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The weekly news source for investment management legal and compliance professionals

Topic: Technology

Clayton Addresses Past and Future in Senate Testimony

January 4, 2019  SEC Chairman Jay Clayton, in testimony before a Senate committee, spoke of the agency’s achievements during 2018, as well as what it hoped to do in the coming year. Throughout the hearing, he stressed his ongoing themes, among them looking out for retail investors and staying on top of technological changes, including digital currencies and cybersecurity.
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SEC Takes First Robo-Adviser Enforcement Actions

January 4, 2019  It was only a matter of time until it happened. With the SEC focusing its enforcement guns on cryptocurrencies and cybersecurity, advisory firms’ use of robo-advisers couldn’t have been far behind. The agency primed the pump with guidance on the subject in early 2017, but really showed that it meant business late last month, when it brought its first two enforcement actions against advisory firms involving the use of robo-advisers.
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The Year Ahead: New and Revised Rules, Cryptocurrency and Cybersecurity Enforcement

January 4, 2019  Advisory firms, investment companies and broker-dealers should get ready for some changes as 2019 takes off. Among other things, they will be likely to deal with new rules, revisions to existing rules, and enforcement efforts targeted at reining in cryptocurrencies and strengthening cybersecurity.
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2018 in Review: Standards of Care, Cryptocurrencies, SEC Changes and More

December 21, 2018  With the past year almost over and a new one about to begin, it’s time to take a look back and take stock of what was accomplished in 2018 and what issues remain. The past 12 months found major developments involving standards of care for advisers and broker-dealers, the emergence of an SEC strategy regarding cryptocurrencies, a full year in office for a new SEC team and philosophy, the rising challenges of cybersecurity, and more.
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Ruling Against SEC in ICO Case May Upset Agency’s Cryptocurrency Strategy

December 7, 2018  The question of whether a digital token constitutes a security may have been put into play by a federal judge’s ruling in an ongoing case involving the SEC and a company engaged in a digital coin offering (ICO). The judge turned down the agency’s request for a preliminary injunction against the company, saying that the SEC had not sufficiently proved that the digital tokens involved met the definition of a security.
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SEC Draws a Digital Line in the Sand for Cryptocurrencies

November 30, 2018  The SEC, in a recent statement and through recent enforcement actions, made its view on cryptocurrencies clear: Any digital asset deemed to be a security must meet Commission registration requirements. That includes initial offers and sales of these securities, investment vehicles placing money in digital asset securities and those advising others to do the same, or secondary market trading of such products.
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Cryptocurrency: SEC Takes Action Against Hedge Fund Manager Subscriber Access Not Required

September 14, 2018  It was only a matter of time before it happened. The SEC on September 11 took what it called its “first-ever enforcement action” against a hedge fund manager marketing digital assets. The firm had raised more than $3.6 million for such investments over a four-month period – but the agency charged that it did so using misrepresentations and registration failures.
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The CAT Takes a Step Forward and a Step Back

September 7, 2018  The SEC is finding that its progress in creating a comprehensive electronic blueprint of securities transactions, the Consolidated Audit Trail (CAT), is proving as difficult as getting real cats to do what you want. It issued a statement that demonstrates the forward-and-back nature of this project: the arrival of a detailed master plan, but the delay of three key deadlines by a year.
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Technology: IAA Urges Treasury to Recommend a Principles-Based Approach

May 18, 2018  As new technologies and networks proliferate among advisory firms and other non-bank financial institutions, many will require regulation, but will that regulation encourage innovation, or stifle it? The Investment Adviser Association, in a recent letter to the Department of the Treasury, urged the Department to support innovation by recommending and encouraging regulators to adopt regulations that are principles-based.
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Machine Learning and Artificial Intelligence Increasingly Part of SEC Oversight

May 11, 2018  Artificial intelligence may or may not be here yet, depending on one’s definition of AI. There is little doubt, however, that machine learning – the analysis of data by machines without direct human direction – has already found a home at the SEC and is growing.
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Clayton Rejects Request to Extend CAT Deadline

November 17, 2017  SEC chairman Jay Clayton on November 14 issued a nuanced statement?rejecting a request from the national securities exchanges and FINRA to delay the initial deadline of the Comprehensive Audit Trail – better known as the CAT – by a year, and other deadlines by a year or more. His decision leaves at least the short-term implementation of the much-discussed high-tech tool up in the air.
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After the Cyber Breach: SEC Faces Questions, Clayton Testifies, Effect on the CAT

September 29, 2017  The asset management industry, including the SEC, is weighing the impact of the cybersecurity breach that agency chair Jay Clayton recently disclosed to the public (ACA Insight, 9/25/17). In the wake of the disclosure, the SEC announced a new initiative, Clayton testified before a Senate committee, and industry leaders and observers speculated as what it all might mean for future regulation and oversight, including the launching of the agency’s Comprehensive Audit Trail (CAT).
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SEC Enforcement Today and Tomorrow: Big Data, Machine Learning and Artificial Intelligence

July 20, 2017  SEC enforcement already relies on technology. That reliance will only grow in future years, with the agency’s use of data analysis increasingly married to machine learning and artificial intelligence. Advisers should be aware that actions they take will often turn up in data, and that the SEC can be counted on to use that data in ever-more sophisticated ways.
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Electronic Messaging May Be Subject of New Sweep Examination

July 7, 2017  Advisory firms should consider preparing for what may be a new SEC sweep exam: electronic messaging. While it is not yet certain that such sweep exams have begun or are scheduled to begin, advisers would be wise to review their policies and procedures, as well as how they use and document such forms of communication as instant messaging, text/SMS messaging, emails sent and received on non-company systems, and personal or private messaging.
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