Posts tagged SIFMA.

On March 31, 2022, the Securities Industry and Financial Markets Association (“SIFMA”) released its after-action report on Quantum Dawn VI – a global financial-markets cybersecurity exercise.

Quantum Dawn VI was conducted on November 18, 2021, with over 1,000 participants from 240 financial institutions and regulatory bodies representing 20 countries. The exercise simulated a large-scale ransomware attack by a state-actor against major global financial institutions and regulators. The scenario was chosen, in part, based upon an observed 93% increase in ransomware ...

The Securities Industry and Financial Markets Association (“SIFMA”) recently proposed sweeping modernization of industry self-regulatory rules to reflect firms’ successful pivot to remote operations over the past year.  SIFMA suggests significant remote work likely will continue, even after the COVID-19 “pilot program.”

SIFMA proposed a “location agnostic” overhaul of the Rules in its February 16 comment letter in response to FINRA’s call for “lessons learned” during the COVID-19 pandemic.  See FINRA Reg. Notice 20-42 (Dec. 16, 2020).

Firms’ ...

Posted in: COVID-19

The Massachusetts Securities Division adopted a watered-down fiduciary-rule for broker-dealers, effective March 6, with a compliance deadline of September 1, 2020. The move comes after years of announced intention to do so – especially after the Obama Labor Department’s fiduciary-rule got shot down in the courts.

The Rule requires a broker-dealer to act as a fiduciary for retail customers (excluding institutional accounts and investment advisers) when a broker:

• Has discretion (other than time and price);
• Has undertaken a contractual fiduciary duty; or
• Has ...

Starting June 23, municipal advisors will be subject to revised Rule 42 and its heightened engagement letter and disclosure obligations. SIFMA has released exposure drafts of compliance documents to help MAs meet those requirements. The drafts include a model engagement letter, disclosure statements for both new and continuing engagements and a client -intake checklist. They are here. Broadly speaking, the amended Rule imposes upon municipal advisors

  • A fiduciary duty of care and loyalty to municipal entity clients - but only a duty of care to obligated persons (like conduit ...
Posted in: Rule G-42, SIFMA
A week after OCIE announced it would conduct a second round of cyber-security exams, the Commission emphasized the issue by bringing an enforcement action against a non-custodial investment-adviser over a remediated data breach that caused no customer harm. The adviser used a third-party-hosted web server, on which was stored the personally-identifiable information ("PII") of about 100,000 people, including the firm's 8,400 customers. The server suffered a cyber-attack and data breach in July 2013. The firm responded by retaining multiple consultants, investigating the ...

Addressing SIFMA's Anti-Money Laundering ("AML") conference Wednesday, SEC Enforcement Director Andrew Ceresney said that - when it comes to AML - the lack of red flags itself is a red flag. Bank Secrecy Act ("BSA") AML requirements under the Currency & Foreign Transactions Reporting Act of 1970, as amended, 31 U.S.C. §5311, et seq. (31 C.F.R. Chap. X and related laws / regulations: here) require financial institutions to file "suspicious activity reports" ("SARs") with the Financial Crimes Enforcement Network ("FinCEN") within the Department of Treasury. Examples ...

Posted in: SEC, SIFMA

The SEC and FINRA each issued February 3 cyber security "alerts" summarizing last year's sweep exams and pointing out the obvious. In two parts, the SEC's press-release covered the results of the Commission's 2013-2014 sweep exams and an investor bulletin. SEC Press Release 2015-20, here. The Commission's Office of Compliance Inspections and Examinations ("OCIE") conducted a "sweep exam" - or wide industry survey on the subject among broker-dealers and investment advisers- during 2013 and 2014. The good news is that a wide majority of them have have information security ...

Posted in: FINRA, SEC
With only three official days left of the current Congress, conversations Wednesday turned towards cybersecurity in the financial sector. The Commodity Futures Trading Commission, Office of the Comptroller of the Currency, and the Securities Exchange Commission all discussed planned or ongoing strategies to prepare for future cyber-attacks, highlighting such methods as compliance examinations of firms' cybersecurity measures. These organizations' efforts emphasize the substantial scrutiny on the effects that cyber-attacks can have on both financial institutions and ...
Posted in: FINRA, SIFMA
Reacting in part to recent data-breaches and cyber-attacks on larger retailers, the Financial Industry Regulatory Authority ("FINRA") is conducting a targeted examination of some 20 broker-dealer member firms' compliance and risk-management approaches to cyber-security, aimed at increasing regulators' understanding of the cyber-security risk environment and various approaches and methods used throughout the industry. Wall Street conducted its second comprehensive cyber-security drill, Quantum Dawn 2, just this past July. The after-action study and related ...
Posted in: FINRA, SIFMA
On Thursday, January 9, the MSRB re-proposed new Rule G-42 promulgating standards of conduct for Municipal Advisors ("MA's") subject to the almost-newly-effective SEC MA Rule, 17 CFR § §240.15Ba1-1 to 15Ba1-8 (now delayed until July 1, 2014). MSRB Notice 2014-01 covers the following principal objectives: I. It establishes an MA's fiduciary duty to Municipal-Entity ("ME") clients, but merely a duty of care to "Obligated Person" ("OP") clients (consistent with Dodd-Frank). II. It moves the "engagement letter" regulatory trend forward by imposing a detailed ...
Posted in: MSRB, SIFMA
Tags: MSRB, SIFMA
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