SEC

SEC Adopts Cybersecurity Rules by Public Companies

On July 26, the SEC adopted rules requiring registrants to disclose material cybersecurity incidents they experience, and to disclose on an annual basis material information regarding cybersecurity risk management, strategy, and governance.

Review the press release.

SEC Adopts Money Market Fund Reforms and Amendments to Form PF Reporting Requirements for Large Liquidity Fund Advisers

On July 12, the SEC adopted amendments to their money market funds rules. The amendments will increase minimum liquidity requirements for money market funds to provide a more substantial liquidity buffer in the event of rapid redemptions. The amendments will require:

• Institutional prime and institutional tax-exempt money market funds to impose liquidity fees when a fund experiences daily net redemptions that exceed 5% of net assets, unless the fund’s liquidity costs are de minimis.
• Any non-government money market fund to impose a discretionary liquidity fee if the board determines that a fee is in the best interest of the fund.
• Note: Swing pricing was not included in the final rule.

Review the press release, fact sheet and final rule here.

SEC Proposes Rules for Digital Engagement Practices by Broker-Dealers and Investment Advisers

On July 26, the SEC proposed new rules to require broker-dealers and investment advisers to take certain steps to address conflicts of interest with their use of predictive data analytics and similar technologies to prevent firms from placing their interests ahead of investors’ interests.

• The public comment period will remain open until 60 days after the date of publication of the proposing release in the Federal Register.
• Read the press release and adopting release.

SEC Proposes Amendments to the Broker-Dealer Customer Protection Rule

On July 12, the SEC proposed amendments to Rule 15c3-3 (the Customer Protection Rule) to require certain broker-dealers to increase the frequency with which they perform computations of the net cash they owe customers and other broker-dealers (PAB account holders) from weekly to daily.

• There will be a 60-day public comment period following publication of the proposal on the SEC website or 30 days following in the Federal Register, whichever period is longer.
• Read the press release and adopting release.

SEC Proposes Amendments to the Exemption for Investment Advisers Operating Exclusively Through the Internet

The proposed amendments would require an investment adviser relying on the internet adviser registration rule to have an operational interactive website through which the adviser provides digital investment advisory services on an ongoing basis to more than one client. The amendments would also require that an internet investment adviser provide advice to all of its clients exclusively through an operational interactive website, and make certain corresponding changes to Form ADV.

• There will be a 60-day comment period from the publication date in the Federal Register.
• Read the press release and proposing release.

SEC Issues Investor Alerts

The SEC recently issued three investor alerts: two regarding SIPC Protection to help educate investors about SIPC protection for brokerage accounts, one about the end of LIBOR to explain how the transition away from LIBOR could impact securities, financial instruments or financial products, and where investors can go for additional information. Read all three alerts:

• SIPC Protection (Part 1: SIPC Basics) (June 7)
• SIPC Protection (Part 2: Filing a SIPC Claim) (June 7)
• What You Need to Know About the End of LIBOR (May 1)

SEC Issues Risk Alerts

The SEC has issued four Risk Alerts since March 27: the first pertaining to newly-registered advisers, the second regarding customer records at branch offices, the third concerning LIBOR transition preparedness, and the most recent addressing additional areas of the adviser marketing rule. Read them all below:

• Examinations Focused on Additional Areas of the Adviser Marketing Rule (June 8)
• Investment Advisers and Investment Companies Concerning LIBOR-Transition Preparedness (May 11)
• Safeguarding Customer Records and Information at Branch Offices (April 26)
• Newly-Registered Advisers (March 27)

DOL

ERISA July 2023 Advisory Council Meeting

The ERISA Advisory Council met from July 17 to July 19. The meeting included a discussion of Recordkeeping in the Electronic Age, an EBSA Presentation on Interpretive Bulletin 95-1, and Long-Term Disability Benefits and Mental Health Disparity.

Meeting materials are available here.

Amendment of Abandoned Plan Program

The DOL has filed with the Office of Management and Budget a rule proposal regarding employer-abandoned pension plans and to help plan participants access their benefits.

Read the rule proposal.

U.S. Government Accounting Office Recommends DOL Updates 403(b) Plan Information

On June 24, the GAO announced it found the DOL website contains little educational material specific to 403(b) plans, such as information to help participants understand the fees associated with these plans. The GAO recommends the DOL update information on these plans to help participants.

Read the recommendations.

DIGITAL ASSETS

Senators Lummis and Gillibrand Introduce Consumer Protection Bill

During the First Session of the 118th Congress, Senators Lummis and Gillibrand introduced a bill to provide for consumer protection and responsible financial innovation, and to bring crypto assets within the regulatory perimeter.

Review the bill.

FINRA

Rulemaking Items Approved at July 2023 Board Meeting

In July, the FINRA Board approved three rulemaking items: Dissemination of Transaction Information for Treasury Securities; Reducing the TRACE-Reporting Timeframe From 15-Minutes to One Minute, and Enhancements to Short Interest Data and Regulation SHO Oversight.

Review all items here.

SEC Issues Order Regarding FINRA Proposed Rule Change Regarding Private Residences Where Supervisory Activities Take Place as Non-Branch Locations

On July 5, the SEC issued an order that institutes proceedings to determine whether to approve or disapprove FINRA’s proposed rule change: the change would treat a private residence at which an associated person engages in specified supervisory activities as a non-branch location and subject to safeguards and limitations. Comments are due August 1; rebuttals are due August 15.

See the Notice of Order.