In a break from prior practice, the U.S. Securities and Exchange Commission’s (SEC) Division of Examinations (EXAMs) has published its priorities at the start of the 2024 fiscal year. It is a strong signal that the EXAMs staff expects asset managers to be well prepared to demonstrate their compliance with respect to “the key risks, trends, and examination topics” identified by the staff.

The EXAMs staff has grown substantially over the past year, and the increased “field presence” supports the stated goal of promoting transparency and compliance. This heavier examination hand comes in a period of ever-growing compliance burdens as the SEC has proposed, and recently adopted, rulemaking that stands to significantly affect the asset management industry.

The U.S. Securities and Exchange Commission (SEC) announced on September 11, 2023, settlement agreements with nine registered investment advisers. All were charged with advertising hypothetical performance on their websites without adopting and implementing policies and procedures required by Rule 206(4)-1 (the Marketing Rule) under the Investment Advisers Act of 1940 (Advisers Act).

The author wishes to acknowledge the contributions of summer associate Henry Little

Proposed Rules

The US Securities and Exchange Commission (SEC) indicated this summer that it plans to introduce proposals to regulate conflicts of interest associated with artificial intelligence (AI) later this year as part of its semiannual rule-writing agenda. The SEC is considering proposed

Introduction to AI and Definitions

Artificial intelligence (AI), a term first coined in the 1950s, is a field of technology that engages in problem-solving by using AI algorithms to make predictions or classifications based on input data.[1] With the recent emergence of generative AI technology, the regulation of AI has become a priority for

The delay has subsided with custody of digital asset securities by special purpose broker-dealers (SPBDs). By way of background, on July 8, 2019, SEC and FINRA staff issued a joint statement addressing how registered broker-dealers could facilitate transactions in digital asset securities without taking custody of the assets. The solution involved bilateral clearance and settlement of the transactions.

A year later, the SEC’s Division of Trading Markets staff issued a no-action letter to FINRA articulating the staff’s position on how alternative trading systems (ATSs) could facilitate trading in digital asset securities using a three-step process. However, per its terms, the no-action letter requires the ATSs to not take custody of the digital asset securities.

Between November 2017 and November 2021, three individuals actively solicited investments in securities, including providing marketing materials and advising on the merits of the investment, and receiving commissions for their sales. In May 2022, the U.S. Securities and Exchange Commission (SEC) halted the activities of the individual defendants involved in May 2022, for operating a

In the blitz of regulatory and financial developments that have made headlines throughout the first quarter of 2023, a recent FINRA enforcement action serves as a reminder to both broker-dealers and their representatives that Regulation Best Interest (Reg BI) remains an area of focus for FINRA. This action underscores how important it is for broker-dealers

Given this week’s headlines, many emerging companies may be asking themselves: “Why am I holding so much cash?
The Investment Company Act of 1940 (the 1940 Act) may be to blame.

“Inadvertent” Investment Companies

But I don’t have any intent of being an investment company. Aren’t those mutual funds or hedge funds? I’m

On March 10, 2023, volatility resulting from concerns regarding runs on certain banks triggered trading halts in those banks’ stocks on the New York Stock Exchange (NYSE) and Nasdaq. March 13, 2023, saw additional trading halts on bank stocks. This post provides a brief explanation of the Limit Up Limit Down (LULD) rules that