Compliance & Ethics

Wall Street is grappling with an unwelcome side effect of inflation, one that doesn't involve rising prices at the pump but rather, heftier checks to be cut for regulatory violations. Recent reports suggest that big banks and brokerage firms are being compelled to pay substantially larger settlements for regulatory investigations, including those that may not have resulted in losses for investors. This surge in regulatory fines, even for what were once considered technical violations, is prompting concern and frustration among financial institutions.

The Securities and Exchange Commission (SEC) has taken action against Lyft Inc., accusing the ride-sharing giant of failing to disclose pertinent information related to a significant pre-initial public offering (IPO) stock transaction involving a company board director. This enforcement action sheds light on the importance of transparency in corporate disclosures, especially concerning transactions close to a company's IPO.

The Financial Crimes Enforcement Network (FinCEN) has taken decisive action by issuing a $15 million civil money penalty against Bancrédito International Bank and Trust Corporation (Bancrédito). This penalty is the outcome of Bancrédito's willful violations of the Bank Secrecy Act (BSA) and its implementing regulations, marking a significant development in financial regulatory enforcement. Notably, this represents FinCEN's inaugural enforcement action against a Puerto Rican International Banking Entity (IBE) and encompasses the first violation for failing to establish and maintain an Anti-Money Laundering (AML) program under the "Gap Rule."

The U.S. Securities and Exchange Commission (SEC) has announced a significant enforcement action against GlennCap LLC, a Connecticut-based investment advisory firm, and its owner, Jonathan Vincent Glenn. The charges stem from allegations of fraudulent activities, specifically the unfair allocation of securities trades, a practice commonly referred to as "cherry-picking."

The U.S. Securities and Exchange Commission (SEC) has announced a settlement with YieldStreet Inc. and its registered investment adviser subsidiary, YieldStreet Management LLC, over allegations of failing to provide crucial information to investors in a $14.5 million asset-backed securities offering.

Toronto-Dominion Bank (TD), one of Canada's largest financial institutions, remains optimistic and views the ongoing anti-money laundering probe by U.S. authorities as "manageable." This statement comes from Leo Salom, the CEO of TD Bank's U.S. unit, as he addressed concerns during a recent Barclays conference.

In the ever-evolving landscape of artificial intelligence, U.S. Senate Majority Leader Chuck Schumer has called for a prudent and considered approach to crafting regulations in the field. While acknowledging the imperative for regulations to oversee the burgeoning AI sector, Senator Schumer emphasized the need to strike a balance and cautioned against hasty decision-making.