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SEC Proposes Rolling Back the Volcker Rule

Weeks after President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act , a bill to roll back systemic risk regulations under the Dodd-Frank Act, the Securities and Exchange Commission (“SEC”) is taking aim at reversing another Dodd-Frank rule. In a 3-2 vote on June 5, the SEC issued a proposal to amend the Dodd-Frank Act’s Volcker Rule, which limits banks’ proprietary trading and prohibits them from owning hedge funds and private equity funds. The proposal would create new requirements centered on a bank’s trading activities, with an aim to alleviate the burden small- and mid-sized companies face in complying with the Volcker rule. It would also revise the exemptions. Read More.

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Senate Committee Aide Nominated to Open SEC Seat

Last week, President Trump announced that he would nominate Senate Banking Committee aide Elad Roisman to the open seat on the Securities and Exchange Commission (“SEC”). Currently the chief counsel to Senate Banking Committee chairman Mike Crapo, Roisman was counsel to Daniel Gallagher from 2012-2014 when Gallagher was an SEC commissioner. Crapo stated that Roisman would be a valuable asset to the agency. The seat on the SEC became vacant when commissioner Michael Piwowar announced he would leave the agency when his term ends this month. Piwowar, however, did say he is open to staying until the Senate confirms his. Read More.

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SEC Proposes Changes to Auditor Independence Rules

To address circumstances when auditors borrow funds or issue debt to accrue working capital, the Securities and Exchange Commission (“SEC”) has proposed updates to its auditor independence rules for lending relationships. The proposed amendments include updating Rule 2-01 of Regulation S-X to replace the current 10 percent bright-line shareholder ownership test with what the SEC calls a “significant influence” test and introducing a “known through reasonable inquiry” standard for recognizing the beneficiaries of the audit client’s equity securities. The SEC also wants to change its definition of “audit client” to exclude funds that are otherwise deemed affiliates of the audit. Read More.

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Dodd-Frank Executive Compensation Rules Still Delayed

For the last eight years, the Securities and Exchange Commission (“SEC”) has been working to finish the Dodd-Frank Act’s executive compensation rules. Based on recent comments by William Hinman, the rules are far from being completed. Speaking on April 26 before the House Financial Services Committee’s Capital Markets subcommittee, the director of the agency’s Division of Corporation Finance said the executive compensation rules would not be finished this fiscal year. Minnesota Rep. Keith Ellison pressed Hinman about why the SEC is taking so long to complete the executive compensation rules. During his questioning, Ellison referenced unfinished rules on clawbacks (Release. Read More.

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SEC Proposes New Broker-Dealer Regulations and Interpretations

The following proposed rules and interpretations by the Securities and Exchange Commission (“SEC”) aim to improve transparency regarding investors’ relationships with investment advisers and broker-dealers: Regulation Best Interest would require a broker-dealer to act in a retail customer’s best interest when recommending any securities transaction or investment strategy concerning securities to a retail customer. This regulation attempts to clarify that a broker-dealer cannot place its financial interests before a retail customer’s interests when making recommendations. A proposed interpretation would clarify the SEC’s opinion of the fiduciary duty investment advisers owe to clients. By stressing principles important to the fiduciary duty,. Read More.

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SEC Issues Statement against Unlawful Online Platforms

In a public statement issued March 7 , the Securities and Exchange Commission’s (“SEC”) Divisions of Enforcement and Trading and Markets warned about using illegal online platforms for trading digital assets. According to the SEC, more investors are using online platforms to buy and sell digital assets such as those sold in Initial Coin Offerings. The online platforms regularly claim that investors can rapidly purchase and sell digital assets. The statement encourages investors to consider asking several questions before trading digital assets via an online trading platform. Investors should ask whether the platform is registered as a national securities exchange; how the platform selects digital. Read More.

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