This periodic newsletter brings you recent activity related to securities, commodities, derivatives, and banking as well as certain compliance calendar reminders. The below is not intended to be an exhaustive list, but is rather designed to assist you in setting compliance priorities for 2017 and 2018.

With Enforcement Action, SEC Shows that Outsourced CCO's Must be Active in Overseeing the Adviser
The SEC settled an enforcement action against an outsourced CCO who failed to file timely and accurate reports with the Commission. The action can be found here.

SEC Issues Three No Action Letter Bridge to MiFID II Advisers' Receipt of Research
The three letters act to allow (i) the aggregation of orders for the purchase or sale of securities on behalf of clients to satisfy MiFID II (ii) a MiFIMD adviser to pay for research from a MiFID research account along side payments for execution services and (iii) a broker-dealer to be compensated for providing research to a MiFID II Adviser without the payments being deemed special compensation. You can review the three no action letters here: letter one, letter two and letter three.

SEC Chairman Jay Clayton Addresses Regulation of ICOs and Establishing a Bad Actor Database
While indicating that the SEC's near term agenda would be shorter than under his predecessors, Chair Clayton indicated that the SEC would be focusing on (i) hidden fees (ii) penny stocks and recordkeeping (iii) unregistered securities transaction processing (iv) online platforms offering initial coin offerings and (v) investor education. Chair Clayton's remarks can be found here.

CFTC, through its LabCFTC Initiative, Issues a Primer on Virtual Currencies
The CFTC issued the Primer on October 17, 2017 and it can be found here.

The CFTC Issues an Order Extending Current Swap Dealer De Minimis Threshold to December 2019
Because of this action, the de minimis threshold will remain at $8 billion until December 31, 2019 instead of decreasing to $3 billion on December 31, 2018. The order can be found here.
CFTC issues No-Action Relief for Swap Execution Facilities from Certain Block Trade Requirements
The no-action letter states that, subject to certain conditions, the CFTC is extending time-limited relief to SEFs from the “occurs away” requirement under CFTC regulation 43.2 until November 15, 2020, at 11:59 pm EST. You can view the No-Action Letter here.

CFTC Fines Market Participant $4 Million for Attempting to Manipulate a Propane Benchmark (Argus FEI), in an Effort to Benefit the Participant's NYMEX-Cleared Swaps Position
The CFTC issued the fine as a result of the participant using the physical propane market to attempt to raise the value of its NYMEX-Cleared Swaps position. While unsuccessful, the participant's attempts to manipulate the benchmark were described repeatedly in communications. The order can be found here.

CFTC Fines Market Participant $10 Million for Providing Inaccurate Mid-Market Marks on Swaps
The participant concealed the full mark-up on certain swaps from its counterparties and swap data repository in an effort to avoid revenue decreases. The order can be found here.

OCC Releases Updated List of Permissible Activities
The list of permissible activities applies to national banks and federal savings. The updated list can be found here.

Treasury Appoints Kenneth Blanco as new FinCEN Director
Mr. Blanco commented that he is " excited to take my 28 years of prosecutorial experience with me to FinCEN". Mr. Blanco was most recently Acting Assistant Attorney General in the Criminal Division of the US Department of Justice. The press release can be found here.

CFPB's Arbitration Agreements Rule Eliminated
The CFPB's arbitration rule that would have given consumers the opportunity to file class actions against banks and other financial firms was officially eliminated. President Trump signed a resolution passed by both houses of Congress that nullified the CFPB rule, which was released in July. More information regarding the rule can be found here.

CFPB Releases Principles for Consumer-Authorized Financial Data Sharing and Aggregation
The CFPB's guidelines set a standard for how companies, including banks and FinTechs, can access and share sensitive customer information. The consumer protection principles are available here.

14 November 2017

  • Form 13F is due for third quarter 2017. Exchange Act Rule 13f-1 requires every institutional investment adviser that exercises investment discretion over accounts holding Section 13(f) securities with an aggregate fair market value on the last trading day of any month of any calendar year of at least $100 million to file Form 13F.
  • Form 13 H is due for third quarter 2017. Exchange Act Rule 13h-1(a)(1) Registered Advisers meeting the "large trader" thresholds are required to file an initial Form 13 H with the SEC within 10 days of triggering the threshold, annually within 45 days of fiscal year end and update quarterly to the extent that information changes.

29 November 2017

  • Quarterly update to Form PF due for all large hedge funds advisers (for third quarter 2017).
  • CFTC CPO-PQR Form - Large Commodity Pool Operator Form CPO-PQR (September 30 quarter end report) required to be filed with the NFA for Commodity Pool Operators. Small and Mid-sized Commodity Pool Operators are required to file NFA Form CPO-PQR.

14 December 2017
FINRA Deadline for receipt of preliminary statement payments. Advisory firms with sufficient amounts in their flex-funding account will have funds automatically transferred to their renewal account to cover total renewal fees owned.

28 December 2017
Web CRD is unavailable due to final statement and renewal processing. Web CRD should be available again on December 29, 2017.

31 December 2017
Amended Form 13H due promptly after this date.

15 January 2018
Form PF filing - large liquidity fund advisers.

31 January 2018
Annual Holding Report - most advisers complete their compliance manual annual holding report obligations during this period.

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