Data Protection in Financial Services Week 2022
From February 28-March 3, Sidley and OneTrust DataGuidance hosted their annual Data Protection in Financial Services (DPFS) Week, a series of webinars looking at the impacts of data privacy across the financial sector. Industry speakers covered a range of issues including:
- How the latest privacy and cybersecurity developments in Europe and the U.S. have impacted financial services
- How new and existing privacy and cyber requirements intersect with finance-specific regulation
- What financial organizations can do to keep ahead of the curve in the ever-evolving data privacy and cyber landscape
- How to deal with and manage the key issues for 2022, such as AI, data governance, and international transfers
SEC Encourages Self-Reporting of Recordkeeping Violations Resulting From Employees’ Use of Personal Devices for Business Communications
On December 17, 2021, the U.S. Securities and Exchange Commission (SEC) announced settled charges against a broker-dealer firm for recordkeeping violations arising from its employees’ use of personal devices for business communications. The firm agreed to pay a $125 million penalty and to retain a compliance consultant to conduct a comprehensive review of its policies and procedures relating to the retention of electronic communications found on personal devices. In announcing this enforcement action, the SEC encouraged registrants to self-report similar failures to the SEC. (more…)
Sidley Welcomes Former-CFPB Enforcement Director Tom Ward
Sidley is pleased to announce that Thomas Ward, who previously served as Enforcement Director at the Consumer Financial Protection Bureau (CFPB), has joined the firm as a partner in the Banking and Financial Services Group in Washington, D.C. As the CFPB’s chief law enforcement officer, Tom was responsible for enforcing more than 20 enumerated consumer financial statutes and the Consumer Financial Protection Act. He established and supervised the strategy in hundreds of active investigations and cases prosecuted by the CFPB’s Office of Enforcement and managed the agency’s 165 enforcement trial lawyers, investigators, and staff. Under his leadership, in 2020, the CFPB brought the second highest number of enforcement actions since its inception, secured its fourth highest amount of redress, prosecuted its largest and most complex litigation docket, and recommitted to enforcing the Fair Lending laws, including filing the first contested Fair Lending action in the CFPB’s history.
FINRA Issues 2021 Report on its Examination and Risk Monitoring Program
Released on February 1, the Financial Industry Regulatory Authority (FINRA) 2021 Report on its Examination and Risk Monitoring Program (Report) provides a roadmap for member firms to use to prepare for examinations and to review and assess compliance and supervisory procedures related to business practices, compliance, and operations. The Report replaces two of FINRA’s prior annual publications: (1) the Report on Examination Findings and Observations, which provided an analysis of prior examination results, and (2) the Risk Monitoring and Examination Program Priorities Letter, which highlighted areas FINRA planned to review in the coming year.
FINRA Issues its 2020 Artificial Intelligence Report for Industry Comment
On June 10, the Financial Industry Regulatory Authority (FINRA) released its Artificial Intelligence (AI) in the Securities Industry Report (Report), a culmination of a two-year review by FINRA’s Office of Financial Innovation to learn about the emerging challenges confronted by broker-dealers (Firms) and other market participants as they introduce AI-based applications into their businesses. The Report provides an overview of AI technology, explores its diverse, multifaceted applications in the securities industry and identifies the challenges and legal considerations with leveraging this technology. FINRA requests industry feedback on topics covered in the Report by August 31, 2020.
SEC and FINRA Issue 2020 Examination Priorities for Broker-Dealers and Investment Advisers
The U.S. Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) and the Financial Industry Regulatory Authority (FINRA) recently published their examination priorities (together, the Examination Priorities) for the 2020 calendar year.1 In general, the 2020 Examination Priorities continue recurring themes from recent prior years.
OCIE’s 2020 Examination Priorities for broker-dealers and investment advisers include the protection of retail investors (including compliance with new standard of care requirements and interpretations), cyber and information security risks, anti-money laundering compliance, firms engaging in the digital asset space and the provision of electronic investment advice.
FINRA’s 2020 Examination Priorities for member firms include those generally identified by OCIE for registered broker-dealers, as well as cash management and bank sweep programs, initial public offerings, liquidity management, trading authorizations and order routing and vendor display rule requirements, among others.
This Sidley Update summarizes selected aspects of the Examination Priorities that may be of particular interest to broker-dealers and investment advisers. As always, firms should use the 2020 Examination Priorities to review their compliance and supervisory procedures carefully and make any necessary revisions. Firms also should be prepared to explain their compliance and supervisory policies in these areas in their upcoming SEC and/or FINRA examinations, as applicable, and provide documentation of relevant reviews.