The SEC and Its New Marketing Rule: Testimonials and Endorsements
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.
The Clock Continues to Tick for SEC Climate Proposal
Juhi Desai Associate Editor Loyola University Chicago School of Law, JD 2024 In March 2022, the U.S. Securities and Exchange Commission (SEC) released a 490-page proposal encouraging organizations to adopt climate-focused regulations. The policies could include climate disclosure requirements and an expense report detailing the effect climate change has on businesses. However, shortly after the …
Climate-Related Disclosures for Investors: What the SEC Has Proposed & How Proposals May Impact the Regulatory World and Small Businesses
In March of this year, the Securities and Exchange Commission (SEC) proposed a new rule that would require public companies to disclose important information about their carbon footprint. Although many continue to sing the praises of the new rule, a fair share of critics has emerged as well. Additionally, while this proposal may have an impact on large public companies, critics question what this rule will mean for smaller suppliers.
Jarksey v. SEC and the Future of Administrative Adjudications
On May 18, 2022, the United States Court of Appeals for the Fifth Circuit issued a novel and divisive decision that greatly restricts the administrative enforcement powers of the SEC and its use of Administrative Law Judges (ALJs) in Jarksey v. SEC. Although much deliberation has been had over the implications and immediate impact of this ruling, the takeaway is that the Securities and Exchange Commission (SEC) may be facing significant challenges to its internal enforcement procedures in the near future.
SEC Looks to Modernize the Fund Names Rule
On May 25th, 2022, the Securities and Exchange Commission (SEC) issued a proposal to the Investment Company Act of 1940 Rule 35d-1 which expands on a rule that mostly regulates fund names. The SEC has decided to take these measures to combat “greenwashing”; a marketing ploy used by fund investors to draw in socially conscious investors for investments that are anything but sustainable. The SEC believes investors lack comparable, consistent, reliable information on ESG products. This article will discuss these new proposals and what they mean for important stakeholders.
The SEC and Its ESG Investment Disclosure Proposal
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.
Is Stablecoin Really Stable?
On June 22nd, ten-year-old Yuna was reported missing by her teachers. Just one week later, the police discovered a sedan in the southernmost coast of South Korea, two hours away from Yuna’s home. The three bodies recovered belonged to Yuna and her parents, both in their thirties. The police suspected suicide. Among the parent’s last online searches included “LUNA,” “sleeping pills,” and “how to commit suicide.” Evidence further suggested that Yuna’s parents were unemployed, invested their lives savings into the cryptocurrency market, and struggled from financial debt of $100,000.
Online Daily Fantasy Sports – Gambling or Derivatives Trading?
Patrick Gilsenan Senior Editor Loyola University Chicago School of Law, Weekend JD Dec. 2022 The question of why it’d be legal to gamble in the stock market but not the Super Bowl has been made moot in recent years. In the wake of recent Supreme Court decisions and state legalization, sports betting is widespread and …
Stablecoins III: The Stablecoin TRUST Act of 2022
On Wednesday, April 6, 2022, Senator Pat Toomey of Virginia released a discussion draft of the Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022, also known as the Stablecoin TRUST Act (“the TRUST Act”). This new legislation, introduced in the United States Senate, aims to create a three-pronged regulatory framework for the issuers of stablecoins in the United States. Like similar bills on the topic of stablecoin, such as the Stablecoin Innovation and Protection Act of 2022, the bill is short at only fourteen pages long. Where the bills differ is immediately noted in the more robust definitions section of the TRUST Act which lays out a six-part definition of “payment stablecoins” that covers the design intent of a stablecoin, who can issue a stablecoin, whether the holder can inherently earn interest, and where the stablecoin transactions are recorded.
Judge Scrutinizes Wells Fargo and FINRA Over Arbitration Selection Process
Throughout the history of the financial services industry, broker-dealers and investment advisory firms have typically required harmed investors to dispute matters through arbitration rather than the court system. Arbitration disputes between broker-dealers and former clients are generally kept confidential and decided by a purportedly impartial three-person panel; the panels are hand-selected by the parties from a randomly generated list of arbitrators employed by the Financial Industry Regulatory Authority (FINRA). FINRA utilizes a computer algorithm, the Neutral List Selection System (NLSS), which creates a list of potential arbitrators to review the matter based on the type of case. However, a recent court decision overturning a 2019 FINRA arbitration award in favor of Wells Fargo has flooded the financial services industry with widespread allegations of fraud and misconduct. In addition to vacating the arbitration award, Fulton County Superior Court Judge Belinda Edward criticized FINRA’s arbitration selection procedures as well as Wells Fargo for their role in altering the process. Wells Fargo is set to appeal the decision while FINRA now faces immense regulatory pressure to address its failure to facilitate a fair arbitration selection process.