On March 27, 2024, the U.S. Securities and Exchange Commission (“SEC”) announced amendments to the Internet Adviser Exemption, which permits investment advisers that provide advisory services through the internet (“Internet Investment Advisers”) to register with the SEC under the Investment Advisers Act of 1940 (“Advisers Act”) if they do not otherwise have enough assets under management to be eligible for registration.[1]  The final rule seeks to address technological and industry advancements since the original Internet Adviser Exemption was adopted in 2002.  The final rule also amends the interactive website requirement, eliminates the exception for advisers with de minimis non-internet clients, and imposes additional reporting requirements for Internet Investment Advisers on Form ADV.

Continue Reading SEC Announces Reforms for Internet Investment Advisers

On March 18, 2024, the SEC announced two enforcement actions against investment advisers for so-called “AI-washing” and violations of the Marketing Rule.  Using the playbook from the Enforcement Division’s “green-washing” cases in the ESG space, the SEC found that the two investment advisers marketed that they were using AI in certain ways, when in fact, the advisers were not. 

Continue Reading SEC Announces “AI-Washing” Cases Against Investment Advisers

On March 6, 2024, the Securities and Exchange Commission (“SEC” or “Commission”) adopted amendments to the disclosure requirements of Rule 605 of Regulation NMS for order executions of stocks listed on a national securities exchange.[1]  The final rule amendments expand the scope of entities that must comply with, and order types and sizes that must be reported under, Rule 605, and requires time-based metrics to be reported at a more granular level.  This is the first substantive update of Rule 605 since it was adopted in 2000. 

Continue Reading SEC Approves Amendments to Enhance Disclosure of Order Execution Information

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