SEC publishes Risk Alert
The Securities and Exchange Commission (SEC) has published a Risk Alert on the importance of having written policies and procedures in place to protect customer records and information at branch offices. The SEC Division of Examinations established that several firms did not have such policies, making them liable to data or cybersecurity breaches. The Risk Alert states: “Firms should consider their entire organization, including branch offices, when implementing written policies and procedures for the safeguarding of customer records and information to ensure they are compliant with Regulation S-P (the Safeguards Rule).
FDIC publishes guidance on overdraft fee consumer compliance risk
The Federal Deposit Insurance Corporation (FDIC) has published guidance to ensure that supervised institutions are aware of the consumer compliance risks associated with charging an overdraft fee on a transaction that was authorized against a positive balance but settled against a negative balance, a practice commonly referred to as “Authorize Positive, Settle Negative” (APSN). Supervised institutions are encouraged to review their practices regarding the charging of overdraft fees on APSN transactions to ensure customers are not charged overdraft fees for transactions consumers may not anticipate or avoid. The guidance also advises that institutions should ensure overdraft programs provided by third parties are compliant with all applicable laws and regulations.
SFC imposes ban and fine
The Hong Kong Securities and Futures Commission (SFC) has banned former licensed representative of Convoy Asset Management Limited, Peter Law Chi Kin, from re-entering the industry for ten years and fined him HK$535,500 for taking part in a stock manipulation scheme.
From June to July 2016, Law was involved in manipulating the shares of a company and solicited ten clients to buy shares from the manipulators involved in the scheme. His clients suffered substantial losses because they were not allowed to offload their shares before the share price of the company collapsed. The SFC found that Law coordinated with a colleague to arrange the transactions and gave his clients reckless advice, including recommending they tap the overdraft facilities offered by a brokerage firm to fund their purchase of shares.
MAS Financial Services and Markets Act 2022 comes into force
Part one of the all-encompassing Financial Services and Markets Act 2022 (FSMA) comes into effect on 28th April 2023.
This first phase involves the porting of the following provisions from the Monetary Authority of Singapore Act 1970:
- General powers over financial institutions, including inspection powers, offenses and other miscellaneous provisions (Parts 2, 10, 11 and 12 (not section 183 of Part 12, which is to be implemented later) of the FSMA);
- Anti-Money Laundering / Countering the Financing of Terrorism framework (Part 4 of the FSMA); and
- Financial Dispute Resolution Schemes framework (Part 6 of the FSMA).
The remaining phases are targeted to be implemented between 2H 2023 and 2024.
FCA publishes latest Market Watch
Market Watch No. 73 looks at observations and findings from the FCA’s recent market abuse peer review into firms that offer Contracts for Difference (CFDs) and spread bets (CFD providers). The publication strongly advises CFD providers to take heed of the points raised in the publication and to ensure they have effective policies and procedures to counter the risk of market abuse-related financial crime as per SYSC 6.1.1R
ASIC publishes Market Integrity Update
The Australian Securities &Investments Commission (ASIC) has published Market Integrity Update 147 (MIU).
MIU 147 summarizes three recent events:
- the cancellation of the Australian financial services license held by Binance;
- the ASIC and IOSCO report on combatting retail market misconduct; and
- the permanent injunctions ordered against social media influencer Tyson Scholz.
A selected summary of key developments for regulated financial institutions
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