News in Personal Trading Software & Compliance Monitoring Tools

What’s in the news: the top five compliance articles for July 9 – July 22, 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 July 22, 2022.

Top five compliance articles

Compliance officers should leapfrog regulators in providing crypto trading guidance to employees – Author Amy Kadomatsu

“Today, there are no direct cryptocurrency market regulations. But several oversight agencies may issue rules that impact the development of the digital asset ecosystem as they continue to gain popularity with financial services industry employees, even as these assets experience a significant downgrade in valuation.

The SEC may lead much of this process, with recent announcements from Chair Gary Gensler outlining consumer and investor protections from cryptocurrency scams. But it’s also possible the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority and the Financial Stability Oversight Council will have meaningful roles. Factor in that the blind nature of transferring crypto assets may bring law enforcement and tax agencies into the equation.

Until regulators do act, financial services companies that monitor traditional employee trading activities should develop specific cryptocurrency-related protocols.”

How? By using existing policies to proactively monitor cryptocurrency trading activity. Applying either a securities or commodities lens to cryptocurrency allows firms to track such trading with their standard policies and procedures.

Former Coinbase employee charged in alleged insider-trading scheme – Authors Corinne Ramey and James Fanelli

“A former Coinbase Global Inc. employee and two other men were charged with wire fraud Thursday in what federal prosecutors called the first insider-trading case involving cryptocurrency markets.”

According to the SEC nine of the 25 digital coins should have been classified and registered as securities. This classification could have significant ramifications for the entire cryptocurrency industry including “new legal liabilities and regulatory requirements.”

SEC enforcement will help ensure Reg BI delivers on investor protection: Grewal – Author Mark Schoeff Jr.

“SEC Enforcement Director Gurbir Grewal told lawmakers Tuesday that his division will help ensure Regulation Best Interest delivers on its investor protection promises.

The SEC has made probing compliance with Reg BI an examination priority again this year. Grewal said the initial Reg BI case was referred to enforcement by the SEC Division of Examinations.

“There are other referrals,” Grewal said at a hearing of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets. “It remains to be seen. But it’s my hope with enforcement actions, with education and with compliance, that [Reg BI] is having its desired effect in the market.”

The broker-dealer standard of conduct, which prohibits brokers from putting their financial interests ahead of their customers’ interests, went into force in June 2020. Since then, it’s been the subject of debate about whether it’s curbing brokers’ conflicts of interest.

Gensler has emphasized the use of SEC guidance and enforcement to put teeth into the regulation. In a recent InvestmentNews interview, Gensler indicated the agency will be releasing staff bulletins on various aspects of the regulation.”

Tracking the record flow of assets cascading into RIAs – Author Tobias Salinger

“RIAs remain largely an industry composed of small businesses and top-heavy giants that collectively manage trillions of dollars in assets, according to an annual study released last month by the Investment Adviser Association and ComplySci’s NRS.

With that backdrop, the sheer figures give a glimpse of the scale being delivered by RIAs, as of the end of last year. The number of RIA clients ballooned by 47% between 2018 and 2021, and the AUM rose 80%, the report shows.”

Bill to require SEC investor testing is revived – Author Melanie Waddell

“Rep. Sean Casten, D-Ill., reintroduced Thursday the SEC Disclosure Effectiveness Testing Act, legislation to require the Securities and Exchange Commission to conduct investor testing prior to issuing any rule or regulation that designates documents or information to be disclosed under the securities laws to retail investors.”

The bill, which was passed in the House late 2019, includes requirements regarding more in-depth reviews and tests for all relevant disclosures.