All Things FinReg

The Securities and Exchange Commission (SEC) filed a complaint against a crypto market maker (Market Maker) on October 10, 2024, alleging that the firm operated as an unregistered securities dealer in violation of Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act) by virtue of acting as a market maker in cryptoasset securities.

Almost exactly a year after issuing a Notice of Proposed Rulemaking (NPRM) on Personal Financial Data rights, on October 22, 2024 the Consumer Financial Protection Bureau (CFPB) issued its final Rule under Section 1033 of the Consumer Financial Protection Act. The Rule, also referred to as the “open banking rule,” has been a key priority of CFPB Director Rohit Chopra’s rulemaking agenda, and according to the CFPB and Director Chopra, aims to give consumers greater rights over their personal financial data and promote competition and consumer choice in financial products and services.

In an unusual move, on July 26, 2024, the Securities and Exchange Commission (SEC) stayed an order that was previously issued by its own Division of Trading and Markets just one week earlier on July 19, 2024. That order approved amendments to Financial Industry Regulatory Authority (FINRA) Rule 2210 that would have allowed FINRA member broker-dealers to use projected performance and target returns in communications limited to institutional investors and qualified purchasers (subject to compliance with certain other requirements).

The US Supreme Court ruled on May 16, 2024 that the funding structure of the Consumer Financial Protection Bureau (CFPB)—which is funded with money from the Federal Reserve rather than the US Congress—does not run afoul of the Appropriations Clause of the US Constitution. The Court’s decision reversed the Fifth Circuit’s ruling that the CFPB’s funding structure was unconstitutional and put a definitive end to the last pending wholesale challenge to the CFPB’s constitutionality.

The Consumer Financial Protection Bureau (CFPB) on February 16 issued an internal process regulation—effective immediately upon publication in the Federal Register—updating and formalizing the steps that supervised institutions may take to appeal certain adverse supervisory findings and ratings. While there are minimal substantive changes, the regulation is informative in its acknowledgment of the significant centralization of authority under a single supervision director that the CFPB had previously not widely publicized.

The US Office of the Comptroller of the Currency (OCC) on January 29 proposed meaningful revisions to its rules and processes for reviewing proposed transactions involving national banks under the Bank Merger Act. The proposed amendments would notably remove the expedited application review process and associated OCC streamlined business combination application, replacing them with a policy statement that outlines the principles the OCC plans to use when evaluating merger applications, including a number of proposed indicia that support approval and, potentially, denial.

The die is cast: FINRA has published Regulatory Notice 24-02 (RN 24-02) announcing the effective dates and other key dates and considerations for its recently adopted Residential Supervisory Location (RSL) and Remote Inspection Pilot Program (Pilot Program) rulemakings, to be codified as FINRA Rules 3110.19 and 3110.18, respectively. Together, these rules will offer FINRA member firms additional flexibility in how they structure certain aspects of their supervisory system following the sunsetting of related COVID-19 relief.

On December 13, 2023, the US Securities and Exchange Commission (SEC) adopted rule amendments (Treasury Clearing Rules) designed to improve risk management in clearance and settlement and to facilitate additional central clearing for the US treasury market.

At its next open meeting on December 13, 2023, the US Securities and Exchange Commission (SEC) is expected to adopt rules (the Treasury Clearing Rules) to improve risk management in clearance and settlement and facilitate additional central clearing for the US treasury market. More specifically, the SEC is scheduled to consider whether to adopt amendments to the standards applicable to covered clearing agencies for US Treasury securities regarding their membership requirements and risk management.

Financial services is perhaps the most regulated industry in the world, and the intersection between financial services, technology, and law remains a complicated and evolving space. A team of Morgan Lewis lawyers recently attended the 2023 Money 20/20 conference and previewed some major themes and trends that the industry can expect in 2024.