Lessons Learned

SEC Charges Broker-Dealer for Failing to File SARS. The SEC settled charges with GWFS Equities Inc. for failing to file suspicious activity reports (“SARs”) related to an external bad actors’ attempts to gain access to the retirement accounts of individual plan participants. During three years, GWFS filed 297 incomplete SARs related to this suspicious activity and failed to file a SAR in 130 instances. The SEC’s order finds that GWFS violated Section 17(a) of the Securities Exchange Act and Rule 17a-8 thereunder. GWFS agreed to a settlement that imposes a $1.5 million penalty, a censure, and an order to cease and desist from future violations. Contributed by Doug MacKinnon, Senior Compliance Consultant.

Worth Reading, Watching and Hearing

• The New Marketing Rule and the Seven Prohibitions: Sneaky, Sloppy, Tricky, Shifty, Iffy, Flimsy, and Dicey. Hardin Partner, Jaqueline Hummel, breaks down two core elements of the Marketing Rule – the new definition of “advertising” and the seven general prohibitions. Use this tool to help plan for implementation.
• Cryptocurrency Madness – Dogecoin Trading in 2021: How to Get a Doge in Your Pocket.
• Strategies for Maintaining Good Workplace Culture. Step back from technical compliance topics for a moment and consider the bigger picture topic of workplace culture. Morgan Lewis’ London team offers this quick read for CCO’s, who are often instrumental to this effort.
• Comparison of SEC’s Regulation Best Interest and DOL’s Final Investment Advice Class Exemption Morgan Lewis put together this excellent chart comparing the two sets of requirements.
• The SEC’s Latest Risk Alert Puts ESG Investing in the Crosshairs – Harvard Law School Forum on Corporate Governance addresses this industry hot topic.
• FINRA Shares Practices Firms Use to Protect Customers From Online Account Takeover Attempts. Regulatory Notice 21-18 dated May 12, 2021, addresses this timely risk.
• Money Stuff: Index Firm Forgot to Update XIV. Check out this Bloomberg Opinion by Matt Levine, which unpacks the SEC’s recent and unique enforcement action against an index provider.
• Taking Stock, Environmental, Social and Governance (ESG) Considerations. Eversheds Sutherland published a new ESG matrix addressing current required disclosures for different SEC-regulated entities – namely advisors, public and private funds. The introduction to the matrix notes that they will update it ongoing, so this may be a useful tool to watch.
• SEC to Reconsider Rules and Guidance Regarding Proxy Advisory Firms. Cydney Posner from the Cooley PubCo blog reports on SEC Chair Gary Gensler’s June 2 direction. The post also offers a thought summary of the prior regulatory updates related to proxy voting advisors that have led us to this latest inflection point.

Photo Credit: Photo by Cookie the Pom on Unsplash.