On February 15, 2023, the Securities and Exchange Commission (SEC) proposed an enhanced safeguarding rule for registered investment advisers (RIAs) under the Investment Advisers Act of 1940. The proposal would require RIAs to implement certain additional measures to protect their clients’ assets from theft or misuse. Additionally, to combat the growing concerns around cryptocurrency and to modernize the Advisers Act, the SEC proposal would expand protection to all assets, not just funds or securities.
Cryptocurrency’s lack of regulation has been a major focus in the news recently. Furthermore, there is a lack of regulation over non-fungible tokens (NFTs) as well, which is a further concern for consumer safety. Although the first known NFT was established in May of 2014, NFTs didn’t really take-off until 2017. Due to the unique nature of NFTs (being either jpegs, real estate, etc.) the Securities and Exchange Commission (SEC), along with other regulatory authorities, still haven’t clearly laid out if NFTs are securities or what rules/regulations will apply. Unless securities are clearly at issue it is unclear if NFTs will fall under securities laws at this point in time. However, there is a potential way consumers can invest in NFTs related to real estate and still find protection through the SEC.
The Federal Trade Commission (FTC) recently proposed a ban on non-compete clauses in contracts between employers and their employees. The FTC estimates this ban could increase American earnings in the range of $300 billion per year, while also allowing for lateral movements across business sectors and more career opportunities for employees. The FTC’s primary mission is to protect both competition and consumers with this proposed ban. Through Section 5(a) of the FTC Act, the FTC has the power to investigate and prevent unfair methods of competition and unfair or deceptive acts or practices affecting commerce.
The Securities and Exchange Commission’s (SEC) new marketing rule will take effect on November 4, 2022. Advertising and solicitation regulations have undergone a major overhaul after decades of continuity. Further, testimonials and endorsements are no longer prohibited, but their use will be conditioned on compliance with certain provisions. The new rule only applies to financial adviser’s communications that are advertisements, as defined in the new rule.
On March 9, 2022, the U.S. Securities and Exchange Commission (SEC) proposed rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies. In an attempt to further protect against cybersecurity attacks and increase cyber transparency among issuers and investors President Biden signed into law the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). Before CIRCIA goes into effect, it requires the Cybersecurity and Infrastructure Security Agency (CISA) to complete mandatory rulemaking activities, to develop/publish a Notice of Proposed Rulemaking (NPRM), and a final rule. The SEC proposal and CIRCIA both have different implications, but both will increase cybersecurity regulations and procedures, even making employees more conscious of potential attacks.
The Securities and Exchange Commission (SEC) established the Environmental, Social, and Governance (“ESG”) Task Force in 2021. In March and May of 2022, the SEC proposed a disclosure rule “forcing publicly traded companies to disclose how climate change could threaten their businesses and describe their contributions to global warming.” The rule further accentuates the SEC’s mission “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” However, the proposal has faced substantial opposition, as some believe the proposal exceeds the SEC’s authority.