech businesses in order to refer to each other new enterprises that seek to operate in or have questions regarding the other’s regulator’s jurisdiction. The principal points of contact for this initiative would be LabCFTC for the CFTC and Innovate for the FCA. Among other things, each regulator proposes in the first instance to assist innovative FinTech businesses by providing support during any requisite licensing process “including the allocation of staff that are knowledgeable about financial innovation … to provide guidance to the Innovator Business with respect to its Authorization applications” and to help with questions regarding ambiguities in existing laws or rules that “may inhibit beneficial innovation.” Each regulator intends to keep confidential nonpublic information it receives, to the extent permitted by law.

My View: In the last two weeks, multiple international regulators have issued cautions and advisories regarding cryptocurrencies. Among other advisories,

  • the CFTC warned of pump-and-dump schemes involving illiquid or new virtual currencies and digital coins or tokens (click here to access the relevant CFTC Customer Advisory);
  •  the Securities and Exchange Commission explained the protection differences between lawfully issued securities and cryptocurrencies issued as part of initial coin offerings (click here to access the relevant SEC guidance); and
  • three European regulators – the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority – issued a warning to consumers on virtual currencies. This warning explained the differences between fiat and virtual currencies and discussed some of the investment risks of trading in and owning virtual currencies (click here to access the relevant warning).

Separately, seven of the largest cryptocurrency enterprises in the United Kingdom, including Coinbase, have formed a trade organization known as CryptoUK. The goal of the organization is “to help educate politicians and regulators about the cryptocurrency industry, to work with them in developing an appropriate operating framework in the UK.” Among other things, the members expressly support “the introduction of appropriate regulation” and have adopted a code of conduct that calls for members to commit to operate “honestly and responsibly” with consumers; to communicate with customers in a way that is “fair, clear and not misleading”; and to include on platforms information regarding the complaints procedure, the senior management team, the legal form of the business, arrangements in case of business failure, and material changes in business, among other information. (Click here to access CryptoUK’s Key Principles and Code of Conduct.)

The media has reported that a move to create a self-regulatory organization in Japan comprising 16 of the country’s cryptocurrency exchanges may be finalized as soon as this week. (Click here for a sample article describing this development.)

At the February 14 CFTC TAC meeting, Commissioner Brian Quintenz called for the consideration of whether the “SRO model could assist cryptocurrency exchanges establish and enforce standards that protect investors and deter fraud.” (Click here for a copy of Mr. Quintenz’s prepared remarks.)

To be a truly credible SRO, an organization should not only have a code of conduct but an effective means of disciplining members for breach of the code, as well as the authority to investigate their ongoing conduct. It should likely also have more specific proscriptions. However, the initiatives being taken in the United Kingdom and apparently in Japan are important first steps and are highly welcome.

  • HK SFC Fines Brokerage Company HK $4.5 Million for Order Routing System Breakdown; UK FCA Publishes Observations on Best Practices in Algorithmic Trading: Interactive Brokers Hong Kong Limited was fined HK $4.5 million (approximately US $675,000) for a purported automated order routing system flaw that caused large market orders to disrupt the prices in two incidents – one in October 2015 and the other in July 2016. In both incidents, IBHK’s AORS entered a comparatively large market order into a thin market, and repeatedly entered unexecuted parts of the order at the next available price until the entire order was executed. This caused the price of one stock to increase 48.7% in 101 seconds, and another, 126% in 84 seconds, claimed the SFC. The regulator said the IBHK’s AORS failed to consider “the liquidity of the market” when entering orders and “failed to put in place effective price and volume controls to prevent its execution of market orders from disrupting the market.” SFC acknowledged that IBHK’s substantial cooperation and commitment to enhance its AORS failures within 12 months contributed to a lower level of fine.

Separately, the UK Financial Conduct Authority issued a report summarizing good and bad practices for algorithmic traders, addressing five principle topics: defining algorithmic trading, development and testing, risk controls, governance and oversight, and market conduct. For example, because firms need to identify algorithmic trading across their entire business in order to comply with new requirements under the Markets in Financial Instruments Directive II, a good practice is to consult all aspects of a business in order to “consider at length how trading algorithms are used within the firm.” This technique enables a firm to ensure that all relevant activities are captured, observed the FCA. A poor practice, said the FCA, is for a business to use a “high level definition” which may capture algorithms used in well-established areas, but not other areas where algorithms are used less frequently. FCA also considers it a good practice to have robust development and testing procedures that includes breaking down the development process into separate components to establish independent tests at each phase. A bad practice, submits FCA, is for firms not to apply their development and testing procedures across all aspects of their business. Another good practice is to consider the impact of algorithmic trading strategies and whether “the proposal is deemed appropriate.” A poor practice would be to focus on operational effectiveness and not consider market conduct considerations.

Compliance Weeds: Other regulators besides SFC are concerned with potentially disruptive trading caused by algorithmic trading systems. Last year, Saxo Bank A/S, a member firm, agreed to pay an aggregate fine of US $190,000 to the Chicago Board of Trade and the Chicago Mercantile Exchange to resolve two disciplinary actions brought against it for the way it liquidated futures positions of its customers that were under-margined. According to the exchanges, on multiple dates between October 2014 and March 2015, Saxo employed a liquidation algorithm that automatically entered market orders for the entire amount of an under-margined customer’s positions. The exchanges said Saxo Bank did so without considering market conditions and therefore violated its disruptive trading practices rule. (Click here for background in the article “CME Group Settles Disciplinary Action Alleging That Automatic Liquidation of Under-Margined Customers Positions by Non-US Futures Broker Constituted Disruptive Trading” in the March 20, 2017 edition of Bridging the Week.)

Persons entering orders on CME Group and other exchanges must be mindful of the potential impact of their orders on the marketplace and avoid actionable or nonactionable messages that are likely to have a disruptive impact on the marketplace.

  • ICE Futures US Sanctions Trader US $100,000 for Alleged Spoofing Offense: Stuart Satullo agreed to pay a fine of US $100,000 to resolve a disciplinary action brought by the ICE Futures U.S. The exchange charged that, from August 2015 through November 2016, Mr. Satullo engaged in a pattern of trading to create order imbalances by entering an “undisclosed volume order” showing a small quantity on one side of the relevant market and much larger disclosed quantities on the other side. Once all or some of the undisclosed volume order was executed, Mr. Satullo purportedly cancelled the larger disclosed orders. For this trading practice, Mr. Satullo was charged with disruptive trading and also agreed to serve a 10-day trading suspension on any IFUS market to resolve this matter.

Separately, Stone Ridge Asset Management LLC agreed to pay a fine of US $45,000 and Raymond Simpson consented to pay a sanction of $25,000, both to the Chicago Mercantile Exchange, to resolve unrelated disciplinary actions. Stone Ridge was charged with engaging in exchange for related position transactions involving NASDAQ 100 and E-mini S&P futures that were dependent on other transactions that were immediately offset, while Mr. Simpson was charged with wash trades for entering into buy and sell transactions to freshen positions. In connection with his trades, Mr. Simpson also allegedly permitted another person to use his Tag 50 ID to enter orders that Mr. Simpson controlled; each individual must use their own Tag 50 ID in connection with Globex orders. (Click here to access CME Group Rule 576 within a relevant Market Regulation Advisory Notice published by the exchange.) Mr. Simpson also agreed to a 15-business-day all CME Group trading prohibition as part of his settlement.

Ecom Agroindustrial Corp. Limited also agreed to pay a fine of US $20,000 to resolve a disciplinary action alleging that it engaged in two instances of wash sales on December 27, 2016, to effectuate position transfers. Soars Capital Limited was ordered to pay a fine of US $100,000 for failing to answer charges against it that it engaged in disruptive trading practices on various occasions from September 18, 2015, through March 7, 2016.

Legal Weeds: Last month, the Commodity Futures Trading Commission and the Department of Justice coordinated announcements regarding the filing of civil enforcement actions by the CFTC, naming five corporations and six individuals, and criminal actions by the DOJ against eight individuals – including six of the same persons named in the CFTC actions – for engaging in spoofing activities in connection with the trading of futures contracts on US markets.

Four of the corporations – part of global banking organizations – simultaneously resolved their CFTC-brought civil actions. These four corporations were Deutsche Bank AG and its wholly owned subsidiary Deutsche Bank Securities Inc., UBS AG and HSBC Securities (USA), Inc. DB and DBSI settled their CFTC enforcement actions by agreeing to jointly and severally pay a fine of US $30 million; UBS settled by consenting to a sanction of US $15 million; and HSBC settled by agreeing to a fine of US $1.5 million. The companies additionally agreed to continue to maintain surveillance systems to detect spoofing; ensure personnel “promptly” review reports generated by such systems and follow up as necessary if potential spoofing conduct is identified; and maintain training programs regarding spoofing, manipulation and attempted manipulation. (Click here for details in the article “CFTC Names Four Banking Organization Companies, a Trading Software Design Company and Six Individuals in Spoofing-Related Cases; the Same Six Individuals Criminally Charged Plus Two More” in the February 4, 2017 edition of Bridging the Week.)

Subjects of exchange investigations and disciplinary actions must consider the consequences of their cooperation should they later be subject to a criminal action. Information and testimony provided in an exchange investigation or action can be used to incriminate a person in such later criminal action – which might lead to substantial fines and imprisonment. However, the consequences of noncooperation at the exchange level can also be profound, leading potentially to large fines and suspension of all trading privileges.

More Briefly:

  • CFTC Proposes to Simplify Layout of Definitions in Regulations: The Commodity Futures Trading Commission approved a clean-up of definitions in its rules. (Click here to access CFTC Rule 1.3.) Under the revised interim final rule, all definitions that are currently alphabetized from ‘a’ through ‘ssss’ will simply be listed in alphabetical order. This is the first initiative implemented as part of the CFTC’s project KISS project. (Click here for background on Project KISS in the article “Derivatives Industry Wishes Upon a CFTC KISS Star and Hopes Dreams Come True” in the October 8, 2017 edition of Bridging the Week.)
  • CFTC’s DSIO Grants Temporary IB Registration Relief to ICE Subsidiary to Accommodate Transfer of Energy Contracts From ICE Futures Europe to ICE Futures US: The Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission granted Shorcan Energy Brokers a temporary exemption from being registered as an introducing broker even though it was apparently required to be licensed under applicable law and CFTC rules. Shorcan, a wholly owned subsidiary of the Intercontinental Exchange, Inc., was apparently required to register as an IB because of activities it engaged in coupled with the transition by ICE of certain ICE North American Oil and Ice Financial Natural Gas Liquids contracts from ICE Futures Europe to ICE Futures U.S. on February 19. Shorcan and its associated persons were temporarily granted an exemption from registration if sufficient information was provided to the National Futures Association on or before February 19 so that their registration status was regarded as pending as of that date, as well as other conditions.
  • ICE Futures Singapore Approved for Direct Access by US Persons by CFTC: The Commodity Futures Trading Commission approved ICE Futures Singapore Pte Ltd. as a foreign board of trade. This designation permits persons located in the United States direct access to ICE Futures Singapore’s electronic order entry and trade matching system. Foreign exchanges must be licensed as an FBOT in order to grant US persons direct access to their electronic trading platforms in order to trade futures and options contracts. (Click here for background in a summary of FBOT requirements published by the CFTC.)
  • FinCEN Updates Lists of Problematic Jurisdictions: The Financial Crimes Enforcement Network of the US Department of Treasury issued an advisory revising Financial Action Task Force jurisdictions with anti-money laundering and combatting the financing of terrorism deficiencies. Among other matters, Uganda was removed from the list of problematic jurisdictions, while Sri Lanka, Trinidad and Tobago, and Tunisia were added. Similarly, the Office of Foreign Assets Control of the Department of Treasury expanded its sanctions against North Korea by targeting 56 shipping and trading companies and vessels and one individual.

For further information:

Bank Sanctioned US $613 Million for Capping Number of Suspicious Activity Reports:

CFTC and UK FCA Agree to Cooperate in Supporting Innovative FinTech Businesses:

CFTC Proposes to Simplify Layout of Definitions in Regulations:

CFTC’s DSIO Grants Temporary IB Registration Relief to ICE Subsidiary to Accommodate Transfer of Energy Contracts From ICE Futures Europe to ICE Futures US:

HK SFC Fines Brokerage Company HK $4.5 Million for Order Routing System Breakdown; UK FCA Publishes Observations on Best Practices in Algorithmic Trading:

FinCEN Updates Lists of Problematic Jurisdictions:

ICE Futures Singapore Approved for Direct Access by US Persons by CFTC:

ICE Futures US Sanctions Trader US $100,000 For Alleged Spoofing Offense:

CME Group:

ICE Futures US:

SEC Issues Guidance to Public Companies Regarding Cybersecurity Disclosure:

SEC Sues Bitcoin-Denominated Trading Platform for Operating an Unlicensed Securities Exchange; Principal Criminally Charged:

Trading Suspended:

Unlicensed Exchange:

Supreme Court Narrows Key Whistleblowing Protection:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.