NEW YORK, February 27, 2019: Morgan Lewis’s 2018 Year in Review: Select SEC and FINRA Developments and Enforcement Cases offers a comprehensive look at the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) enforcement developments, trends, and cases from the past year regarding broker-dealers, investment advisers, and investment companies.Thereport also highlights this year’s regulatory examination priorities.
Important developments in the SEC’s enforcement and examination programs are discussed in the 13th annual report. Some key observations include the following:
- The SEC experienced a significant composition change last year with the arrival of three new commissioners;
- The metrics by which the work of the Division of Enforcement is measured rebounded last year, even as its leadership continued to explain that the number of cases is not nearly as important as their impact;
- The SEC continued its emphasis on protecting “Main Street,” or retail investors, with the result that the number of cases brought against investment advisers and investment companies continued to increase; and
- Enforcement last year also focused on crypto-assets and offerings as well as cybersecurity, and will sustain that emphasis in 2019, with a view toward striking the appropriate balance between protecting investors from actual fraud without stifling real innovation.
The report also describes the key developments in FINRA’s enforcement and examination programs, including the completion of the consolidation of its enforcement functions and the creation of a new, unified enforcement structure, and FINRA’s plan to combine its examination and risk monitoring programs. Additional highlights include the following:
- The announcement of a set of principles that guide the Department of Enforcement’s decision- making process when it considers instituting charges and setting sanctions;
- The release of FINRA’s second annual report on examination findings late last year, which showcased suitability for retail customers, fixed income mark-up disclosure, reasonable diligence for private placements, and financial advisor’s abuse of authority;
- The issuance of guidance on the use of fine money collected by FINRA; and
- The publication of FINRA’s annual Risk Monitoring and Examination Priorities Letter, which took a new approach from prior letters and highlighted new priorities for 2019, including online distribution platforms, fixed-income mark-up disclosures, and regulatory technology.
These and more highlights, as well as analysis of their implications, are found in the 2018 Year in Review: Select SEC and FINRA Developments and Enforcement Cases.