CUBE RegNews:
6^th March

MAS issues data breach guidance

The Monetary Authority of Singapore has issued a letter to CEOs of Insurance businesses reminding them of the revised expectations for licensed insurers regarding the expectations for notifying the Authority of data breaches, as defined under the Personal Data Protection Act 2012.

Further consumer duty guidance: motor finance providers; credit unions and retail finance providers

The FCA has issued three additional Dear CEO letters for motor finance providers; credit unions and retail finance providers.

Each highlights some specific aspects of the new regime on the three sectors, but all three focus on three key areas where firms should particularly focus their attention during the second half of the implementation period (to 31 July 2023):

• Effective prioritisation
• Embedding the substantive requirements
• Working with other firms.

Further analysis on motor finance providers is available here.

CEO charged with insider dealing by ASIC

ASIC has charged the former  CEO of Big Un, a media company, with communicating inside information to a shareholder on or around 10 January 2017. The information concerned the number of customers who had already been onboarded to purchase Big Un’s promotional ‘TV Show’ package at a cost of $12,000, together with a $20 million funding arrangement with ‘Finstro’, a product of Sydney-based financier First Class Capital, which allowed customers to make this purchase on deferred payment terms. Big Un’s shares were suspended from trading in February 2018 after information about Big Un’s funding arrangement with First Class Capital was released. Big Un was placed in voluntary administration and delisted from the exchange in August 2018. It is now in liquidation.

Parting perspectives to Gensler from Small Business Capital Formation Advisory Committee (SBCFAC)

In a letter to SEC chair Gary Gensler, the inaugural members of the SBCFAC highlight several areas for continued emphasis following their four-year term:

• Recognize the importance of the private markets for small business growth.
• Ensure public company rules are mindful of the unique circumstances of small public companies, so that these small companies can attract capital, spur innovation, and create jobs.
• Allow retail investors greater access to a wider range of investment opportunities.
• Support rules to facilitate the existence and growth of small funds
• Continue to protect investors through effective enforcement and more education and outreach.

The committee chair, Carla Garrett, and vice-chair, Jeffrey Solomon, leave their posts in April.

SEC charges SIlver Edge with unregistered BD activity and Kaplan brothers with misappropriation of funds

The Securities and Exchange Commission has charged Silver Edge Financial LLC, Equity Acquisition Company Ltd with unregistered broker-dealer activity relating to their sales of interests in shares of various pre-IPO companies.

SIlver Edge sold interests in two funds that were set up as series LLCs, with each series representing an interest in shares of a single pre-IPO company. The underlying assets in these series were interests in shares of companies that were expected to undertake an initial public offering or other liquidity event within two-to-five years. Silver Edge solicited accredited investors and raised more than $65 million while failing to register as brokers with the Commission, as required.

“The SEC’s registration requirements ensure that broker-dealers fulfill important responsibilities and regulatory obligations, such as submitting to regulatory inspections and maintaining appropriate books and records,” said Carolyn M. Welshhans, Associate Director of the SEC’s Enforcement Division. “Individuals and entities in the pre-IPO space, including dealers, must comply with the SEC’s registration provisions when selling securities backed by pre-IPO shares and cannot avoid essential regulatory oversight.”

Elsewhere the SEC has also charged Adam Kaplan and Daniel Kaplan, for engaging in several different fraudulent activities to misappropriate more than $5 million from at least 60 of their investment advisory clients.  The Kaplans were associated as investment adviser representatives with an SEC-registered investment adviser from May 2018 until their termination in July 2021, and after leaving that firm, they continued to act as investment advisers to certain clients. The complaint alleges that, among other things, they:

• overcharged clients for advisory fees by fraudulently inflating the fee amounts in clients’ advisory agreements, without the clients’ knowledge or consent, so that they could collect higher fees than their clients had agreed to pay;
• misappropriated clients’ funds by fraudulently applying charges to their clients’ credit card and bank accounts;
• used the clients’ funds obtained from these fraudulent activities for their personal benefit and to repay certain clients who complained about unusual account activity; and
• falsified documents and made Ponzi-like payments to clients to conceal their fraudulent activities.