A broker-dealer agreed to settle FINRA charges for failing to conduct an independent test of its anti-money laundering ("AML") compliance program, in violation rules. FINRA Rule 3310(c) and Rule 2010 require independent testing of an AML program on an annual basis. According to the Letter of Acceptance, Waiver and Consent, Gelband & Co., Inc. ("Gelband") testing carried out for calendar years 2014, 2015, 2016 and 2017 was conducted by the firm's compliance officer or persons who reported to him. As a result, the testing was not "independent." To settle the charges, Gelband agreed to pay a fine

The SEC named the inaugural members of the newly formed Small Business Capital Formation Advisory Committee. The committee was created to establish a formal mechanism for the SEC to “receive advice and recommendations” on SEC rules and other policy matters affecting small businesses.

The Consumer Financial Protection Bureau ("CFPB") modified its policies concerning civil investigative demands ("CIDs"). The updated policy requires that CIDs provide more information about "potentially wrongful conduct under investigation" and applicable law that may have been violated. Going forward, CIDs will also specify the business activities that are subject to the CFPB's authority. The new policy takes into consideration recent court rulings relating to "notifications of purpose" and is consistent with comments that the CFPB received on several aspects of its operations.

A broker-dealer and one of its supervisors agreed to settle FINRA charges for allegedly failing to implement an adequate supervisory system to comply with FINRA's suitability rule. The failure allowed two registered representatives to recommend "excessive and unsuitable trades" in several customer accounts. According to the Letter of Acceptance, Waiver and Consent, Buckman, Buckman & Reid, Inc. ("BBR") and one of its supervisors failed to (i) identify that a registered representative had conducted "frequent and short-term trading of Unit Investment Trusts and other long-term investments with

An CFTC final rule allowing exceptions from the requirement that "covered persons" ( i.e., futures commission merchants, retail foreign exchange dealers, CTAs, CPOs, introducing brokers, major swap participants and swap dealers) send customers annual privacy notices was published in the Federal Register. (See here for previous coverage). The final rule will become effective on May 28, 2019.