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The regulator begins a big purge on Wall Street.
The US Securities and Exchange Commission (SEC) has unveiled a plan for inspections of market participants for 2025. The regulator intends to tighten control over modern technologies and strengthen the protection of investors from unfair practices.
The SEC's audit department will focus on monitoring financial companies' compliance with fiduciary obligations to customers. The focus will be on recommendations for:
Broker-dealers will have a detailed check of the CRS form. The regulator will check how companies:
The SEC will pay close attention to the cybersecurity of market participants. The Commission will review compliance with the requirements of Regulations S-ID and S-P, as well as the recently adopted rules that reduced the standard settlement cycle for most securities to the T+1 format.
For the first time, the organization will concentrate so seriously on the latest technologies. She intends to scrutinize how companies implement automated investment tools, artificial intelligence, and trading algorithms. The risks of using non-traditional data sources will be assessed separately.
The SEC Whistleblower Program will help identify violations. Anyone will be able to anonymously tell how companies violate securities laws and receive a monetary reward for this.
Compliance specialists also had the opportunity to participate in the program on special terms. Usually, employees whose work is related to compliance or internal audit are not allowed to participate. However, thanks to the "120-day rule", the compliance officer can report a violation if he first raises the issue within the company and waits 120 days before contacting the Commission.
Since the SEC cannot inspect every supervised entity every year, whistleblowers become indispensable assistants in identifying and preventing violations.
Potential whistleblowers are advised to consult with lawyers who understand the intricacies of the SEC Whistleblower program before applying.
Source
The US Securities and Exchange Commission (SEC) has unveiled a plan for inspections of market participants for 2025. The regulator intends to tighten control over modern technologies and strengthen the protection of investors from unfair practices.
The SEC's audit department will focus on monitoring financial companies' compliance with fiduciary obligations to customers. The focus will be on recommendations for:
- high-risk products
- Non-Traditional Instruments
- illiquid assets
- instruments sensitive to interest rate fluctuations
Broker-dealers will have a detailed check of the CRS form. The regulator will check how companies:
- describe their services to retail customers
- report commissions and costs
- explain possible conflicts of interest
- talk about their disciplinary violations
The SEC will pay close attention to the cybersecurity of market participants. The Commission will review compliance with the requirements of Regulations S-ID and S-P, as well as the recently adopted rules that reduced the standard settlement cycle for most securities to the T+1 format.
For the first time, the organization will concentrate so seriously on the latest technologies. She intends to scrutinize how companies implement automated investment tools, artificial intelligence, and trading algorithms. The risks of using non-traditional data sources will be assessed separately.
The SEC Whistleblower Program will help identify violations. Anyone will be able to anonymously tell how companies violate securities laws and receive a monetary reward for this.
Compliance specialists also had the opportunity to participate in the program on special terms. Usually, employees whose work is related to compliance or internal audit are not allowed to participate. However, thanks to the "120-day rule", the compliance officer can report a violation if he first raises the issue within the company and waits 120 days before contacting the Commission.
Since the SEC cannot inspect every supervised entity every year, whistleblowers become indispensable assistants in identifying and preventing violations.
Potential whistleblowers are advised to consult with lawyers who understand the intricacies of the SEC Whistleblower program before applying.
Source
