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Yesterday, the Supreme Court issued its decision in the closely-watched SEC v. Jarkesy, holding that the SEC could no longer seek civil monetary penalties for fraud in its in-house courts consistent with the Seventh Amendment, which grants the right to a jury trial and thus requires such cases to be heard in federal court. The Supreme Court’s decision has potentially profound implications, not only for the SEC’s regulation of the securities industry, but for dozens of federal administrative agencies that, depending on the authorizing statute, can or must impose civil penalties through administrative proceedings.

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After bringing its first disciplinary action related to Regulation Best Interest (“Reg BI”) back in October 2022, the Financial Industry Regulatory Authority (“FINRA”) has made it clear that compliance with the long-dormant regulation will be a significant focus of the regulator’s attention this year.  Bill St. Louis, FINRA’s Executive Vice President and Head of the National Cause and Financial Crimes Detection Program, announced last week that FINRA intends to conduct Reg BI compliance examinations of 1000 broker-dealers – or just under one-third of FINRA’s member firms – by the end of the year.

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In an Article 77 trust instruction proceeding, the Commercial Division of the Supreme Court of the State of New York recently issued a ruling safeguarding privileged communications between a corporate trustee and securities administrator (the “trustee”) and its counsel where the trustee is seeking a finding of good faith.  The development suggests that trustees and other parties may seek findings of good faith in Article 77 proceedings without losing privilege protections, so long as certain criteria are met.

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On January 10, 2023, the Financial Industry Regulatory Authority (“FINRA”) issued its 2023 Report on FINRA’s Examination and Risk Monitoring Program (the “Report”).

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Online broker-dealers can breathe easily in the Commonwealth of Massachusetts once more, as a Massachusetts court last week found a recent regulation imposing a fiduciary duty standard upon brokerage firms to be unlawful.

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A Connecticut federal jury just answered one of the biggest questions on the minds of cryptocurrency investors, developers, and regulators – are cryptocurrencies securities? The jury concluded that Paycoin and several cryptocurrency mining-related assets are not securities.
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On June 30, 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued national priorities for the anti-money laundering and countering the financing of terrorism (“AML/CFT”) policy (the “Priorities”).[i]
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On January 1, 2021, Congress enacted the National Defense Authorization Act for Fiscal Year 2021 (the “NDAA”), after overriding a presidential veto. Within the NDAA is the Anti-Money Laundering Act of 2020 (the “AMLA”), which introduces substantial reforms to U.S. anti-money laundering (“AML”) and counter-terrorism financing (“CFT”) laws.
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In response to the COVID-19 pandemic, the North America Securities Administrators Association (NASAA) put together a task force in April 2020 specifically targeted to use “online investigative techniques to identify websites and social media posts that may be offering or promoting fraudulent offerings, investment frauds, or improper unregistered regulated activities” which were related to any aspect of COVID-19.
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FINRA recently issued Regulatory Notice 20-17 (“Reg. Notice 20-17”) addressing changes to FINRA Rule 4530 due to the impending implementation of Regulation Best Interest (“Reg. BI”). Rule 4530 requires member firms to report, among other things, statistical and summary information regarding written customer complaints, as well as specified criminal actions, civil complaints and arbitration claims.
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This article lists five best practices that employers can adopt to improve their compliance efforts and reduce the risk of a substantiated SEC whistleblower complaint.
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FINRA, through its most recent Regulatory Notice 20-16 , shares certain common practices they have seen taken by member firms to enhance supervision in the remote work environment due to the COVID-19 pandemic.
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As we previously discussed, FINRA issued guidance to member firms and their associated persons in April 2020 to remain “vigilant in their surveillance against cyber threats and take steps to reduce the risk of cyber events.”
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Kestra Investment Services LLC (“Kestra”) was fined $125,000 by FINRA for sharing personal customer data with a third-party vendor.
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Due to the economic impact of COVID-19, especially on smaller broker-dealers, FINRA will allow small firms more time to pay their Annual Assessment (comprised of the Gross Income Assessment and the Personal Assessment).
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