Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • SEC publishes final rule modernizing electronic filings

    Securities

    On June 24, the SEC announced a final rule to require certain documents filed by investment advisers, institutional investment managers, and certain other entities be submitted electronically—a change that is “intended to promote efficiency, transparency, and operational resiliency.” Among other things, the final rule requires the electronic filing or submission of: (i) applications for orders under the Advisers Act on EDGAR; (ii) confidential treatment requests for Form 13F filings on EDGAR; and (iii) Form ADV-NR (through the IARD system).

    The SEC also released a Fact Sheet further explaining the final rule and what is required. According to a statement released by SEC Chair Gary Gensler, “these amendments benefit filers, investors, and the SEC” as “it is important for filers to have easy, online methods to submit information to the Commission, and where appropriate for investors to have easy, online access as well.”

    Securities Electronic Filing EDGAR SEC

    Share page with AddThis
  • SEC settles allegations regarding robo-adviser service

    Securities

    On June 13, the SEC announced a settlement with three subsidiaries of a financial services holding company (collectively, “respondents”) regarding their robo-adviser service. The order, which the respondents consented to without admitting or denying the findings, imposes a civil money penalty of $135 million and a total of $52 million in disgorgement. The order also provides that the respondents must cease and desist from committing or causing any future violations of the antifraud provisions in the Investment Advisers Act.

    Securities Enforcement Cease and Desist Investment Advisers Act Robo-Advisor Service

    Share page with AddThis
  • SEC enters $78 million FCPA settlement with steel pipe manufacturer

    Securities

    On June 6, the SEC announced that a Luxembourg-based manufacturer and supplier of steel pipe products agreed to pay over $78 million to settle the SEC’s claims that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and the Exchange Act. The settlement is the latest in the long-running investigation regarding Brazilian state-owned and controlled energy company Petrobras, and resolves allegations that agents and employees of the company’s Brazilian subsidiary paid approximately $10.4 million in bribes between 2008 and 2013 to obtain over $1 billion in new contracts and to retain existing business from Petrobras. The bribes were allegedly funded on behalf of the company through entities associated with its controlling shareholder and paid to Brazilian government officials in exchange for using their influence to persuade Petrobras to forego an international tender process. The DOJ closed its parallel investigation without charges.

    This is the second time the Luxembourg-based company has resolved FCPA charges with U.S. authorities, following 2011 resolutions with both the DOJ and SEC related to a state-owned entity in Uzbekistan. The company had been the first ever to enter into a Deferred Prosecution Agreement with the SEC.

    The current resolution involves a $25 million monetary penalty, as well as $42.8 million in disgorgement and over $10 million in prejudgment interest. The company neither admitted nor denied the allegations.

    Securities Financial Crimes SEC Enforcement FCPA Securities Exchange Act Bribery Of Interest to Non-US Persons Petrobras

    Share page with AddThis
  • FINRA levies $15 million fine for software flaw that increased mutual-fund prices

    Securities

    On June 2, the Financial Industry Regulatory Authority (FINRA) announced it had entered into a Letter of Acceptance, Waiver, and Consent (AWC), which ordered a New York-based member brokerage firm to pay more than $15.2 million in restitution and interest to customers who were steered by a software flaw in its automated system into purchasing higher-priced mutual fund shares when other shares were available at substantially lower costs. According to FINRA, the firm’s system, which is designed to restrict a customer’s purchase of Class C shares when lower cost Class A shares are available, allegedly “failed to correctly identify and implement applicable purchase limits on Class C shares,” thus causing thousands of customers to purchase Class C shares and incur fees and charges. The firm neither admitted nor denied the findings set forth in the AWC agreement but accepted and consented to the entry of FINRA’s findings and agreed to convert shares where applicable. FINRA stated that it “did not impose a fine due to the firm’s extraordinary cooperation and substantial assistance with the investigation.”

    Securities FINRA Enforcement

    Share page with AddThis
  • SEC publishes final rule requiring certain electronic filings

    Securities

    On June 3, the SEC announced a final rule requiring certain forms to be filed or submitted electronically. The final rule also amends forms to require structured data reporting and remove outdated references. According to the SEC, the final rule is “intended to promote efficiency, transparency, and operational resiliency by modernizing how information is filed or submitted to the Commission and disclosed to the public.” The SEC also noted that electronic filings will be more accessible and available on the SEC website in searchable formats. The public comment period will be open for 30 days after publication in the Federal Register. The SEC released a Fact Sheet providing information on the amendments to electronic filing requirements. According to a statement released by SEC Chair Gary Gensler, the final rule “will modernize and increase the efficiency of the filing process—for filers, investors, and the SEC.”

    Securities Agency Rule-Making & Guidance SEC EDGAR Federal Register

    Share page with AddThis
  • SEC charges broker-dealer with SAR violations

    Securities

    On May 20, the SEC announced charges against the broker-dealer affiliate of a national bank for allegedly failing to file Suspicious Activity Reports (SARs) in a timely manner in violation of the Securities Exchange Act and Rule 17a-8. According to the SEC’s order, the broker-dealer’s internal anti-money laundering (AML) transaction monitoring and alert system allegedly failed to reconcile the different country codes used to monitor foreign wire transfers due to an alleged failure to test a new version of the system. The broker-dealer also allegedly did not timely file SARs related to suspicious transactions in its customers’ brokerage accounts involving the wire transfers to or from foreign countries that it determined to be at a high or moderate risk for money laundering, terrorist financing, or other illegal money movements. Additionally, in April 2017, the broker-dealer allegedly failed to timely file additional SARs due to a failure to appropriately process wire transfer data into its AML transaction monitoring system in certain other situations. In addition to the $7 million penalty, the institution, without admitting or denying the SEC’s findings, agreed to a censure and a cease-and-desist order.

    Securities SEC Enforcement Securities Exchange Act Anti-Money Laundering SARs Financial Crimes Broker-Dealer

    Share page with AddThis
  • SEC awards whistleblowers $3.5 million

    Securities

    On May 6, the SEC announced awards totaling nearly $3.5 million to four whistleblowers whose information and assistance led to successful SEC enforcement actions. According to the redacted order, three joint whistleblowers provided SEC staff with information that led to the opening of a new investigation, which resulted in a successful enforcement action. These joint whistleblowers’ information also caused another agency to open an investigation and led to a separate successful action. Another whistleblower provided insights based on an independent analysis of information that focused the staff’s attention on allegations that were not previously known to staff that advanced the investigation. The SEC has awarded approximately $1.3 billion to 273 individuals since issuing its first award in 2012.

    Securities SEC Enforcement Whistleblower

    Share page with AddThis
  • SEC advises companies on Ukraine-related disclosure obligations

    Securities

    On May 3, the SEC Division of Corporation Finance released a sample letter advising companies that they should provide “detailed disclosure[s]” if they have direct or indirect operations in Russia, Belarus or Ukraine or if they trade securities in Russia or are affected by financial sanctions imposed on Russia. Companies should also report any other related uncertainties caused by the conflict in Ukraine, and disclose supply chain disruptions, cybersecurity risks, and volatility related to commodity trading prices. Additionally, companies should report whether they rely on goods or services sourced in Russia or Ukraine (or in certain cases, countries supporting Russia) as well as any business relationships or assets based in Russia, Belarus, or Ukraine. “The sample comments do not constitute an exhaustive list of the issues that companies should consider,” the Division said. “As always, companies should evaluate whether they have experienced or been impacted by matters characterized as potential risks and, if so, update disclosures accordingly.”

    Securities Financial Crimes Privacy/Cyber Risk & Data Security Ukraine Ukraine Invasion Russia Of Interest to Non-US Persons

    Share page with AddThis
  • SEC to expand crypto asset and cyber unit team

    Securities

    On May 3, the SEC announced it will nearly double the size of its Crypto Assets and Cyber Unit within the Division of Enforcement. “By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity,” SEC Chair Gary Gensler stated. Since the unit’s inception, more than 80 enforcement actions have been brought against actors related to fraudulent and unregistered crypto asset offerings and platforms, resulting in monetary relief totaling more than $2 billion. The unit has also “brought numerous actions against SEC registrants and public companies for failing to maintain adequate cybersecurity controls and for failing to appropriately disclose cyber-related risks and incidents.” The expanded unit will focus on investigations related to: crypto asset offerings, crypto asset exchanges, crypto asset lending and staking products, decentralized finance platforms, non-fungible tokens, and stablecoins.

    Securities Digital Assets Cryptocurrency Privacy/Cyber Risk & Data Security Enforcement

    Share page with AddThis
  • SEC awards $6 million to whistleblowers

    Securities

    On April 25, the SEC announced awards totaling nearly $6 million to two groups of whistleblowers whose information and assistance led to a successful SEC enforcement action. According to the redacted order, the first group of whistleblowers provided the SEC with key documents that led the staff to seek additional documents from the respondent, and the second group provided firsthand accounts of the misconduct at issue. Both groups, which consisted of five individuals, provided ongoing assistance throughout the investigation.

    The SEC has awarded approximately $1.2 billion to 268 individuals since issuing its first award in 2012.

    Securities SEC Whistleblower Enforcement

    Share page with AddThis

Pages