Topics covered in this issue include:
SEC Clarifies Rules, Enforcement Approach on Digital AssetsAs enforcement activity intensifies in the space of digital assets, the SEC’s FinHub has published a framework that clarifies when digital assets might be considered as securities. Additionally, the SEC’s Division of Corporation Finance issued a no-action letter in a matter involving digital assets.
- Income Inclusions From a Controlled Foreign Corporation or Passive Foreign Investment Company are “Good” Income for a Regulated Investment Company, Even if Not DistributedRecently-finalized, regulations provide that, in determining whether a corporation is a regulated investment company, amounts the corporation is required to include in income as a result of its investment in foreign corporations will qualify as “good income” even if those amounts are not distributed to the corporation.
- Accountable for the "Black Box": A Primer on the Regulation of AI in Financial Services
As securities regulators implement new regulatory obligations for robo-advisers and algorithmic traders, good governance is key to maintaining accountability and demonstrating oversight of AI decisions. Since this area is changing quickly, advisers and traders should also monitor developments in the EU that might impact regulatory decisions and AI use in the U.S.
SEC Simplifies Disclosure Requirements to Further FAST Act MandateThe SEC has overhauled disclosure requirements to eliminate redundancy, introduce flexibility, promote efficiency and integrate the use of technology in various filings. While these were intended to reduce the regulatory burden on certain companies targeted by the FAST Act, they streamline disclosure for a large number of registrants and bring more flexibility to securities law generally.
- OCIE Issues Risk Alert Urging Investment Advisors, Brokers-Dealers to Adhere to Privacy GuidelinesThe SEC’s Office of Compliance Inspections and Examinations observed certain cybersecurity deficiencies with registrants that could put customer information at risk. While many registrants have policies in place, proper implementation and governance remains a challenge for some.