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FCA’s New Listing Rules and Digital Securities Sandbox: Insights from Sarah Pritchard’s Speech
On 6 September 2024, Sarah Pritchard, the Executive Director of Markets and International at the UK’s Financial Conduct Authority (UK FCA), addressed the Capital Markets Industry Taskforce, presenting the UK FCA’s reform agenda aimed at strengthening the UK's position in global wholesale markets. Pritchard discussed the recent overhaul of the UK’s listing rules, which arguably is one of major changes in over 30 years. These Listing rules reforms are intended to streamline the listing process, reduce regulatory burdens, and attract more companies to the UK’s capital markets. The new rules, which came into effect on 29 July 2024, simplify the regulatory framework while maintaining high standards of corporate governance and disclosure. Pritchard emphasized that the goal is to empower investors with the right information to make informed decisions rather than enforcing a one-size-fits-all regulatory regime. In addition to the listing rule reforms, Pritchard elaborated on the UK FCA’s...
United Texas Bank Issued Cease and Desist Order by Federal Reserve U.S.A.
On 4 September 2024, the Board of Governors of the Federal Reserve System announced enforcement action against the United Texas Bank. The Federal Reserve and the Texas Department of Banking issued a Cease and Desist Order against United Texas Bank, headquartered in Dallas, Texas on 29 August 2024 in relation to foreign correspondent banking and virtual currency customers. The order followed an extensive examination of the bank, which revealed non compliance in the institution's corporate governance, risk management, and compliance with federal anti-money laundering (AML) laws, as well as the Bank Secrecy Act (BSA). These deficiencies, identified in a review conducted by the Federal Reserve Bank of Dallas and the Texas Department of Banking, required immediate regulatory action to safeguard the financial system. United Texas Bank is a Texas state-chartered bank and a member of the Federal Reserve System. On 22 May 2023, an examination was conducted by the Federal Reserve Bank of...
WazirX Parent Zettai Pte. Ltd. Court Proceedings Update: Moratorium Hearing Scheduled for 25 September 2024
On 3 September 2024, a case conference was convened in the General Division of the Singapore High Court concerning Zettai Pte. Ltd., the parent entity of WazirX, in relation to its application for a six-month moratorium. The application, prompted by the company’s financial difficulties arising from a USD 234 million cyberattack on WazirX, seeks to stay all legal proceedings and enforcement actions against the company while it undergoes restructuring. At the conference, the Court scheduled the matter for hearing on 25 September 2024, at which Zettai will present arguments in support of the moratorium, aimed at allowing the company time to reorganize its affairs and engage in negotiations with its creditors. The moratorium, if granted, would provide Zettai with the breathing space needed to reorganize its operations without facing immediate legal challenges from creditors or other parties. The court has set deadlines for submissions in preparation for the hearing. Zettai was instructed...
CFTC Orders Uniswap Labs to pay $175K Penalty for Breaking the Rules in DeFi Dealings
On September 4, 2024, the Commodity Futures Trading Commission (CFTC) issued an Order Instituting Proceedings and imposed remedial sanctions against Universal Navigation Inc., operating as Uniswap Labs. The action was taken due to Uniswap Labs’ violation of the Commodity Exchange Act (CEA) for offering and facilitating off-exchange leveraged token transactions to retail customers who were not Eligible Contract Participants (ECPs). During the period from March 2021 to September 2023, Uniswap Labs allowed users to trade digital assets, including leveraged tokens, through its decentralized protocol on the Ethereum blockchain. These transactions were conducted without the necessary regulatory compliance, leading the CFTC to impose penalties and enforce corrective measures. Uniswap Labs settled the case without admitting or denying the allegations, agreeing to pay a $175,000 civil penalty and to cease further violations of the CEA. The case between Universal Navigation Inc., operating as...
SEC Charges Six Credit Rating Agencies with $49 Million in Penalties for Recordkeeping Failures
On 3 September 2024, the U.S. Securities and Exchange Commission (US SEC) charged six nationally recognized statistical rating organizations for failing to maintain and preserve electronic communications as required under federal securities laws. The firms, including Moody’s, S&P Global Ratings, and Fitch Ratings, admitted to the violations and agreed to pay a total of over $49 million in penalties. These charges stem from recordkeeping failures that hindered the US SEC’s ability to ensure compliance with regulatory obligations, prompting the firms to implement compliance reforms. The SEC has imposed a $1 million fine on A.M. Best Rating Services, Inc. for failing to retain key business communications related to credit rating activities, in violation of federal securities laws. The company allowed employees, including senior staff, to use personal devices for business communication, bypassing recordkeeping rules since 2020. A.M. Best agreed to the cease-and-desist order, admitted...
MAS Issues Prohibition Order Against Former Broker Involved in Market Misconduct
On 3 September 2024, the Monetary Authority of Singapore (MAS) issued a five-year prohibition order (PO) against Mr. Chong Yew Mun Alan, a former representative of RHB Securities (Singapore) Pte. Ltd. The order was made following Mr. Chong’s conviction for market misconduct offences under the Securities and Futures Act (SFA), relating to false trading in the shares of Catalist-listed Koyo International Limited. Between December 2015 and January 2016, Mr. Chong had participated in a scheme devised by Mr. Lin Eng Jue to create a misleading impression regarding the price of Koyo shares. Acting on Mr. Lin’s instructions, Mr. Chong traded Koyo shares in 15 different trading accounts using login credentials that were not his own. The brokerage firms involved were not aware of or had not consented to Mr. Chong’s trades being placed on behalf of the account holders, which contributed to the false appearance of rising share prices for Koyo. The market-rigging activities culminated in Mr....
U.S. Court Orders $230 Million in Penalties for Fraud in Commodity and Digital Asset Trading
On 3 September, 2024, the Commodity Futures Trading Commission (CFTC) announced the penalty imposed by Judge Mary Rowland of the United States District Court for the Northern District of Illinois in the case of Commodity Futures Trading Commission v. Jafia LLC, Sam Ikkurty (a/k/a Sreenivas I. Rao), and Ravishankar Avadhanam. The final judgment was delivered on 22 July 2024 in the above mentioned matter related to a Ponzi scheme disguised as crypto and carbon investment funds. The court imposed permanent injunction on the defendants from engaging in any commodity interests or digital asset transactions, and imposed financial penalties, including a restitution obligation of $83,757,249, disgorgement of $36,967,285, and a civil monetary penalty of $110,901,855, for violations of the Commodity Exchange Act (CEA). The case was lodged by CFTC against the defendants for operating fraudulent investment schemes involving commodities and digital assets. The defendants, Sam Ikkurty, Jafia LLC,...
WazirX Parent Company Seeks Moratorium in Singapore High Court Amid Financial Crisis
On 27 August 2024, Zettai Pte. Ltd., the parent company of the cryptocurrency exchange WazirX, filed an application with the Singapore High Court seeking a moratorium under Section 64 of the Insolvency, Restructuring, and Dissolution Act 2018. The application, registered as Case No. HC/OA 861/2024, aims to secure a six-month halt on any winding-up resolutions and legal proceedings against the company as it undergoes a restructuring process. The moratorium application, submitted without notice, requests the Court to prevent any ongoing or new legal actions, including those before courts, arbitral tribunals, or administrative agencies, from proceeding against Zettai during this period. Additionally, the application seeks to restrict any execution, distress, or other legal processes against Zettai’s property unless expressly permitted by the Court. The moratorium, if granted, would provide Zettai with temporary relief from legal actions and financial obligations, giving the company a...
ADGM Introduces Consultation Paper for Fiat-Referenced Stablecoin Issuers
On 20 August, 2024, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) issued Consultation Paper No. 7, proposing a regulatory framework for the issuance of Fiat-Referenced Tokens (FRTs). This paper outlines regulations for these tokens. FRTs are stablecoins backed by high-quality, liquid assets denominated in a single fiat currency. The proposed paper addresses key areas such as reserve asset requirements, redemption rights, capital adequacy, and governance to ensure that FRTs are issued and managed in a manner that promotes financial stability, transparency, and consumer protection within the ADGM. While the FSRA had previously established guidelines for virtual assets, the FRTs necessitate a tailored regulatory approach. Unlike other stablecoins that may be backed by volatile assets, FRTs are intended to maintain a stable value by being backed by high-quality, liquid assets denominated in the same currency as the token to ensure their use as a...
Hong Kong Monetary Authority Imposes Penalty on WeChat Pay Hong Kong for Anti-Money Laundering Failures
The Hong Kong Monetary Authority (HKMA) has concluded its investigation into WeChat Pay Hong Kong Limited (WPHK), resulting in a HK$875,000 penalty for violations under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO). The penalty was imposed for WPHK's failure to meet the required standards under section 6(2)(b) of Part 2 of Schedule 3 of the Ordinance, concerning anti-money laundering (AML) and counter-financing of terrorism (CFT) controls. The disciplinary action follows a self-report from WPHK and an ensuing investigation by the HKMA, which uncovered lapses in WPHK's compliance practices between August 25, 2016, and October 24, 2021. During this period, WPHK failed to conduct customer due diligence (CDD) and apply enhanced due diligence (EDD) measures, particularly in high-risk scenarios involving potential money laundering and terrorist financing risks. The HKMA's investigation revealed that WPHK did not properly categorise certain law enforcement agency...
CFTC Approves Kalshi Klear LLC Refistration as DCO: New Era of Event-Based Trading in the Financial Markets
On 29 August 2024, the Commodity Futures Trading Commission (CFTC) granted Kalshi Klear LLC an Order of Registration as a derivatives clearing organisation (DCO) under the Commodity Exchange Act (CEA). Kalshi's affiliate, KalshiEx LLC, was already registered as a designated contract market, and now it’s another subsidiary is designated as a DCO which expands its operational capabilities. Kalshi Klear is the first exchange regulated by the CFTC to focus on trading the outcomes of future events. They have developed a new asset class known as event contracts which allows participants to trade on a wide range of topics, from inflation and federal rates to government shutdowns and Supreme Court decisions. This platform enables individuals and institutions to hedge against risks directly related to their concerns and capitalise on their opinions about future events. Kalshi's platform introduces trading by allowing market participants to take Yes or No positions on whether specific events...
Latvijas Banka invites Pre-Licensing Consultations Ahead of New EU Regulations
On 29 August 2024, the Bank of Latvia extended an invitation to crypto-asset service providers (CASPs) and consulting service providers to engage in pre-licensing consultations as they prepare to comply with the forthcoming European Union (EU) Markets in Crypto-Assets Regulation (MiCA). This new regulation, set to take effect on December 30, 2024, will introduce a unified regulatory framework across the EU for the crypto-asset industry. One of the key requirements under MiCA is that all crypto-asset service providers must obtain an operating permit to conduct their business within the EU. Latvijas Banka, in preparation of the formal application process that begins in January 2025, is offering these pre-licensing consultations to help companies understand the regulatory requirements and prepare their applications. The aim of this initiative is to allow companies to gain a clear understanding of the regulatory requirements, the necessary documentation, and the compliance standards they...
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