News & Events – Bates Research

Bates Group recently hosted employment litigators and experts for a CLE program to discuss the effects that current and future employment issues have had on workforce reintegration, supervisory activity, mental health and substance abuse, disciplinary actions, and Form U5 language and terminations. Panelists included financial services industry leaders and Bates Group Experts who shared what they are seeing today and what employers and employees can expect going forward in the post-COVID work environment. Bates looks at the highlights and insights from the program.

Legislators, administrators and regulators have publicly advocated for government intervention to protect consumers and investors from cryptocurrency price volatility and the fraud and money laundering that has proliferated across digital platforms. With the passage of the bipartisan infrastructure bill in the U.S. Senate, comprehensive regulation of the industry seems inevitable. Meanwhile, SEC Chair Gensler’s recent remarks on crypto assets demonstrate the regulator’s focus on addressing gaps and protecting investors.

On July 21, 2021, the SEC Division of Examination issued two new risk alerts on Wrap Fee Programs and Principal and Cross Trading. The alerts were based on the latest observations of compliance deficiencies drawn from extensive examinations. The Division stated that the new alerts should be considered alongside earlier priorities and observations from 2019. In this article, Bates reviews the Division’s recent findings and guidance.

The White House, Congress, federal and state law enforcement agencies and regulators are mobilizing to combat the threat of ransomware. In the wake of high-profile attacks on businesses of all sizes, the Biden administration has made the issue a priority. In this article we focus on the significant recent administrative, legislative and regulatory efforts to confront ransomware, including: strengthening the digital resilience of critical infrastructure, the launch of a new interagency website to support the private sector’s cyber defenses, a $10 million “Rewards for Justice” program to catch cybercriminals, bipartisan cyber legislation, and SEC and NYSDFS developments, to name few.

With the recent publication of its of national priorities for anti-money laundering and countering the financing of terrorism ("AML/CFT"), the Financial Crimes Enforcement Network ("FinCEN") fulfilled one of the core mandates under the Anti-Money Laundering Act of 2020: the establishment and dissemination of national AML priorities. The 12-page document is the product of consultations among the U.S. Treasury Secretary and Attorney General, federal regulators, state financial regulators, and national security agencies. In this article, Bates takes a look at the newly published policy, each of FinCEN’s national priorities, and what your firm and clients need to know. 

Early last month, FINRA proposed new amendments to rules on the financial exploitation of seniors and other vulnerable individuals. The changes have implications for state rules protecting seniors as well. The SEC, FINRA and NASAA have also announced a joint training program designed to help firms comply with Senior Safe Act requirements. The program has compliance implications for firms seeking to utilize FINRA’s safe harbor rule 2165. In this article, Bates takes a closer look at the proposed changes and what they could mean for your firm.

The Financial Crimes Enforcement Network (FinCEN) today issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy.

The Securities and Exchange Commission today announced that Gurbir S. Grewal has been appointed Director of the Division of Enforcement, effective July 26, 2021.

On June 11, 2021, the White House Office of Information and Regulatory Affairs released a Unified Agenda of Regulatory and Deregulatory Actions containing the latest official list of the SEC’s regulatory rulemakings. The list includes proposed items the agency will undertake in the near future, which reflect the emergent priorities of the independent agency’s Chair Gary Gensler, who was sworn in on April 14, 2021. In this article, Bates takes a look at a few of the proposed items positioned for regulatory action this year.

In an op-ed in the Wall Street Journal on June 6, 2021, former SEC Chair Jay Clayton and former Undersecretary of the Treasury Brent McIntosh warned against the “serious risk of both overregulation and underregulation” of cryptocurrencies. They were responding to a rapidly changing financial marketplace in which innovative and complex digital products and services have become mainstream. They were also responding to recent statements by legislators, administrators and regulators advocating for a more comprehensive framework of government intervention to protect consumers and investors from price volatility and the fraud and money laundering that has proliferated across digital platforms. In this article, we review some of the recent pronouncements concerning cryptocurrency regulation, including the latest considerations on the development of a U.S. central bank digital currency.

As we previously relayed in Part 1 of this article, the honeymoon period in which firms needed to show merely a “good faith” effort at compliance with Reg BI and Form CRS requirements has come to an end. The SEC and FINRA have made clear that the regulators are moving to the next, more aggressive examination phase to ensure compliance with the new standard. Part 2 of our article focuses on commentary from FINRA’s 2021 Annual Conference concerning Reg BI and what firms should expect during examinations in Phase Two.

The honeymoon period in which firms needed to show merely a “good faith” effort at compliance with Regulation Best Interest (“Reg BI”) and Customer Relationship Summary Form (“Form CRS”) requirements has come to an end. At a recent session on Reg BI and Form CRS Observations during FINRA’s 2021 Annual Conference, speakers from the SEC and FINRA made clear that the regulators are moving to the next, more aggressive examination phase to ensure compliance with the new standard. In this two-part article, Bates examines regulator comments and expectations, and what firms can expect in Phase Two. In Part 1, we look at developments concerning Form CRS.

In a sign of ramped-up concern, FINRA urged members to ensure that cybersecurity programs and practices are in place to protect customers from online account takeover attempts. The regulator also issued Notices reminding firms to follow disclosure and other rules on pre-dispute arbitration agreements and asking market participants for comments on any rules that may create unintended barriers to diversity and inclusion in the broker-dealer industry.

Read our latest Bates AML & Financial Crimes: In Brief publication, bringing industry leaders important AML and Financial Crimes news and updates, including spotlights on our Bates AML & Financial Crimes staff and experts, on-demand AML webinars and other training, and thought leadership resources to support your professional success.

In its April 2021 Investment Adviser Section Report highlighting 2020 activities, the North American Securities Administrators Association ("NASAA") promoted the November 24, 2020 adoption of two model rules: a broad rule on compliance to ensure that advisers cover the full range of investor concerns in their written policies and procedures, and a long-debated proposed rule on continuing education to ensure that advisers are knowledgeable of current regulatory requirements and best practices. The report also offers information on a newly developed Cybersecurity Checklist for Investment Advisers. In this article, Bates examines these new rules in light of NASAA's annual report and continuing guidance.

In December 2020, the Department of Labor adopted regulations on investment advice for retirement accounts under ERISA, providing a class exemption for persons who are fiduciaries under ERISA and allowing them to receive compensation and engage in otherwise prohibited transactions on behalf of retirement investors, employee benefit plans and investment advice providers. The regulation has a long regulatory history and became effective on February 16, 2021. On April 13, 2021, the DOL issued guidance to address detailed implementation questions. In addition, on April 14, 2021, the DOL issued cybersecurity guidance for ERISA plan sponsors, fiduciaries and record-keepers, as well as for plan participants and beneficiaries. In this article, Bates takes a closer look and reviews the new DOL guidance, including details to guide your implementation and the cybersecurity protocols for your firm to follow.