These are some compliance-related stories that recently caught my attention:
SEC Brings Enforcement Action for Failure to Verify Accredited Investor Status
by Steve Quinlivan
The SEC alleged CoinAlpha did not have pre-existing substantive relationships with nine of the fund’s investors and engaged in a general solicitation of public interest in the securities offering through CoinAlpha’s website, which was generally accessible without password protection. Additionally, CoinAlpha engaged in general solicitation through blog postings, and media interviews and digital asset and blockchain conferences, accessible both via live attendance and through the Internet. Despite collecting accredited investor questionnaires and representations from investors certifying to their accredited investor status, Respondent did not take reasonable steps to verify that investors in the Fund were accredited investors.
Debevoise & Plimpton Discusses Custody of Digital Assets
by Kenneth J. Berman, Byungkwon Lim and Gary E. Murphy
Significant uncertainties remain, however, in applying existing laws, regulations and practices to these digital assets. One area of significant concern is custody. Without a way to safely store and hold digital assets, institutional investors are often reluctant to make—and, in some cases, may be legally precluded from making—investments in this space.
Custody generally refers to the holding and control of an asset. What does it mean to have or retain custody of a digital asset? What practical concerns do investors in digital assets have regarding the custody and safeguarding of such assets? What legal obligations are imposed in the custody of digital assets? Do current methods of custody adequately address these legal and practical concerns?
This paper focuses on these and related questions, with a particular emphasis on the custody requirements imposed on registered investment advisers under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”). [More…]
Cyber risk measurement and the holistic cybersecurity approach
by Jim Boehm, Peter Merrath, Thomas Poppensieker, Rolf Riemenschnitter, and Tobias Stähle
A holistic approach proceeds from an accurate overview of the risk landscape—a governing principle that first of all requires accurate risk reporting. The goal is to empower organizations to focus their defenses on the most likely and most threatening cyber risk scenarios, achieving a balance between effective resilience and efficient operations. Tight controls are applied only to the most crucial assets. The holistic approach lays out a path to root-cause mitigation in four phases
SEC Names Danae M. Serrano Acting Ethics Counsel and Designated Agency Ethics Official
Ms. Serrano joined the SEC in 2010 as an Assistant Ethics Counsel, and has served as the Deputy Ethics Counsel and Alternate Designated Agency Ethics Official since 2013. Ms. Serrano also served as the Agency’s Acting Chief Compliance Officer until August 2018.
“Danae is widely respected by her colleagues throughout the Commission for her steady and thoughtful ethics counsel,” said Chairman Jay Clayton. “I know that Danae and her team are committed to maintaining the highest ethical standards at the SEC, and I want to thank her for taking on this important role in support of the Commission and our dedicated staff.”
“I am grateful for this opportunity to lead the talented and dedicated staff in the Office of the Ethics Counsel, and for the Chairman’s support of the SEC’s robust ethics and compliance programs,” said Ms. Serrano.
Before joining the SEC, Ms. Serrano served as an attorney in the General Counsel’s Office of the Pension Benefit Guaranty Corporation (PBGC), where she advised on government ethics and administrative law matters. Prior to PBGC, Ms. Serrano served as an attorney and ethics official in the United States Air Force, Office of the General Counsel. Ms. Serrano received her law degree from the University of Connecticut School of Law, where she was an Executive Editor of the Connecticut Insurance Law Journal. She received her B.A. in History from Yale University.
SEC faces lawsuit over ‘gag orders’ in enforcement settlements
by Joe Mont
The Cato Institute, a libertarian think tank, is suing the Securities and Exchange Commission in federal court to challenge its decades-old policy of imposing “gag orders” on settling defendants in civil enforcement actions. As a routine condition of settling civil or administrative actions, defendants agree to a promise that they will never publicly contest, challenge, or deny any of the allegations the SEC has made against them—even after the case has been settled and the underlying lawsuit or administrative proceeding dismissed.
Five things to do NOW to deal with Sexual Harassment Compliance Challenges
by Kristy Grant-Hart
The public, regulator, and shareholder expectations for companies are sky-high when it comes to preventing and responding to sexual harassment. What can you do to protect your company in 2019? Start with these five actions… [More…]
