Greg Kilminster
Head of Product - Content
Enforcement
There were several significant enforcements in the United States during April, with both Commonwealth Equity Services and Senvest Management being fined $6,500,00 each in the United States, the latter for recordkeeping breaches of off-channel communications.
Darren Robinson and his firm The QYU Holdings were fined nearly $6,000,000 for forex fraud and RedRock Secured was fined more than $12 million for fraudulent activities in connection with metals trading. On the same day that we reported the RedRock fine, the co-founders of crypto-mixing service Samurai Wallet were charged with conspiracy to commit money laundering and operating an unlicensed money transmitting business. Earlier in the month, the US Federal Trade Commission (FTC) issued $1.2 million to almost 20,000 consumers who fell victim to misleading investment advice.
Elsewhere, the US Justice Department made its first conviction in a cryptocurrency open-market manipulation case and hedge fund manager Michael WIlliams was jailed for running a Ponzi scheme.
Another Ponzi scheme was acted against by the UK’s National Crime Agency, who apprehended a senior figure from the JuicyFields platform which had accumulated €645 million from investors. Also in the UK the Financial Conduct Authority (FCA) obtained court approval to recover £1.6 million from Argento Wealth Ltd for promoting two unlawful investment schemes.
Consultations
April was a busy month for consultations. In Europe, the European Securities and Markets Authority (ESMA) issued a consultation paper to improve the incorporation of environmental, social, and governance (ESG) factors in credit rating methodologies.
Later in the month, the European Banking Authority (EBA) issued a consultation considering the Regulatory Technical Standards (RTS) on the method for identifying the main risk driver and determining whether a transaction represents a long or a short position for market and counterparty risk.
In the UK, the FCA issued several consultations including: a joint paper with the Bank of England outlining plans for implementing and operating the Digital Securities Sandbox; its annual consultation on fees and levies; and a new proposal for paying investment research fees. Following a mid-month pause, the UK regulator ended the month with three additional consultations, one proposing changes to its Financial Crime Guide, another considering changes to the Sustainability Disclosure Requirements and finally changes proposed to the guidance in the FCA Knowledge Base regarding the Listing Regime.
Still in the financial crime arena, the UK’s HM Treasury issued a consultation seeking to enhance the effectiveness of the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017, and the Joint Money Laundering Steering Group (JMLSG) issued a consultation to consider changes to the wholesale markets section of its guidance.
The Prudential Regulation Authority (PRA) also consulted on fees and on changes resulting from the Solvency II Review.
Elsewhere, the Australian Securities & Investments Commission (ASIC) issued a consultation paper outlining proposed updates to Regulatory Guide 16, which governs reporting obligations for external administrators and controllers concerning alleged misconduct. On 22 April we covered two consultations: the Securities and Exchange Board of India’s consultation which proposes a framework for price discovery of shares of listed Investment Companies and Investment Holding Companies, and the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) joint consultation updating the list of approved Financial Services Providers under the over-the-counter derivatives regulatory regime. Earlier in the month, the Reserve Bank of India published for consultation two draft directions regarding the regulation of Payment Aggregators.
Policies and Procedures
Starting in the UK, the FCA published several policy statements in April including strengthening protections for borrowers facing financial difficulties in the consumer credit and mortgage sectors, which comes into force in November, and final guidance on the anti-greenwashing rule prior to its effective date of 31 May 2024 and a policy statement on Product Sales Data reporting for consumer credit.
The EBA issued final guidelines for implementing the Investment Firm Regulation group capital test for investment firm groups, coming into force on 1 January 2025 and also on the resubmission of historical data under the EBA reporting framework.
Over in North America, the Commodity Futures Trading Commission (CFTC) approved final rules amending its regulations regarding Swap Execution Facilities and the Financial Industry Regulatory Authority (FINRA) released its Sanction Guidelines. The Financial Transactions and Reports Analysis Centre of Canada released guidance to clarify suspicious transactions reporting obligations and the Federal Trade Commission issued a final rule that aims to promote competition by banning noncompete agreements nationwide.
Finally, in Hong Kong, two circulars were issued, one to remind firms of their AML/CFT obligations and one to ensure firms consider risk management of distributed ledger technology.
Key speeches
United States
- In a speech given at the Federal Reserve Bank of Kansas City Workshop on the Future of Banking, Federal Reserve Governor Michelle Bowman discussed the regulatory and supervisory reform agenda particularly in regard to merger and acquisition (M&A).
- In a speech at the SEC Speaks 2024 event, Sanjay Wadhwa, Deputy Director of the Securities and Exchange Commission Division of Enforcement, provided a helpful summary of SEC enforcement highlights and considered some of the factors that affect two ongoing initiatives: the recordkeeping initiative and the amended marketing rule initiative.
- In a speech at the Roundtable on the Lender of Last Resort in Washington DC, Michelle Bowman discussed the Federal Reserve's crucial role in providing liquidity to the US banking system.
- Michelle Bowman also spoke about supervisory expectations for the banking industry at the New York Fed Regional and Community Banking Conference.
- In a speech at the Futures Industry Association L&C Panel, CFTC Commissioner Kristin N Johnson spoke about the role of artificial intelligence in the derivatives markets.
United Kingdom
- In a speech at the Innovate Finance Global Summit, Aidene Walsh, Chair of the Payment Systems Regulator (PSR) emphasised the vibrant FinTech ecosystem in the UK.
- In a speech at the TheCityUK International Conference, Sarah Pritchard, Executive Director at the FCA, addressed the balance between encouraging innovation and maintaining regulatory objectives.
- In a speech at the Digital Regulation Cooperation Forum, FCA Chief Executive Nikhil Rathi spoke about the UK’s digital regulation landscape.
- In a speech at the Payment Leaders' Summit, Chris Hemsley, Managing Director of the PSR, spoke about how open banking can help the challenges and opportunities facing the UK economy.
Europe
- In a speech at the Annual Assembly of the Spanish Banking Association, José Manuel Campa, Chairperson of the EBA, discussed the need for prudential regulation to set the appropriate boundaries to assess the effect on banks of innovative technological enhancements and reliance on third-party FinTech and Big Tech providers.
- In a speech at the Institute of International Finance Global Outlook Forum, Pablo Hernández de Cos Chair of the Basel Committee on Banking Supervision, discussed the role of artificial intelligence and machine learning (AI/ML) in the banking sector.
- In a speech at the joint European Central Bank/European University Institute seminar, Anneli Tuominen, a member of the Supervisory Board of the European Central Bank spoke about the critical importance of governance and risk culture in the European banking sector.
- In a speech at the CFA Institute Systemic Risk Council Meeting, Klaas Knot, Chair of the Financial Stability Board, considered financial stability risk in Europe.
APAC
- In a speech at the Financing Asia’s Transition Conference 2024, Chia Der Jiun, Managing Director of the Monetary Authority of Singapore, highlighted critical aspects for bridging global climate ambitions with regional actions in Asia.
- In a speech at the Hong Kong Federation of Insurers Annual Reception, Christopher Hui, Secretary for Financial Services and the Treasury, discussed Hong Kong's insurance sector.
- In a speech at the Deakin Law School International Sustainability Reporting Forum, Joe Longo, Chair of ASIC, spoke about the impending mandatory climate disclosure regime.