FiSolve Weekly News Digest (December 13, 2024)
Here is what we are reading in the news this week.?
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SEC Charges Investment Adviser in “Cherry-Picking” Scheme
The U.S. Securities and Exchange Commission charged an investment adviser with engaging in a fraudulent “cherry-picking” scheme, in which an associated person disproportionately allocated profitable trades to certain personal and family accounts he controlled, and disproportionately allocated unprofitable trades to the accounts of unrelated advisory clients. ?In addition, the associated person routinely placed certain of his clients in unsuitable, highly volatile and highly risky securities that were contrary to their indicated risk tolerances.? As part of a settlement, the firm was censured by the SEC, fined $375,000 and ordered to cease and desist from committing or causing any violations and any future violations of the relevant federal securities laws.? Read more at https://www.sec.gov/files/litigation/admin/2024/33-11338.pdf.
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SEC Charges Firm with Policy Deficiencies that Resulted in Theft of Investor Funds
The U.S. Securities and Exchange Commission charged a large financial services firm with failing to reasonably supervise four investment adviser and registered representatives who stole millions of dollars of advisory clients’ and brokerage customers’ funds and for failing to adopt policies and procedures reasonably designed to prevent and detect such theft. ?To settle the charges, the firm agreed to pay a $15 million penalty and accept certain undertakings.? Read more at https://www.sec.gov/files/litigation/admin/2024/34-101842.pdf.
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Republican Commissioner Andrew Ferguson Tapped to Lead FTC
President-elect Donald J. Trump nominated Andrew Ferguson to lead the Federal Trade Commission (FTC).? Mr. Ferguson, one of two current GOP commissioners on the five-member FTC, would succeed current Chair Lina Khan.? The Wall Street Journal reports Mr. Ferguson is likely to abandon the Biden administration’s "liberal approach to policing mergers while keeping the heat on big technology companies."? Read more at https://www.wsj.com/politics/policy/trump-aims-to-remake-federal-trade-commission-with-two-picks-b9c51649?st=xwKnL9&reflink=desktopwebshare_permalink.?
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One in Three Companies Require RTO Due to Existing Office Leases Agreements
A report issued by Resume.org finds the return-to-office (RTO) push remains a prominent trend in corporate environments, with one-third of the 900 business leaders interviewed saying their company’s current office lease terms affect their RTO strategies.? 75% of the companies surveyed will require employees to be in the office at least 3 days per week next year with 50% not concerned about employees quitting over RTO policies.? By the end of 2025, over 73% of the companies surveyed that already have an RTO policy in place will require employees to work three or more days in the office. ?Nearly 30% will mandate a full five-day RTO week. ?Only 2% plan to allow attendance once a week or less.? However, 10% of companies plan to lessen or eliminate RTO policies upon their current lease’s expiration.? Read more at https://www.resume.org/1-in-3-companies-are-forcing-return-to-office-due-to-existing-office-leases-agreements/.?
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CFPB Announces Rule Limiting Bank Overdraft Fees
The Consumer Financial Protection Bureau took action to close what it describes as “an outdated overdraft loophole” that exempted overdraft loans from lending laws. ?The agency’s final rule on overdraft fees applies to the banks and credit unions with more than $10 billion in assets. ?The reforms will allow large banks several options to manage their overdraft lending program: they can choose to charge $5; to offer overdraft as a courtesy by charging a fee that covers no more than costs or losses; or continue to extend profit-generating overdraft loans if they comply with longstanding lending laws, including disclosing any applicable interest rate. Read more at https://www.consumerfinance.gov/about-us/newsroom/cfpb-closes-overdraft-loophole-to-save-americans-billions-in-fees/.
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SEC Charges Firm Over Misleading SPAC Disclosures, Commissioner Dissents
The U.S. Securities and Exchange Commission charged a global financial services firm with causing two special purpose acquisition companies (SPACs) it controlled to make misleading statements to investors ahead of their initial public offerings. The firm has agreed to pay a $6.75 million civil penalty to settle the SEC’s charges.? Commissioner Mark Uyeda issued a dissent stating the case, like two others before it, contain allegations of misstatements and omissions that are not material, and do not demonstrate investor harm.? Read more at https://www.sec.gov/files/litigation/admin/2024/33-11339.pdf and https://www.sec.gov/newsroom/speeches-statements/uyeda-statement-spac-121224.?
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FINRA Board Appoints Public Governor and Holds Comprehensive Meeting
FINRA ’s Board of Governors met this week to discuss FINRA’s 2025 budget, FINRA’s Outside Business Activities and Private Securities Transactions rules, and an overview of the 2025 FINRA Annual Regulatory Oversight Report.? The Board recently appointed a Public Governor, Erik Sirri , Emeritus Professor of Finance at Babson College and a former Director of the SEC's Division of Trading and Markets, who participated in his first Board meeting.? The Board approved two items during the meeting: FINRA’s 2025 budget and FINRA’s plan to publish a Regulatory Notice soliciting comments on a proposal to replace FINRA’s Outside Business Activities and Private Securities Transactions Rules with a single Outside Activities Requirements Rule. ?FINRA staff presented the Board with an overview of the 2025 FINRA Annual Regulatory Oversight Report, which is slated to be published in January and summarizes noteworthy findings from recent examinations among other things.? Read more at https://www.finra.org/media-center/newsreleases/2024/report-finra-board-governors-meeting-december-2024.?
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ESMA Consults on Open-Ended Loan Originating Alternative Investment Funds
The European Securities and Markets Authority (ESMA) published a consultation paper on draft regulatory technical standards (RTS) on open-ended loan originating AIFs under the revised Alternative Investment Fund Managers Directive (AIFMD).? The consultation aims to receive feedback on the draft RTS that set out the requirements with which loan-originating Alternative Investment Funds (AIFs) shall comply to maintain an open-ended structure.? Read more at https://www.esma.europa.eu/sites/default/files/2024-12/ESMA34-1985693317-1085_CP_RTS_on_open-ended_loan-originating_AIFs_under_the_AIFMD.pdf.? ??
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