SEC Accredited Investor Definition Updated
On Aug. 26, 2020, the SEC broadened the definitions of “accredited investor” in Regulation D under the Securities Act of 1933.
Fund Administrators Sanctioned by SEC
On Sept. 18, 2020, the SEC sanctioned two related administrators for contributing and causing violations of sections 206(2) and 206(4) of the Investment Advisers Act and Rule 206(4)-8 thereunder by L-R Managers LLC.
SEC Staff Provides Guidance Regarding Disciplinary History Disclosure Standard in Form CRS
On Oct. 8, 2020, the staff of the SEC’s Division of Investment Management and of the Division of Trading and Markets released additional FAQs relating to Form CRS focused on disciplinary history disclosures required of Form CRS filers (e.g., registered investment advisers with natural person clients) and their personnel.
SEC Chairman Highlights Robust Rulemaking, Enforcement and Examination Statistics
At the “SEC Speaks” forum on Oct. 8, 2020, SEC Chairman Jay Clayton provided an overview of the SEC’s 2020 fiscal year goals and accomplishments, including its rule enforcement activities and highlighted the SEC’s rulemaking, examination and enforcement statistics, which show that the SEC has remained highly active in its oversight of market participants even in the midst of the COVID-19 global pandemic.
SEC Provides Observations on “Credential Stuffing” Cyberattacks
On Sept. 15, 2020, OCIE issued a cybersecurity Risk Alert warning about an increase in cyberattacks against registered investment advisers and broker-dealers using “credential stuffing.”
SEC Resolves Digital Token Offering Case
On October 20, 2020, the SEC and Kik Interactive Inc. resolved a multi-year litigation regarding Kik’s offer and sale of digital tokens called Kin. The SEC sued Kik alleging that the Kin offering should have been registered with the SEC.
CFTC Sanctions Trader for Insider Trading by “Misappropriating” Employer’s Trade Data and Analysis
Although insider trading cases typically arise in the equities markets, managers should be reminded that the Commodity Futures Trading Commission has asserted its authority to bring such actions in the commodity interest space as well.
CFTC Compliance Program Evaluation Factors Released
On Sept. 10, 2020, the CFTC announced new guidance from its Division of Enforcement outlining factors that will be considered when evaluating a regulatory compliance program in connection with an enforcement matter.
“Spoofing” Continues to Draw Heavy Enforcement Attention
Spoofing, a form of manipulative trading conduct in which a trader enters buy or sell orders into the market that they have no genuine intention of fulfilling, remains an area of keen interest for regulators as well as exchange-level enforcement officers.
CFTC Finalizes Simplifying Amendments to CPO Quarterly Reporting Form
On Oct. 6, 2020, the CFTC voted to adopt amendments to Form CPO-PQR, the standard quarterly reporting form that is furnished to the CFTC (via submission to the NFA) by registered commodity pool operators.
NFA Updates Annual Questionnaire
National Futures Association member commodity pool operators are required to update their “Annual Questionnaire” — an online template that aggregates various information about a member’s business and operated commodity pools — on an annual basis (or upon the occurrence of certain events).
NFA Announces Expiration of COVID-19-Related Relief from Fingerprinting Requirements for New APs and Principals
Earlier this year, the CFTC and the NFA implemented temporary relief from the requirement to obtain fingerprints in connection with registering principals and associated persons. On Sept. 29,2020, the NFA announced that this relief would end and provided additional guidance.
SEC Sanctions a Registered Broker-Dealer for Text Message Recordkeeping Failures
On Sept. 23, 2020, the SEC released a cease-and-deist order imposing remedial sanctions arising out of the failure of a registered broker-dealer to retain business-related texts with clients, as required by the provisions of Section 17(a) of the Securities Exchange Act and SEC Rule 17a-4(b)(4).
European Funds — ESMA Liquidity Stress-Testing Guidelines Take Effect
ESMA Liquidity Stress-Testing Guidelines took effect on 30 Sept. 2020. The guidelines set out detailed requirements applicable to EU managers of alternative investment funds and UCITS.