As Fintech Platforms Grow Up, Investment Management Firms Face the ‘Problems of Tomorrow’

Fund groups face disruptive developments, as advances in financial technology, often called fintech, continue at an ever more rapid pace. Even as new efficiencies and opportunities blossom, regulators have pushed financial firms to recognize the dangers of technological failures. To help prepare investment management firms for changes ushered in by fintech, we offer our primer on the latest key developments and potential risks.  Read our new article in The Investment Lawyer to learn more about the legal and regulatory implications of emerging technologies, including blockchain and digital ledger technology, investing in fintech companies, robo-advisers and algorithms, and cybersecurity.

SEC Offers More Guidance on Cybersecurity Best Practices and Pitfalls – Part 2 of 2

This post continues our discussion of the Risk Alert released on August 7, 2017, by the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) regarding conclusions drawn from its yearlong review of the cybersecurity practices of 75 asset management firms and funds. The sweep, deemed OCIE’s Cybersecurity 2 Initiative, covered broker-dealer, investment adviser, and investment company practices during the period from October 2014 through September 2015. Continue Reading

SEC Offers More Guidance on Cybersecurity Best Practices and Pitfalls – Part 1 of 2

On August 7, 2017, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) released a Risk Alert summarizing its conclusions from a year-long review of the cybersecurity practices of a 75 firms — including broker-dealers, investment advisers and investment companies.  The sweep, OCIE’s Cybersecurity 2 Initiative, ran from September 2015 to June 2016 and covered the review period from October 2014 through September 2015.  It follows OCIE’s 2014 Cybersecurity 1 Initiative, during which the staff examined a different group of firms from January 2013 to June 2014.  The Risk Alert that followed the first sweep was released in early 2015. Continue Reading

Blockchain and Digital Token Update: SEC Releases Investigative Report and Investor Bulletin

On July 25, 2017, the Securities and Exchange Commission (SEC) released groundbreaking materials relating to blockchain tokens. These materials provide significant and welcome insight to the SEC’s and its staff’s thinking in this area, although they leave a number of important questions unanswered. The SEC released a detailed investigative report under Section 21(a) of the… Continue reading the full post here.

The Financial Choice Act Aims to Help Angel Investors

The proper treatment of angel investing groups under the Federal securities laws can be a vexing question. If it were appropriate to describe the angel investing group as a “company” as defined in Section 2(a)(8) of the Investment Company Act of 1940, and if the “company” were appropriately viewed as issuing interests or shares, then the angel investing group would have to seek to rely on Sections 3(c)(1) or 3(c)(7) of the Investment Company Act and comply with the requirements of Regulation D under the Securities Act of 1933. Yet these views seem to beg the questions of who is giving investment advice to the “company” and who is acting as a broker in offering and selling interests in the “company.” Continue reading The Financial Choice Act Aims to Help Angel Investors.

Takeaways From TRANSACT: Payments Industry Legal and Regulatory Trends

The Electronic Transactions Association (ETA) hosted its annual TRANSACT conference focused on connecting and educating the various branches of the payments industry. Industry leaders spoke on technology, security, regulatory and policy issues affecting the industry.

This update highlights the key legal and regulatory takeaways from TRANSACT, which include regulatory red flags, the important role of compliance, recent litigation in the field of chip card and signature debit, nationwide-licensing and the potential impact of Dodd-Frank amendments and other changes brought by the Trump administration.

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