Welcome to the Regulatory Roundup. Each month, Eversheds Sutherland Investment Services attorneys review significant regulatory developments (including notable rulemakings and guidance from securities regulators) from the previous month that are of interest to retail broker-dealer and investment adviser firms.
The Government Shuts Down: Impacts on the SEC and FINRA
- The federal government shut down on October 1, 2025, meaning that most non-essential government personnel are no longer working. The SEC issued an “Operations Plan Under a Lapse in Appropriations and Government Shutdown” (Operations Plan) in August, which details how the SEC would operate in the event of a government shutdown. In addition, both the Division of Investment Management and Division of Corporation Finance recently announced action plans for the current shutdown. More information about the SEC’s operations during the shutdown can be found here.
- FINRA, a self-regulatory organization, will remain fully operational during the government shutdown.
FINRA’s Recent Board of Governors Meeting Report Hints at Future Guidance and Rulemaking
- On September 17 and 18, FINRA’s Board of Governors (Board) met in New York. Among other things, the Board received a progress update on the FINRA Forward initiatives currently in progress. Among other things, the Board discussed an upcoming Regulatory Notice addressing the use of the negative consent process for bulk transfers of customer accounts. FINRA indicated that this Regulatory Notice is intended to “reduce unnecessary burdens and consolidate prior guidance” related to the use of negative consent to these types of transfers.
- The Board has also approved amendments to a FINRA rule proposal earlier this year that is designed to simplify requirements regarding the reporting and supervision of associated persons’ outside activities (Proposed Rule). The Proposed Rule would replace FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person) with a single rule: Rule 3290 (Outside Activities Requirements). FINRA intends to file the revised proposal with the SEC for approval.
SEC Chair Paul Atkins Embraces AI in Speech at Inaugural OECD Roundtable on Global Financial Markets
- On September 20, SEC Chairman Paul Atkins gave a speech at the Inaugural OECD Roundtable on Global Financial Markets in which he expressed enthusiasm about the benefits of generative artificial intelligence (Gen AI) in providing “faster markets, lower costs, and broader access to strategies.” Chairman Atkins expressed his belief that “[t]he government’s responsibility . . . is to ensure that commonsense guardrails are in place while eliminating the regulatory obstructions that stifle innovation.”
- Chairman Atkins speech stands in stark contrast to statements made by prior SEC Chairman Gary Gensler, who just a year before had expressed that “AI may play a central role in the after-action reports of a future financial crisis.”
- To receive an invitation to our upcoming webinar series covering the use of AI tools by broker-dealers and investment advisers, please enter your contact information here. Future webinars will cover: (1) AI notetaking tools; (2) AI chatbots; and (3) AI marketing material creation and review.
The SEC Hosts a Webinar for Large Firms on Amendments to Regulation S-P
- On September 25, the SEC held a compliance outreach event for large firms regarding the 2024 adoption of amendments to Reg S-P. “Larger entities” must comply with the Reg S-P amendments beginning on December 3, 2025; while smaller entities must comply with the amendments by June 3, 2026.
- The event covered Reg S-P’s history, key aspects of the regulatory framework, and the Division of Examinations’ future approach, including the expected maintenance and production of required policies, procedures, books, and records. To date, there has not been any indication from the SEC (including at the event) that the compliance date for the Reg S-P amendments will be delayed, a result sought by a number of trade organizations and industry participants.
FINRA Issues a Regulatory Notice Reminding Firms of Their Obligation to Comply with Rule 8210
- On September 25, FINRA issued Regulatory Notice 25-11 (Notice) to remind members and associated persons that, no matter where they are located, they are required to provide information and testimony in response to a request from FINRA staff pursuant to Rule 8210. FINRA Rule 8210 (Provision of Information and Testimony and Inspection and Copying of Books) authorizes FINRA staff and adjudicators to request information from members and their associated persons for the purpose of an investigation, complaint, examination, or proceeding authorized by FINRA’s By-Laws or rules.
- The Notice reminds firms that operate or maintain personnel in jurisdictions that have laws that could potentially conflict with the requirements of Rule 8210 to anticipate that FINRA’s examination program will continue to review the firms and their associated persons.
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