By: Joseph Skilton, Michael Ruck, Rosie Naylor
The FCA has assessed and reported on the sanctions controls of over 90 financial service firms from a range of sectors including wealth management.
Read MoreBy: Shane Geraghty and Áine Ní Riain
On 6 July, the European Securities and Markets Authority (ESMA) announced it had launched a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on the integration of sustainability risks and on sustainability-related disclosures in the investment fund sector.
Read MoreBy: Shane Geraghty and Áine Ní Riain
On 20 July, the European Commission announced political agreement between the European Parliament and the European Council on proposed amendments to the EU’s Alternative Investment Fund Managers Directive (AIFMD). This follows the Commission’s proposal in the form of a draft directive amending AIFMD (AIFMD 2) issued in November 2021, protracted negotiations between the Commission, the Council and the European Parliament since 8 March of this year, and the issuance in June of a compromise text by the Council.
Read MoreBy: Neil T. Smith, Hayley Trahan-Liptak, and Christopher F. Warner
In November 2022, The Securities and Exchange Commission (SEC) Chair Gary Gensler stated that the SEC was only just getting started in its efforts to ensure firms were properly retaining business-related communication occurring over off-channel mediums. Two settled orders against two prominent broker-dealers released 11 May 2023 emphasize that point.
As with the SEC’s December 2021 and September 2022 settlements with major Wall Street firms, the 11 May 2023 settlements find violations of the record keeping requirements of Exchange Act Rule 17a-4 based on the firms’ failures to retain off-channel business-related communication. In the orders, which closely track the September 2022 orders, the SEC emphasized that the broker-dealers engaged in “pervasive off-channel communication” that occurred at all firm levels. The SEC continued to identify discussions about clients, client meetings, investment strategy, and communication regarding market color, trends, and events as “concerning” the broker-dealers’ respective businesses.
The May 2023 and September 2022 orders diverge with the discussion of cooperation. The SEC emphasizes in the recent orders that it considered the broker-dealers’ self-reporting, immediate remedial action, and cooperation with the SEC’s ensuing investigation when assessing penalties. Ultimately, the SEC ordered penalties of US$15 million and US$7.5 million, a fraction of the US$50 to US$125 million penalty range assessed in most prior similar orders.
It is clear the SEC’s investigatory efforts into record retention are in full swing. In fact, since the Fall of 2022, a myriad of firms have publicly announced that they are under investigation by the SEC in connection with potential record retention issues. It is likely additional formal charges are on the horizon.
By: Keri Riemer and Brian Doyle-Wenger
On 26 April, 2023, shortly after the U.S. Securities and Exchange Commission (SEC) proposed rule amendments that would require broker-dealers and investment advisers (collectively, firms) to comply with enhanced compliance requirements relating to sensitive customer information, the SEC’s Division of Examinations (staff) issued a risk alert highlighting the need for firms to have written policies and procedures for safeguarding customer records and information at their branch offices.
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