FINRA Updates Registration Rules, NFA Writes Disclosures for Virtual Currencies: Regulatory Update for September 2018

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For Investment Advisers:  SEC Actions

SEC Goes Ahead with Administrative Proceedings:   With little fanfare, the SEC issued an order to terminate its previous stay on pending administrative proceedings before its Administrative Law Judges (“ALJ”) on August 22, 2018.  The SEC issued the original order after the U.S. Supreme Court held that the process for hiring SEC’s administrative law judges (“ALJs”) was unconstitutional in its 7-2 decision on June 21, 2018, in Raymond J. Lucia vs. Securities and Exchange Commission. The Commission’s order ratified the appointment of its ALJs and granted to all parties in current proceedings the opportunity for new hearing before a different ALJ.  The SEC also vacated prior opinions issued in nearly 130 matters pending before the Commission, listed on Exhibit A to the order. Contributed by Jaqueline M. Hummel, Partner and Managing Director

For Broker-Dealers:  FINRA Actions

FINRA’s Consolidated Registration Rules become effective on October 1st:  With all the buzz around FINRA’s revised exam structure, FINRA members may have lost sight of FINRA’s new registration and designation requirements that are effective October 1stSee FINRA Regulatory Notice 17-30The to-do list includes the following:

Check out our blog post for more details.  Contributed by Rochelle Truzzi, Senior Compliance Consultant

For Hedge and Private Fund Managers:  NFA Action

NFA Requires New Disclosures on Virtual Currencies:  Responding to current regulatory concerns about virtual currencies, the National Futures Association (NFA) issued an interpretative notice that includes new disclosure requirements for NFA members that are Commodity Pool Operations (“CPOs”), Commodity Trading Advisors (“CTAs”), Futures Commissions Merchants (“FCMs”) or Introducing Brokers (“IBs”) that engage in virtual currency transactions for their customers. NFA’s big concern is that customers may not fully understand the nature of virtual currencies and virtual currency derivatives, the risks associated with these products and the NFA’s limited oversight role.  The new disclosure requirements become effective on October 31, 2018.  NFA member firms should be on the lookout for educational guidance from the NFA on these new requirements.  Contributed by Cari A. Hopfensperger, Compliance Consultant

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