On February 15, 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) released a notice of proposed rulemaking (the “Proposed Rule”)[1] that would impose anti-money laundering/countering the financing of terrorism (“AML/CFT”) compliance obligations on SEC-registered investment advisers (“RIAs”) and exempt reporting advisers (“ERAs”) pursuant to the Bank Secrecy Act (the “BSA”), taking steps to close a perceived gap in the AML/CFT defenses of the U.S. financial system. FinCEN estimates more than 15,000 RIAs and almost 6,000 ERAs may be covered by the Proposed Rule, including many advisers that are located outside the United States but have registered (or file reports) with the SEC because they have U.S. clients. 

Continue Reading FinCEN Tries Again . . . to Impose AML Requirements on Investment Advisers

The crypto space has witnessed significant activity over the last year and is expected to continue generating new litigation risks in 2024 and beyond. The volatility of cryptocurrency values, the complex nature of the technology, the lack of regulation, and lack of understanding by regulators all contribute to this trend. Crypto-related actions span a wide spectrum, involving regulatory issues to claims brought by individuals or as class actions.

Continue Reading Crypto & Digital Assets

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) both accelerated their enforcement efforts in 2023, and seem poised to further intensify these efforts in 2024.  At the same time, the SEC disseminated new disclosure requirements across sectors, including disclosures related to cybersecurity and artificial intelligence (AI), and renewed its focus on the corporate and social aspects of environmental, social and governance (ESG) guidance.  Its Enforcement Division remained focused on litigating high-stakes cases in the digital assets space and expanded its sweep related to off-channel communications. 

Continue Reading 2023 Year-in-Review: Developments and Trends in White Collar Enforcement Litigation

On January 10, 2024, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) announced the creation of the SDNY Whistleblower Pilot Program (the “Pilot Program”).[1]  Under the Pilot Program, individuals who self-disclose certain criminal misconduct that involves business organizations to SDNY and cooperate fully may be eligible for a Non-Prosecution Agreement (“NPA”).[2] 

Continue Reading SDNY Announces Whistleblower Pilot Program For Individuals Who Self-Disclose Wrongdoing Involving Business Organizations

On December 4, 2023, the Commodity Futures Trading Commission (“CFTC”) issued for public comment proposed guidance regarding the listing by designated contract markets (“DCMs”) of voluntary carbon credit (“VCC”) derivative contracts (the “Proposed Guidance”).  

Continue Reading CFTC Publishes Proposed Guidance on Futures Exchanges’ Listings of Voluntary Carbon Credits and What this Means in the Context of Other Developments in this Market

On December 14, 2023, Congress passed the Foreign Extortion Prevention Act (“FEPA”) with bipartisan support as part of the 2024 National Defense Authorization Act (“NDAA”). 

Continue Reading Congress Passes Foreign Extortion Prevention Act to Prosecute Corrupt Foreign Officials

On November 14, the Securities and Exchange Commission announced its enforcement results for the 2023 fiscal year,[1] with case numbers up from fiscal year 2022 and monetary sanctions at the second highest level in the agency’s history, though down significantly from last year’s record highs.  In a press release announcing the results, Enforcement Director Gurbir Grewal noted that the past year’s cases demonstrate how the agency “work[s] with a sense of urgency, using all the tools in our toolkit.”  This post evaluates how the SEC used its enforcement tools in the past year and surveys the enforcement highlights in key substantive areas.

Continue Reading SEC Announces FY 2023 Enforcement Results with Second-Highest Penalties on Record

On October 13, the Securities and Exchange Commission (the “SEC”) adopted new rule 10c-1a (the “Rule”), which establishes broad reporting requirements of the terms of securities loans to the Financial Industry Regulatory Authority (“FINRA”) for public dissemination. Aimed at increasing transparency in the securities lending market, the Rule will significantly increase compliance obligations in the securities lending industry, and many market participants will likely require extensive operational upgrades to prepare for compliance. Certain details of reporting obligations will be the subject of FINRA rulemaking, and participants should be prepared to review and provide comment on what is proposed.

Continue Reading SEC Finalizes Rule Requiring Securities Loan Reporting

On October 13, 2023, the U.S. Securities and Exchange Commission (“SEC”) adopted (i) a new Rule 13f-2 under the Securities Exchange Act of 1934 (the “Exchange Act”) which will require a wide range of firms to file monthly reports with the SEC for large short positions in equity securities on a new Form SHO, as well as (ii) an amendment to the National Market System plan governing the Consolidated Audit Trail (the “CAT NMS Plan”) which adds an additional reporting requirement for CAT-reporting firms relying on the bona fide market maker exception to Reg SHO’s locate requirement.  The Final Rules, described in greater depth below, will require a significant compliance effort from firms and could potentially risk the exposure of certain valuable proprietary data. 

Continue Reading SEC Adopts New Short Position Reporting Requirements for Market Participants