Commercial Litigation Update

Last week, the Securities and Exchange Commission’s Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions, which includes the SEC’s rulemaking agenda.

According to the SEC’s press release, notable proposed and final rulemaking areas include:

• Disclosure relating to climate risk, human capital, including workforce diversity and corporate board diversity, and cybersecurity risk
  Market structure modernization within equity markets, treasury markets, and other fixed income markets
• Transparency ...

Over the past 15 years, chief compliance officers (“CCOs”) for financial services firms have come under increased scrutiny as the Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA”) have brought more frequent enforcement actions seeking to hold CCOs personally liable. CCOs understandably have been concerned about this trend and financial service firms have focused on the chilling effect that the enforcement actions may have on the vital role CCOs play in their organizations and the quality of the COO applicant pool.

Last week, the Securities and Exchange Commission’s Division of Examinations (the “Division”) released its 2021 examination priorities.  The priorities reflect the impact of the COVID-19 pandemic, including how it has increased risks related to cybersecurity; a new focus on climate change; and appear to recognize concerns raised by the recent trading in GameStop stock.

Impact of COVID-19

The onset of the work-from-home environment arising from the COVID-19 pandemic, has, among other things, increased the SEC’s concerns about “endpoint security, data loss, remote ...

Recently, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert to provide broker-dealers with guidance on examinations regarding regulation Best Interest (“Reg BI”).  Reg BI requires that when broker-dealers make a recommendation regarding securities to a retail customer it must act in the best interest of the customer, without placing its own financial or other interest ahead of the retail customer’s interest.  The Financial Industry Regulatory Authority (“FINRA”) also ...

On August 20, 2019, the Securities and Exchange Commission (“SEC”) charged Mosaic Capital, LLC, formerly known as AOC Securities, LLC (“AOC”), and its CEO with failing to adequately supervise an employee who engaged in securities fraud. Pursuant to the SEC Orders, AOC and its CEO were ordered to pay penalties of $250,000 and $40,000, respectively. The SEC’s actions serve as a reminder to broker-dealers—and members of firm management—of the potential for liability based on the actions of a self-dealing employee, and the need to guard against such activities.

The ...