Policy Patty Toolkit 

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The Policy Patty Toolkit Blog covers emerging issues on governance, risk and compliance controls.

This Blog is made available by the Policy Patty Toolkit for informational purposes only to cover emerging legal, governance, regulatory and compliance matters and issues. The postings are not intended to provide specific professional advice (legal, tax, or accounting) to an identified problem or issue. By using this Blog, you understand and acknowledge that there is no attorney-client relationship formed between us and should not use this site as a substitute for legal advice from your legal counsel regarding a particular matter or advice from another professional.

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SEC Proposes to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Investment Professionals

Posted on April 19, 2018 at 8:55 AM

The SEC proposed a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers while preserving access to a variety of types of advice relationships and investment products. The proposed Regulation Best Interest, a broker-dealer would be required to:

  • act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strate...
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GDPR: WP29 Updated Guidance on Consent

Posted on April 18, 2018 at 2:30 PM

The Article 29 Working Party (WP29) has issued its guidance on consent requirements under the EU’s General Data Protection Regulation (GDPR). While much remains the same as the previously-issued draft guidance, some aspects have changed.

The GDPR defines ‘consent’ as:

‘any freely given, specific, informed and unambiguous indication of the data subject's wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the pr...

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FTC Approves Final Consent Settling Charges that Bollman Hat Company Made Deceptive 'Made in USA' and Certification Claims

Posted on April 17, 2018 at 3:15 PM

The Federal Trade Commission (FTC) approved a final consent order settling charges that Pennsylvania-based Bollman Hat Company has agreed to stop the deceptive use of its "American Made Matters" certification and marketing materials.

According to the complaint, Bollman and its subsidiary marketed hats with claims such as "American Made Matters," "Choose American," and "Made in the USA since 1868." These were false claims since more than 70 percent of their hat styles are imported as fin...

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SEC Unveils Public Service Announcement to Promote Background Checks on Investor.gov

Posted on April 16, 2018 at 5:05 PM

The SEC unveiled a public service announcement (PSA) to encourage investors to check the background of their investment professional by using the free search tool on Investor.gov before investing. Investor.gov, the SEC’s website dedicated to individual investors, provides investors with tools and resources to help them invest wisely and avoid fraud. SEC Jay Clayton stated that “Investor education is an important line of defense against fraud and is critical to our efforts to both...

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Multiple Regulators Fine Instinet for Market Access Rule Violations

Posted on April 15, 2018 at 3:25 PM

Instinet censured and fined a total of $1.575 million for violations of various provisions of Rule 15c3-5 of the Securities Exchange Act of 1934 (known as the Market Access Rule) and related exchange supervisory rules. The action was taken by various regulators - FINRA and others. The fine was apportioned among FINRA and the Exchanges.

In settling this matter, Instinet neither admitted nor denied the charges but consented to the entry of FINRA’s and the Exchanges’ findings.

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Uber Agrees to Expanded Settlement with FTC Related to Privacy, Security Claims

Posted on April 12, 2018 at 3:20 PM

The Federal Trade Commission (FTC) settled with Uber Technologies, over charges that the ride-sharing company deceived consumers about its privacy and data security practices. This follows the revelation following the announcement of last year's proposed settlement that Uber had failed to disclose a significant breach of consumer data that occurred in 2016 -- during the FTC's investigation that led to the August 2017 settlement announcement. As a result, Uber will be subject to additional req...

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FINRA Proposed Rule Change Relating to the Establishment of a Second Trade Reporting Facility in Conjunction with Nasdaq, Inc.

Posted on April 11, 2018 at 2:20 PM

FINRA filed a rule change with the SEC to adopt rules relating to the establishment of a second Trade Reporting Facility or “TRF” to be operated in conjunction with Nasdaq, Inc. (“Nasdaq”). The second FINRA/Nasdaq Trade Reporting Facility (“FINRA/Nasdaq TRF Chicago”) would provide FINRA members with another mechanism for reporting over-the-counter (“OTC”) trades in NMS stocks and complying with FINRA’s requirements with respect to bac...

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FINRA Target Exam Letter - VIX-Linked Product Review

Posted on April 10, 2018 at 1:50 PM

FINRA is conducting a review with respect to products linked to the Chicago Board Options Exchange (CBOE) Volatility Index (VIX). The review will focus on the supervisory processes followed by the firm to identify and mitigate sales practice risks associated with recommendations to non-institutional purchasers of VIX-linked products (VIX-linked Products) including, but not limited to, 

  • unsuitable recommendations,
  • misrepresentations, and 
  • appropriateness of...
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SEC Charges Texas Company, Principals in Multimillion Dollar Ponzi Scheme Targeting Seniors

Posted on April 9, 2018 at 7:20 PM

The SEC charged two Texas companies and their principals in a $2.4 million Ponzi scheme and in a related, $1.4 million offering fraud targeting retirees. The SEC's complaint alleged that, from 2010 to 2017:

  • Clifton E. Stanley ran a Ponzi scheme through his retirement planning and real estate investment business, 
  • The Lifepay Group, LLC. Stanley is alleged to have lured at least 30 elderly victims to invest approximately $2.4 million of their retirement savings with bas...
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FinCEN issued FAQs on CDD Requirements

Posted on April 7, 2018 at 4:00 PM

The Financial Crimes Enforcement Network (“FinCEN”) issued a long-anticipated second list of FAQs on the implementation of the Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”). The final deadline for implementation is May 11, 2018.

While the FAQs address only some of the concerns including the following:.

• Interaction of the beneficial ownership threshold with other AML program obligations

• Collection of b...

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