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Katten’s Financial Markets and Funds Quick Take is
a monthly newsletter highlighting key noteworthy developments
potentially affecting financial markets and funds.
To read more issues of Katten’s Financial Markets and Funds
Quick Take, please click here.
SEC Division of Examinations Publishes 2024 Priorities:
Spotlight on Investment Advisers and Broker-Dealers
By Adam Bolter
On October 16, the Securities and Exchange Commission’s
(SEC) Division of Examinations (Division) published its examination priorities for its fiscal year
2024, noting there will be a greater presence of examiners in the
field. The Division also issued a Risk Alert regarding how the Division employs
its risk-based examination approach, including how it selects
registrants to examine and how it makes scoping decisions for those
examinations. Notably, the Risk Alert also provides an attachment
with the Division’s typical initial document request list. Read more about the examination
priorities.
Back to the Future: CFTC Proposes to Amend Customer Funds
Investment Rule Including to Again Permit Investments in Certain
Non-US Sovereign Debt
By Carl Kennedy, Gary DeWaal, Stephen Morris, Daniel
Davis
In a newly issued Notice of Proposed Rulemaking (NPRM), the
Commodity Futures Trading Commission (CFTC) proposed to lessen a
blanket restriction on the investment of customer funds in all
non-US sovereign debt instruments imposed on future commission
merchants (FCMs) and derivative clearing organizations (DCOs)
following the dramatic collapse of MF Global in October 2011. In
response to two public petitions for rulemaking, the CFTC proposed
amendments to its longstanding regulations governing the
safeguarding and investment of derivatives customer segregated,
secured and cleared swap customer funds held by FCMs and DCOs on
November 3. Read more about the proposed
amendments.
SEC Sues SolarWinds and its CISO for Fraud and Other Violations
Related to Massive Data Breach
By Danette Edwards
On October 30, the SEC sued SolarWinds and its chief information
security officer (CISO) for fraud, false reporting, and internal
and disclosure control violations related to the massive UNBURST
cybersecurity attack. The SEC could not reach a settlement with the
company or the CISO following the conclusion of its enforcement
investigation and was forced to file a litigated action against the
defendants. The CISO is the only defendant in the SEC’s suit,
even though it previously sent Wells Notices to other SolarWinds
officers and employees. Read more about the SEC’s
allegations.
President Biden Issues Executive Order on Safe, Secure and
Trustworthy Artificial Intelligence
By Trisha Sircar
Pursuant to the Fact Sheet published on October 30, 2023, by
the White House, President Biden issued a landmark Executive Order
to ensure that America leads the way in seizing the promise and
managing the risks of artificial intelligence (AI). The Executive
Order establishes new standards for AI safety and security,
protects Americans’ privacy, advances equity and civil rights,
stands up for consumers and workers, promotes innovation and
competition, and more. Read more about the Executive
Order.
UK Regulators Publish Policy Statement on the Bonus Cap
Removal
By Neil Robson, Carolyn Jackson, Nathaniel Lalone,
Christopher Collins, Ciara McBrien, Sara Portillo
On October 24, the Financial Conduct Authority (FCA) and the
Prudential Regulation Authority (PRA) (together, the Regulators)
published their joint policy statement to remove the existing
limits on the ratio between fixed (i.e., salary) and variable
(i.e., bonus) components of total remuneration (the Bonus Cap).
This follows the Regulators’ joint consultation on the Bonus
Cap in December 2022 and comes nearly a year after Liz Truss’
short-lived government first announced plans to abolish the Bonus
Cap to boost the attractiveness of the UK financial services
sector. Read more about the policy
statement.
UK FCA Publishes Statement on Common Cryptoasset Marketing
Issues
By Neil Robson, Christopher Collins, Ciara McBrien, Sara
Portillo
On October 25, the FCA published a statement warning about
common issues with cryptoasset marketing in the UK. The FCA has
been supervising firms’ compliance with its new cryptoasset
financial promotions regime since it went into effect on October 8.
The FCA identified several common issues with cryptoasset financial
promotions. Read more about regulatory concerns for
cryptoasset marketing.
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