News in Personal Trading Software & Compliance Monitoring Tools

What’s in the news: the top five compliance articles for Oct. 29 – Nov. 11, 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 Nov. 11, 2022.

Top five compliance articles

SEC Pulls In Record Enforcement Haul, Moves to Rewrite Mutual-Fund Rules – Authors Paul Kiernan and Dave Michaels

In Chairman Gary Gensler’s first complete fiscal year on the job, the Securities and Exchange Commission (SEC) collected $6.4 billion in monetary sanctions.

This year more sanctions were collected than last fiscal year by 40%. Most of the fines, fees and penalties were from 700 enforcement actions, which are indicative of the agency’s crackdown on rule violations.

To help offset the impact of these monetary sanctions and improve confidence in the US market, the SEC has proposed changes to its mutual fund regulations. The rule change would require US funds which hold more than $16 trillion in assets to wait until they know exactly how much money has come in or out before calculating the daily “net asset value” (NAV). The hold period would ensure funds can provide customers with the most accurate information related to their investment and securities options.

SEC seeks more input on FINRA proposal to allow supervision from home offices – Author Mark Schoeff Jr.

In July, the Financial Industry Regulatory Authority (FINRA) filed a proposal with the SEC which would allow brokers who work remotely to supervisor other brokers without the broker’s home being designated as a branch office. According to the proposal, the parent brokerage would examine the residential supervisory location once every three years to ensure it is up to standards. This proposal was developed in response to the growing number of brokers who now work from home.

However, since the SEC put the proposal out for an initial comment period, the proposal has been met with considerable criticism. Members of the North American Securities Administrators Association (NASAA) and Public Investors Advocate Bar Association (PIABA) have said the proposal wouldn’t adequately protect brokers from data breaches and it would undermine investor protection.

Gensler warns market players that SEC crackdown is just getting started – Author Bloomberg News

SEC Chairman Gary Gensler has said that the agency will pursue violations wherever and however they occur. The agency’s staff filed more than 700 enforcement actions in the last fiscal year, which ended in September, and collected $6.4 billion from those actions.

Much of the money collected stems from settlements and record fines against banks for their employees using outside messaging services like WhatsApp to conduct business.

Gensler has also reminded attorneys they will be under scrutiny for their role as “gatekeepers.” If they see a client getting close to committing a violation, they must quickly lead them away from doing so.

SEC exams director warns advisers to strengthen cyber defenses – Author Mark Schoeff Jr.

The SEC proposed a cybersecurity rule for investment advisers earlier this year in direct response to the agency’s understanding of increased cybersecurity threats occurring as a result of technological advances. A risk, which they have noted, impacts firms of any size.

At the ComplyConnect conference, Richard Best, director of the SEC’s examinations division, outlined some of the cyber deficiencies the SEC has seen in examinations over the years. These include:

  • A lack of cybersecurity policies and procedures.
  • Employees not following cybersecurity policies and procedures if they exist.
  • Allowing too many exceptions to multifactor authentication.
  • Failing to train staff.
  • Top firm officials failing to reiterate the importance of cybersecurity.

The future of compliance tech and industry diversity, with ComplySci CEO Amy Kadomatsu – Author Justin L. Mack

COMPLY CEO Amy Kadomatsu was invited as a guest to the Financial Planning Podcast. During the episode, she talked about what has led her into a career in compliance software as well as what has led to her success in her current role. She shared the importance of authenticity in leadership, the pressures she faces in a fast-paced environment wherein regulations are ever-changing and the importance and strength in sharing her story.

Of her strengths, she said, “I’m really lucky to be able to work with an executive coach, and during one of the first interviews I had with her, we were talking about me generally and learning that I really only know how to be me.”