FiSolve Weekly News Digest (May 10, 2024)

Here is what we are reading in the news this week.?

New investment managers sometimes struggle with determining how and where to register as an investment adviser (state versus federal).? An U.S. Securities and Exchange Commission settlement this week provides a cautionary tale of missteps that could lead to enforcement action.? In this case a former investment adviser and its CEO were charged for improperly registering with the SEC and improperly comingling client assets during the early stages of the adviser’s operations.? The firm claimed a basis for registration with the SEC as both an internet investment adviser and as a large investment adviser with more than $100 million in regulatory assets under management.? The order finds the firm did not qualify as an internet investment adviser as the firm did not have an exclusively interactive website and did have human interaction with clients. The firm was also not a large advisory firm as defined in Form ADV, as it did not have any regulatory assets under management.? Sanctions include an industry bar for the CEO, a censure, and monetary penalties.? Read more at https://www.sec.gov/files/litigation/admin/2024/ia-6600.pdf.?

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Citing legal sources and practice outside the United States, HR Dive reports U.S. companies may turn to garden leave agreements as a way to keep outgoing employees from joining a competitor, or from using their knowledge to start a rival business.? This would be in response to the impending ban by the Federal Trade Commission on non-competition clauses in agreements, which is subject of a court challenge.? Read more at https://www.hrdive.com/news/garden-leave-adds-value-FTC-noncompete-alternative-troutman-pepper-diamond-gibbs/715680/.?

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The Consumer Financial Protection Bureau (CFPB) issued a new report finding consumers encounter numerous problems with credit card rewards programs.? The report notes the CFPB has brought actions against large credit card issuers for engaging in unfair, deceptive, or abusive acts or practices related to rewards programs. ?The report identifies four recurring themes that resulted in consumers not receiving the rewards they were promised: (1) unexpected promotional conditions, (2) devaluation, (3) redemption problems, and (4) revocation.? The Bureau intends to continue monitoring credit card rewards programs and threatens “necessary action” on these issues as appropriate.? Read more at https://files.consumerfinance.gov/f/documents/cfpb_credit-card-rewards_issue-spotlight_2024-05.pdf.?

According to its annual employer survey of 400 in-house lawyers, business executives and human resources professionals, Littler reports employers are bracing for increased enforcement by regulatory agencies and an uptick in employment-related litigation.? The survey also found employers are split on the use of artificial intelligence tools in the workplace.? 51% of respondents say their organizations do not use generative AI, while 49% use it in some form.? The survey also finds most employers are still working on specific workplace policies following the pandemic.? Read more at https://www.littler.com/files/2024_littler_employer_survey_report.pdf.?

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The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced an administrative monetary penalty on a crypto firm for failing to register with FINTRAC as a foreign money services business; and its failure to report large virtual currency transactions of $10,000 or more during a single transaction, together with the required prescribed information.? The firm received a C$6 million ($4.38 million) fine for the violations.? Read more at https://fintrac-canafe.canada.ca/new-neuf/nr/2024-05-09-eng.?

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The Federal Reserve Board issued an enforcement action against a bank for a number of programmatic weaknesses, including board management, anti-money laundering and suspicious activity reporting.? The bank agreed to implement a number of remedial undertakings within sixty days in order to resolve the enforcement action.? Read more at https://www.federalreserve.gov/newsevents/pressreleases/files/enf20240507a1.pdf

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