Emmanuel L. Brown
Emmanuel L. Brown represents a range of clients involved in litigation. He assists at various stages of legal proceedings and trial preparation, including legal research, writing motions, and drafting other memoranda. Prior to joining the litigation group, Manny worked in the firm’s corporate and securities group for two years on matters related to finance, securities and mergers and acquisitions.
View the full bio for Emmanuel L. Brown at the Faegre Drinker website.
Articles by Emmanuel L. Brown:
2025 is here, and so is FINRA’s 2025 Annual Regulatory Oversight Report (Report). On January 28, 2025, FINRA published the Report, which provides firms with insight into FINRA’s findings from recent observations and examinations. The Report provides new content addressing trends and potential challenges for broker-dealers. The updated content ranges from technology to data security to popular complex financial products, as well as how firms offer services. Here are four highlighted issues firms may want to consider for 2025:
- Cybersecurity risks associated with third-party vendors, including those related to artificial intelligence (AI).
- How Regulation BI interacts with registered index-linked annuities (RILAs).
- Common new investment frauds and how to combat them.
- Extended trading hours.
Continue reading “What’s New with FINRA’s Recent 2025 Regulatory Oversight Report”
On May 15, 2024, the SEC announced it would make amendments to Regulation S-P (Reg S-P). This will be the first amendment to the regulation since its adoption 24 years ago in 2000. The regulation focuses on how institutions handle customers’ private personal information. The amendment comes in response to the ever-evolving technologies that expose individuals’ sensitive data to potential security breaches. SEC Chair Gary Gensler stated “Over the last 24 years, the nature, scale and impact of data breached has transformed substantially” and that “amendments to regulation S-P will make critical updates to a rule first adopted in 2000 and help protect the privacy of customers’ financial data.”
The new amendments to Reg S-P require firms to (1) have an incident response program, including written policies and procedures, (2) provide notice to customers in the event of a breach no later than 30 days of its discovery, and (3) provide oversight through due diligence and monitoring of service providers, though firms ultimately retain the burden of ensuring that notice of any breach is provided to affected customers per Reg S-P’s requirements.
Continue reading “FINRA to Member Firms: “You Heard the SEC, Create Plans for Data Breaches Now!””
More than ever before, financial services regulators must increasingly adapt to technological advances. Perhaps no other technological advancement is more important right now than crypto currency. Crypto currency is defined as digital assets issued or transferred using blockchain technology. Earlier this month, the SEC, despite SEC chairman Gary Gensler’s well-known skepticism of crypto, granted Bitcoin, the world’s largest crypto currency, approval to be the first crypto asset listed as an exchange traded fund (ETF). This defining moment for crypto currency further cements the relatively new technology into the financial services and securities landscape.
Anticipating the changing tides, FINRA recently declared in its 2024 Annual Regulatory Oversight Report that it would add a brand-new Crypto Asset Development section – dedicated to providing guidance for member firms engaging in (or expecting to engage in) the crypto economy. This new section includes reports from FINRA’s November 2022 targeted exam reviewing the practices of certain member firms that communicate with retail customers concerning crypto assets and crypto asset-related services. The relevant time period of the exam was from July 1 through September 30, 2022. On January 24, 2024, FINRA published an update to the targeted exam, claiming that approximately 70 percent of the more than 500 retail customer communications it reviewed contained potential FINRA Rule 2210 violations (communication with the public), including the following:
Continue reading “Crypto is Here to Stay in 2024, So Be Careful How You Talk About It”
Since Regulation Best Interest’s (Reg BI) June 30, 2020 compliance date, the Division of Examinations of the Securities and Exchange Commissions (the Division) has been busy implementing examinations of broker-dealers to assess compliance with the regulation. The Division is planning to include Reg BI compliance into future examinations of broker-dealers. Therefore, the Division issued a Risk Alert on January 30, 2023 calling attention to deficiencies found during broker-dealer compliance examinations, as well as certain inadequate practices that might lead to deficiencies. Broker-dealers should pay attention to the issues identified by the SEC so that they do not expose themselves to regulatory trouble later down the line.
Some of the exposed weaknesses and deficiencies regarding the Reg BI Care Obligation1 involved inadequate written policies that directed financial professionals to document the basis for their recommendations but failed to state when doing so is required or which information is needed. Under Reg BI, financial professionals are required to make account recommendations that are in the best interest of the retail investor. Doing so is especially important when a financial professional is recommending a significant financial transaction to a retail investor, like an account rollover recommendation.
Continue reading “You Might Want to Write Down Why You Recommended that Rollover”
We have made it a point previously in this blog to track developments of the SEC’s Regulation Best Interest (Reg BI), even speculating more aggressive enforcement actions could be coming due to certain Reg BI deficiency letters sent to firms late last year. Since Reg BI went into effect in June 2020, however, many have waited with bated breath to see what enforcement of the regulation would look like in practice. While the SEC has pursued some cases regarding firms missing deadlines and omitting certain information in disclosure documents, it had taken no further action until June. On June 15, 2022 the SEC finally took its first substantive Reg BI action by filing a civil regulatory complaint in the U.S. District Court for the Central District of California against Western International Securities, Inc. and five of its brokers for allegedly selling a risky debt security, known as corporate L Bonds, to its retail customers. The Complaint invokes Section 15l-1(a) of the Securities and Exchange Act of 1934 — Regulation Best Interest — and seeks to enjoin the Defendants from the acts, practices and courses of business described in the Complaint.
Continue reading “And Now for the SEC’s First Substantive Reg BI Action”
