News in Personal Trading Software & Compliance Monitoring Tools

What’s in the news: the top five compliance articles for August 20 – September 2, 2022

Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.

Stay up-to-date and in the know on everything happening in the compliance world as of September 2, 2022.

Top five compliance articles

SEC adopts amendments to whistleblower program – Author Cydney Posner

Last Friday, the Securities and Exchange Commission (SEC) adopted two amendments to the whistleblower program. Amendments, which, were proposed in February 2022.

The first amendment will expand the circumstances in which a whistleblower who assisted in a related action can receive an award from the SEC for that related action rather than from the other agency’s whistleblower program. The second amendment adjusts the dollar amount of a potential award.

According to SEC Chair Gary Gensler, the amendments “will give whistleblowers additional comfort knowing that the Commission would not decrease awards based on their size.” He said, “I think that these rules will strengthen our whistleblower program. That helps protect investors.”

The amendments to the whistleblower rule will become effective 30 days after they are published in the Federal Register.

SEC strategic plan emphasizes best-interest enforcement – Author Mark Schoeff Jr.

The Securities and Exchange Commission (SEC) released a draft strategic plan that outlines the organization’s priorities over the next four years. According to the draft, the SEC’s priorities will focus on enforcing a best-interest approach to investment advice. SEC Chairman Gary Gensler says that this is to “protect working families against fraud, manipulation and misconduct.”

The SEC intends on using enforcement actions to achieve its goals. The draft plan states that “enforcement … means bringing cases that matter to all parts of the SEC’s mission – whether it be deceptive conduct by registered or private funds, offering or accounting frauds, insider trading, market manipulation, failures to act in retail customers’ best interest when making a recommendation, reporting violations, best execution and failure to act in accordance with the fiduciary duty or another form of misconduct.”

The document may be an indication that the agency will pursue more complex Reg BI violations. The draft plan is currently open for public comment.

‘ESG integration’ a sticking point in SEC proposals – Author Emile Hallez

Recently the Securities and Exchange Commission (SEC) shared two new proposed rules. The first proposal would “update current 2001 regulation to prohibit companies from putting a badge on products that don’t use factors in their name as primary ones in their investment processes, including environmental, social and governance (ESG).” The other proposal, for ESG disclosures for investment companies and advisers, would “put funds into three different groups and require environmentally focused funds to report greenhouse gas emissions tied to their portfolios.”

So far, fund companies and industry groups have submitted comment letters, in which they have asked for clarification and support in helping them comply with the proposed rules, if adopted.

The SEC will review the comments before revising the proposed rules, which the commissioners will later vote to finalize.

New regulations for the new reality – Author Investment News

The Financial Industry Regulatory Authority (FINRA) has proposed a pilot program for firms that opt to continue remote inspections. FINRA has proposed the pilot program in response to the trend toward remote work. If approved by the Securities and Exchange Commission (SEC), the program will help FINRA collect data on the effectiveness of these remote inspections and what changes might need to be made to improve it.

However these regulatory changes are put into effect, it will likely result in a greater reliance and investment in technology and tools. The proposed pilot program could affect various members of the financial industry:

For smaller firms already at a scale disadvantage, this will be an additional motivation to be acquired, merge or to exit the business.

For larger firms, new technology to monitor remote work will mean a required increase in efforts to bolster cybersecurity and new uses of artificial intelligence to assess and predict the actions of those being monitored.

For advisers and other registered personnel, greater remote monitoring likely will require even greater care in keeping work technology and equipment separate from the proliferation of personal tech tools.

“The greater use of technology also may mean that, at some point in the future, 24/7 real-time monitoring of all broker-dealer activities will be the way oversight is conducted.”

SEC Adopts Pay Versus Performance disclosure Rules – Author Stephen Quinlivan

The Securities and Exchange Commission (SEC) adopted final rules implementing the pay versus performance requirement as required by Congress in the Dodd-Frank Act.

“The rules will require registrants to disclose, in proxy or information statements in which executive compensation disclosure is required, how executive compensation actually paid by the registrants and related to the financial performance of the registrants over the time horizon of the disclosure based on the SEC’s rules.”

The rules will become effective 30 days after they are published in the Federal Register.

“Registrants must begin to comply with these disclosure requirements in proxy and information statements that are required to include Item 402 executive compensation disclosure for fiscal years ending on or after December 16, 2022.”