UK updates guidance for banks
The Home Office has updated its Guidance for banks and building societies on carrying out immigration checks on current account holders, a document aimed at assisting banks and building societies to comply with statutory requirements under sections 40, 40A, 40B and 40G of the Immigration Act 2014 (as amended by the Immigration Act 2016).
HKMA Dear CEO letter
The Hong Kong Monetary Authority (HKMA) has written to CEOs of all authorised institutions (AIs) to alert them to a new anti-corruption guide published by the Independent Commission Against Corruption (ICAC) in conjunction with the HKMA. According to the letter, the guide will assist AIs in establishing and strengthening their corruption prevention capabilities and provides practical guidance on the anti-bribery legislation and on effective corporate governance and internal controls to guard against corruption risks in the business.
HKMA and SFC consultation on OTC derivatives
The Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) has launched a joint consultation on proposed changes to the types of transactions subject to clearing obligations under the Clearing Rules for over-the-counter (OTC) derivatives.
Interested parties are invited to submit comments to the HKMA or SFC by 11 April 2023.
FINRA and SEC enforcements
In the US FINRA has announced today has fined Webull Financial LLC $3 million for not exercising reasonable due diligence before it approved customers for options trading; not maintaining a supervisory system reasonably designed to identify and respond to customer complaints; and not reporting certain written customer complaints to FINRA as required.
FINRA found that between December 2019 and July 2021, the firm did not exercise reasonable due diligence before approving customers for options trading. During this period, the firm employed an automated system to review customer applications for options trading, but the system failed to compare new applications with information previously provided by the customer.
Christopher J. Kelly, Senior Vice President and Acting Head of FINRA’s Department of Enforcement said: “The obligations on all FINRA member firms are clear, regardless of their size, rapid growth, or business model. “Before they approve customers for options trading, firms must establish systems and procedures that identify essential facts about their customers’ trading knowledge and experience. Firms must also commit the resources necessary to address customer complaints and report those complaints to FINRA when required.”
Meanwhile the SEC has obtained a final judgment against Joshua Dax Cabrera ordering him to pay approximately $1,126,000 in disgorgement, prejudgment interest, and penalties in a securities offering fraud previously filed by the SEC in August 2021.
The SEC’s complaint alleged that Cabrera partnered with co-defendant Paul Hess to fraudulently raise more than $12.9 million from more than 150 US and foreign investors by offering unregistered securities in Medsis International, Inc from 2015 through 2020. The complaint alleged that while offering Medsis securities, Cabrera and Hess made multiple material misrepresentations and misleading statements about Medsis to investors concerning the existence and value of contracts with customers, existing and expected revenue, and business operations. The complaint also alleged that Cabrera and Hess misrepresented to investors their personal use of investor funds.
FDIC acts to protect SVB investors
The Federal Deposit Insurance Corporation (FDIC) has announced that it has transferred all deposits—both insured and uninsured—and substantially all assets of the former Silicon Valley Bank, California, to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to protect all depositors of Silicon Valley Bank.
Depositors have full access to their money, including online banking. Depositors and borrowers will automatically become customers of Silicon Valley Bank, NA and have customer service and access to their funds by ATM, debit cards, and so on in the same manner as before.
A bridge bank is a chartered national bank that operates under a board appointed by the FDIC. It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank. The bridge bank structure is designed to “bridge” the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.
A selected summary of key developments for regulated financial institutions
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