The FINRA 6500 Series proposal seems to confirm the view that the use of rehypothecated securities by a broker-dealer, in order to make delivery into a customer short sale, would not be a reportable transaction. (See, Regulatory Intelligence commentary .) This is because the FINRA Rules specifically do not require disclosure of the name of a customer from whom a broker-dealer borrows full-paid or excess margin securities, although the loan itself is reportable. It is therefore…

If the SEC is going to assert that Ethereum is a security, and do so by way of enforcement action rather than by a reasoned statement as to why the agency takes that view, it is impossible to describe the SEC's conduct as anything other than regulation by enforcement. The CFTC has taken the view for over four years that Ethereum is a commodity. (See, e.g., ). What has the SEC been doing these four years if it disagreed with the CFTC? This is not how regulators should work. (But see,…

This is one of a series of actions that the SEC has brought against entities that (i) purchase convertible debt from penny stock companies, (ii) convert the debt into equity at a significant discount from the "market price" of the stock (after a holding period) and (iii) sell the debt to presumably unsophisticated individual investors. (See also ; .)

Some in the industry have viewed these cases as controversial and as somehow providing support for - or related to - the…

Commissioner Johnson says that there should be "heightened penalties" for the use of AI to engage in fraud. Why? Shouldn't the penalties be reflective of the fraud and not of the use of AI? It seems absurd to argue that penalties should be set at a lower level for fraud that does not use AI, but that is the flip side of Commissioner Johnson's argument. Rather than treating AI as an overwhelming threat to the financial system that is fundamentally different from all else (fraud is bad, and…