U.S. Congressional Leaders Introduce Two Landmark Bills to Create a Digital Assets Regulatory Scheme
This week, two committees in the House of Representatives will mark up legislation intended to clarify the regulatory framework applicable to digital assets in the United States. Earlier this month, leaders in the U.S. Senate also introduced legislation to establish a comprehensive and unified regulatory scheme for digital assets and digital asset derivatives.1 Both the House and Senate bills seek to integrate the regulation of digital assets and digital asset derivatives into the existing U.S. regulatory framework — primarily that of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) — rather than create a standalone framework, but both bills face significant barriers to enactment.
SEC Delays Enactment of Cyber Rules Related to Investment Adviser and Public Companies to October 2023, Updates Timeline to April 2024 for Recently Proposed Cybersecurity Rules
On June 13, 2023, the Office of Management and Budget released its Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions, which includes updates on Securities and Exchange Commission (“SEC”) proposed rules. The SEC pushed back its estimate for the final action date to October 2023 for its proposed cybersecurity rules related to public companies, as well as for its investment advisers and funds proposal. Notably, the SEC’s timelines are typically estimates for implementation, and the proposed rules could be introduced sooner or later than these dates. However, the updated timeline indicates that the SEC is prioritizing finalizing its cybersecurity rules related to public companies and investment advisers and funds.
U.S. Securities and Exchange Commission Proposes Three Rules Related to Cybersecurity, Reopens Comment for One Rule
On March 15, 2023, the U.S. Securities and Exchange Commission (SEC) proposed three rules related to cybersecurity and the protection of consumer information and reopened the comment period for a proposed cybersecurity rule for investment advisers and funds. This significant action would impose new cybersecurity requirements for several SEC-registered entities, including with respect to these entities’ policies, incident response and notification procedures, and cybersecurity risk management. This Sidley commentary and analysis discusses the key features of each proposal, including new requirements and differences among each of the proposals.
FINRA Issues 2023 Report on Its Examination and Risk Monitoring Program
On January 10, 2023, the Financial Industry Regulatory Authority (FINRA) published its 2023 Report on its Examination and Risk Monitoring Program (the Report).1 The 75-page Report includes four new topic areas for 2023: (1) manipulative trading, (2) fixed income — fair pricing, (3) fractional shares — reporting and order handling, and (4) Regulation SHO.
Preparing Your 2022 Form 10-K: A Summary of Recent Key Disclosure Developments, Priorities, and Trends
This Sidley Update highlights certain key disclosure considerations for preparing your annual report on Form 10-K for fiscal year 2022, including recent amendments to U.S. Securities and Exchange Commission (SEC) disclosure rules and other developments that impact 2022 Form 10-K filings, as well as certain significant disclosure trends and current areas of SEC focus for disclosures. As always, we invite you to contact us with any questions on these topics or any other SEC reporting and compliance matters.
Broker-Dealers and Investment Advisers Should Double-Check Their “Identity Theft” Programs: SEC Division of Examinations Issues Risk Alert on SEC’s Identity Theft Red Flags Rule, Regulation S-ID
On December 5, 2022, the Division of Examinations of the Securities and Exchange Commission (SEC) released a Risk Alert discussing its observations on Regulation S-ID (Reg. S-ID) from recent examinations of SEC-registered investment advisers and broker-dealers. Reg. S-ID, the SEC’s implementation of the identity theft red flags rule, requires SEC-regulated financial institutions and creditors to develop and implement an identity theft prevention program (Program) with written policies and procedures that are updated periodically. The requirements for the Program are outlined in the text of Reg. S-ID, and there are guidelines in Appendix A to assist firms in creating and maintaining a compliant Program. As Reg. S-ID applies to both SEC and Commodity Futures Trading Commission-regulated entities, financial institutions and creditors should consider their compliance programs accordingly.
