CUBE RegNews:
18^th April

SEC charges Bittrex and its former CEO for operating an unregistered exchange, broker, and clearing agency  

The Securities and Exchange Commission (SEC) has charged cryptocurrency trading platform Bittrex and its former CEO, William Shihara, for operating an unregistered national securities exchange, broker, and clearing agency. The SEC also charged Bittrex Global GmbH, Bittrex’s foreign affiliate, for failing to register as a national securities exchange. The complaint alleges that since 2014, Bittrex facilitated the buying and selling of crypto assets that were offered and sold as securities without registering with the SEC. Bittrex earned at least $1.3 billion in revenues from transaction fees from investors,  while servicing them as a broker, exchange, and clearing agency without registration. The complaint also alleges that Bittrex and Shihara coordinated with issuers seeking to have their crypto assets made available for trading on Bittrex’s platform to delete certain “problematic statements” that would lead a regulator to investigate the crypto asset as the offering of a security. The SEC’s complaint alleges that Bittrex and Bittrex Global should have registered as an exchange because they brought together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interacted, and the buyers and sellers entering such orders agreed to the terms of a trade. 

Joint Regulatory Oversight Committee sets out recommendations for the next phase of open banking in the UK       

he Joint Regulatory Oversight Committee (JROC) in the UK has published its key recommendations for the next two years as more and more users switch to open banking services. The report identifies three key priorities: 

• to establish a sustainable and competitive footing for the ongoing development of the open banking ecosystem so that it can grow beyond the current functionalities and bring further benefits to end users 
• to unlock the potential for open banking payments 
• to adopt a model that is scalable for future data sharing propositions 

With five areas of focus over the next two years:  

• levelling up availability and performance 
• mitigating the risks of financial crime 
• ensuring effective consumer protection if something goes wrong 
• improving information flows to third party providers (TPPs) and end users 
• promoting additional services, using non-sweeping variable recurring payments (VRP) as a pilot 

In a separate speech, Andrew Griffith, Economic Secretary to the Treasury, added: “[w]e will move Open Banking on to a sustainable regulatory framework, which the Government intends to develop through the Data Protection and Digital Identity Bill which has its second reading in Parliament today. Open Banking will also transition to a new entity, with a broad-based, equitable funding model and high standards of corporate governance.” 

FINRA April fines summary        

FINRA has published its latest disciplinary summary for April 2023 covering a range of enforcement actions. Amongst those mentioned for violations are UBS Securities, BNA Wealth Inc and SageTrader LLC.  

MAS issues new corporate finance guidelines         

Following an inspection of eight issue managers (IMs), the Monetary Authority of Singapore (MAS) has now published a new document Corporate Finance Thematic Inspection – Good Practices and Key Findings which sets out MAS’ supervisory expectations for financial institutions (FIs) carrying out corporate finance advisory activities for Initial Public Offers (IPOs). The inspection found weaknesses in several areas including governance, compliance and audit, and record keeping. The guidance concludes:  

“MAS’ thematic inspection of IMs showed that there is much room for improvement in the conduct of IMs’ advisory activities for IPOs, as well as IMs’ placement activities. IMs should periodically review their internal controls and policies and procedures and strengthen their management oversight and control over such activities.” 

SEC appoints new Inspector General          

The Securities and Exchange Commission today announced the appointment of Deborah J. Jeffrey as Inspector General, effective May 7, 2023. Ms. Jeffrey is currently the Inspector General of AmeriCorps. 

“Deb will bring incredible experience in public service and oversight to the SEC,” said SEC Chair Gary Gensler. “The Inspector General’s office plays a critical role as an independent reviewer to promote the integrity, efficiency, and effectiveness of the SEC. I thank Deb for taking on this important responsibility. I also thank Katherine Reilly, Helen Albert, and Rebecca Sharek for their rotating service each as Acting Inspector General and their ongoing dedication to the SEC.”