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A Securities and Exchange Commission (“SEC”) plan to create a registration exemption for certain finders has generated a mixed response.  The nearly 90 comments received by the SEC by the November 12, 2020 close of the comment period reflect a clear divide along predictable lines.  Broker-dealers, issuers, and some practitioners lauded the proposal for bringing regulatory clarity to what has long been a cloudy issue while regulatory groups and investor advocates criticized the plan for allowing unregistered finders to conduct brokerage activities without sufficient investor protection mechanisms.
Continue Reading SEC Proposal to Exempt Finders from Registration Generates Split Reaction

On November 19, 2020, Peter Driscoll, director of the Office of Compliance Inspection and Examination (“OCIE”) of the Securities and Exchange Commission (“SEC”), gave a speech urging advisory firms to empower their Chief Compliance Officers (“CCOs”). The speech, made at the SEC’s annual compliance outreach conference, accompanied OCIE’s Risk Alert, issued the same day, identifying notable deficiencies and weaknesses regarding Registered Investment Advisors (“RIAs”) CCOs and compliance departments. Driscoll’s speech complemented the Risk Alert by outlining the fundamental requirements for CCOs: “empowered, senior and with authority.”
Continue Reading OCIE Director Instructs Advisers to Empower Chief Compliance Officers

On June 16, 2020, the U.S. Court of Appeals for the District of Columbia Circuit held that the Securities and Exchange Commission (“SEC”) lacks the authority to administer a two-year pilot program designed to review the fees and rebate structure used by U.S. stock exchanges.  As discussed in our previous article, major U.S. exchanges, such as New York Stock Exchange, CBOE,  Global Markets, and Nasdaq sought review to challenge the pilot program.  In New York Stock Exchange LLC  v. SEC, No. 19-1042 (D.C. Cir. Jun. 16, 2020), the Court sided with the exchanges, holding that the SEC exceeded its authority by creating a program whose thrust was merely to test whether the current pricing structure was problematic.
Continue Reading D.C. Circuit Rejects SEC’s Program Testing Exchange Fees and Rebates

A January proposal to give banks compliance slack floated by a high-ranking Federal Reserve Board (“FRB”) official has not yet gained the traction its supporters had hoped for.
Continue Reading Fed’s Vice Chair for Supervision Proposes a Deregulatory Approach to Limit the Scope of “Matters Requiring Attention” used in Bank Examinations

In response to widespread interest in allowing more small business participation in opportunities involving cloud computing, the Small Business Administration (“SBA”) has decided to exclude cloud computing from the limitation
Continue Reading Small Business Subcontracting for Cloud Computing Gets Easier

The Second Circuit recently took an unexpected plunge into the torrid waters of insider trading law. Following several years of decisions limiting the government’s broad interpretation of what constitutes a
Continue Reading United States v. Blaszczak: Second Circuit Ruling Creates Opening for Significant Increase in Insider Trading Prosecutions

Under its new leader, the New York Department of Financial Services (“DFS”) has staked out high ground for itself by self-identifying as the “regulator of the future” DFS’s pronouncement came in a July press release issued about a month after Linda Lacewell was confirmed as the agency’s third superintendent. The press release, issued to announce the creation of a new Research and Innovation Division, signals that DFS is attempting to harness the increasing technological tools available to regulators, while making New York an attractive place for financial firms to do business. “The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow,” Lacewell said in the press release. “This new division and these appointments position DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.”
Continue Reading New York’s Department of Financial Services: the Self-Styled “Regulator of the Future”

Earlier this month, the U.S. Department of Justice (“DOJ”) and the U.S. Department of the Treasury’s Office of Foreign Asset Controls (“OFAC”) both issued guidance regarding their expectations for corporate compliance programs. Both documents are geared towards establishing more rigid frameworks for assessing compliance programs. A common theme among both pieces of guidance appears to be the identification and allocation of responsibility to individuals, especially management. Additionally, the fact that the agencies released their guidance within days of each other could be read as a clear signal from federal authorities that they are serious about increasing their focus on individual accountability for corporate wrongdoing.
Continue Reading Feds Focus on Individuals in Evaluating Corporate Compliance Programs

Each year, the Government purchases more and more cloud computing from contractors.  But while many small businesses can provide cloud computing, the current rules associated with small business set-aside contracts prevent agencies from awarding prime contracts with a large cloud computing component to small businesses.
Continue Reading More Opportunities On the Horizon for Small Businesses Seeking to Sell Cloud Computing to the Government

On September 11, 2018, the U.S. District Court for the Eastern District of New York denied[1] a motion to dismiss an indictment of a Brooklyn real estate entrepreneur in relation to two virtual currency investment schemes and initial coin offerings (“ICOs”). The indictment, which charged securities fraud against Maksim Zaslavskiy, was based, in part, on the theory that the cryptocurrencies at issue were securities. In his motion to dismiss, Zaslavskiy argued that this premise was faulty and the ICOs offered by the two companies he owned, REcoin Group Foundation, LLC (“REcoin”) and DRC World, Inc. (“DRC”), were not, in fact, securities. The court, then, was called upon to consider whether the securities laws apply to cryptocurrencies. The court also considered Zaslavskiy’s argument that the securities laws are void for vagueness as applied to cryptocurrencies and token sales.
Continue Reading New York Federal Court’s View on Cryptocurrency as Securities