Compliance & Ethics

The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has unveiled a Notice of Proposed Rulemaking (NPRM) targeting the investment adviser sector. The proposed rule, specifically emphasizing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) measures, aims to fortify the U.S. financial system against exploitation by criminals and foreign adversaries.

TradeStation Securities, Inc., a long-standing FINRA member, finds itself in the regulatory spotlight once again as the Financial Industry Regulatory Authority (FINRA) issues a Letter of Acceptance, Waiver, and Consent (AWC) detailing alleged rule violations. TradeStation Securities, headquartered in Plantation, Florida, with four branch offices and approximately 150 registered representatives, is known for providing online trading platforms to self-directed retail and institutional customers.

In a unanimous decision, the U.S. Supreme Court ruled in favor of whistleblower protection under the Sarbanes-Oxley Act of 2002 (SOX) without the need for proving retaliatory intent. The case, Murray v. UBS Securities, centered on Trevor Murray's claims that UBS terminated his employment in violation of SOX after he reported what he believed to be unethical and illegal conduct within the company.

The Securities and Exchange Commission (SEC) has taken enforcement action against a total of sixteen firms, including five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers. The charges revolve around widespread and long-standing failures by these firms and their employees to maintain and preserve electronic communications.

Goldman Sachs has agreed to a settlement with FINRA, accepting a censure and a $512,500 fine. The settlement arises from Goldman's failure to include warrants, rights, units, and certain over-the-counter (OTC) equity securities in nine of its automated surveillance reports between February 2009 and mid-April 2023.

The Securities and Exchange Commission (SEC) has announced settled accounting fraud charges against Cloopen Group Holding Limited, a China-based cloud communications provider. Formerly trading on the New York Stock Exchange, Cloopen faced allegations of accounting misconduct leading to overstated financial results for the second and third quarters of 2021, along with misleading revenue guidance for Q4 2021.

The OCC has announced a hefty $65 million civil money penalty against City National Bank, situated in Los Angeles, California. This penalty stems from the OCC's identification of systemic deficiencies in the bank's risk management and internal controls, categorizing the bank's practices as unsafe or unsound.