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US Regulatory Research

US Regulatory Updates

US Regulatory Research

U.S. Congress

The U.S. Congress remained in recess last week.

SEC & Securities

SEC Releases Videos for Investors on Choosing and Working with a Financial Professional

On 15 August, the Securities and Exchange Commission (“SEC”) released a series of short educational videos designed to provide ordinary investors with basic information about choosing and working with a financial professional. SEC Chairman Jay Clayton stated, “These videos are designed to describe, generally and in plain language, the differences between broker-dealers and investment advisers, arming investors with the information they need to ask better questions and help them make sound decisions for themselves and their families with their hard-earned money.” The videos are a part of the SEC’s larger Main Street investor engagement and education campaign, following recently adopted rulemakings and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers and bring the legal requirements and mandated disclosure in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products. 

Advocate for Small Business Capital Formation Gives Speech at the 38th Government-Business Forum

On 14 August, Martha Miller, the SEC’s new Advocate for Small Business Capital Formation, gave opening remarks to the 38th Government-Business Forum at Creighton University in Omaha. In the speech, Miller explained that her “office is responsible for advocating for policy solutions that encourage capital formation across the spectrum of small businesses and their investors, from the smallest start up scaling with seed capital all the way to a reporting company that has a public float under $250 million.” She highlighted elements of Nebraska’s entrepreneurial spirit to spotlight the importance of entrepreneurial ecosystems. Miller also remarked, “In a world where technology bridges many geographic boundaries, entrepreneurship still is largely a local phenomenon, occurring in early stages through networks of founders, funders ad talent who operate in proximity through relationships of trust, experience and accountability.” Miller emphasized the importance of capital formation and investing in promising new companies for the future of the U.S. economy. She asked the forum to help “craft a vision for what the securities framework should look like to ensure that we are well positioned for a vibrant future ahead.”

Advocate for Small Business Capital Formation Gives Speech to Maha Discovery Festival Entrepreneurs

On 15 August, Martha Miller gave a speech to the Maha Discovery Festival entrepreneurship conference. In the speech, she introduced the entrepreneurs to her new office and explained why Congress created it. Miller remarked, “Recognizing that we needed to do more to proactively engage with entrepreneurs and their investors to bring their perspectives into the regulatory process earlier, Congress created a new office within the SEC with legislation that was broadly supported across the aisle.” The Office of the Advocate for Small Business Capital Formation (“OASB”) segments its target market among three general groups: (i) small, emerging businesses, (ii) mature and later-stage small businesses, and (iii) small reporting companies. Miller explained that the OASB’s go to market plan requires them to reach as many people as possible along three key channels: (i) inbound inquiries, (ii) connections to thought leaders, and (iii) outreach to target “customers.” Miller also stated that the OASB is “interested in quality resolution of issues, engaging new voices and perspectives, bringing small business perspectives to the rulemaking process early and often, and producing practical, solution-oriented proposals for policy change.”

CFTC & Derivatives

Federal Court Orders Defendants to Pay More Than $2.7 Million in Forex Fraud Scheme

On 9 August, the Commodity Futures Trading Commission (“CFTC”) announced that the U.S. District Court for the Northern District of Georgia had entered a default judgment against two defendants in an enforcement action in which the CFTC alleged the defendants fraudulently solicited and misappropriated nearly $700,000 from more than 50 clients in a forex trading scheme. According to the CFTC, one of the defendants “fraudulently told [investors] that the initial funds they gave to the defendants were ‘fully’ guaranteed and that their accounts would grow in value approximately 200% to 350% in less than 60 days.”

CFTC Charges International Enterprise with Operating Fraudulent Binary Options Trading Scheme

On 12 August, the CFTC filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois charging five entities and four individuals with fraud relating to a global retail binary options enterprise that targeted and victimized U.S residents. The CFTC’s complaint “charges that from March 2014 through the present, the defendants fraudulently solicited and accepted more than $103 million in connection with their binary options scheme.” The CFTC alleges that “the defendants executed their unlawful scheme through internet websites using fictitious trade names such as BigOption, BinaryBooks, and BinaryOnine.”    


Kraft and Mondolez Agree to Pay $15 million in Wheat Manipulation Case

On 15 August, the CFTC announced that it had obtained a $16 million penalty and injunction through a consent order against defendants Kraft Foods Group, Inc. (“Kraft”) and Mondolez Global LLC (“Mondolez”) in the U.S. District Court for the Northern District of Illinois. According to the CFTC’s press release: “The $16 million penalty is approximately three times defendants’ alleged gain. The order also enjoins Kraft and Mondolez from engaging in future violations of the manipulation, wash trade, and position limit provisions of the Commodity Exchange Act and CFTC regulations charged in the complaint.” 

o   On the same day, the Commission and CFTC Commissioners Dan Berkovitz and Rostin Behnam issued two statements supporting the settlement. 

Bank Regulators

OCC to Hold Innovation Office Hours in Washington, D.C.

On 12 August, the Office of the Comptroller of the Currency (“OCC”) announced that it will hold Innovation Office Hours on 8-10 October 2019 in Washington, D.C., to promote responsible innovation in the federal banking system. The office hours will consist of “one-on-one meetings with Office of Innovation staff to discuss financial technology (fintech), new products or services, partnering with a bank or fintech company, or other matters related to responsible innovation in the federal banking system.”

OCC Publishes Update to Bank Accounting Advisory Series

On 15 August, the OCC published an update to the Bank Accounting Advisory Series (“BAAS”). The BAAS “promotes consistent application of accounting standards among national banks and federal savings associations,” and the latest update “reflects accounting standards issued by the Financial Accounting Standards Board on such topics as hedging and credit losses” and “includes recent answers to frequently asked questions from the industry and examiners.”


·        August 26: Comments are due on the CFTC’s proposed rule regarding “Customer Margin Rules Relating to Security Futures.”

·        September 5: The SEC’s Investor Advisory Committee will hold a public meeting to discuss the proxy process.

Ianthe Zabel
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