CFTC Orders Major Penalties for Recordkeeping Supervision and Communication Failures at Truist Bank, TD Bank, and Cowen
On 14 August 2024, the Commodity Futures Trading Commission (CFTC) handed down substantial penalties to Truist Bank, TD Bank, and Cowen for serious lapses in recordkeeping, supervisory practices, and the use of unapproved communication channels, such as personal text messages, violated federal regulations.
- Truist Bank, based in North Carolina, was fined $3 million after it was discovered that the bank failed to maintain essential records, violating both internal policies and federal regulations.
- TD Bank received a $4 million fine for its inadequate supervision of electronic communications, leading to a significant gap in oversight over several years.
- Both TD Bank and Cowen were additionally penalized for permitting the use of personal communication methods, which impeded regulatory monitoring and compliance.
To read this news in detail click here
SEC Charges 26 Financial Firms $392 Million for Widespread Recordkeeping Failures
On 14 August 2024, the Securities and Exchange Commission (SEC) through its enforcement action imposed penalties totaling $392.75 million against 26 financial firms for failures in maintaining and preserving electronic communications.
- The firms include major players like Ameriprise Financial and RBC Capital Markets, were found to have used unapproved communication methods more commonly known as “off-channel communications” resulting in the loss of critical evidence and records required for regulatory oversight. Refer to the link to find out the list of all the companies.
- Penalties varied based on the level of cooperation from each firm, with some receiving reduced fines for voluntarily disclosing their violations.
- The recordkeeping failures were not isolated incidents but were found to be systemic, involving personnel at multiple levels of authority, including senior management and supervisors.
To read this news in detail click here
Nasdaq ISE Withdraws Proposals to Trade Bitcoin and Ether Trust Options Following Extensive SEC Deliberations
On 15 August 2024, Nasdaq ISE LLC withdrew its proposals to amend trading rules to allow the listing and trading of options on units representing interests in trusts that hold Bitcoin and Ether, following detailed deliberations by the Securities and Exchange Commission (SEC).
- The proposals, initially designed to integrate digital assets into mainstream financial markets, faced considerable regulatory hurdles due to the SEC’s cautious approach to cryptocurrency products.
- Under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4, any proposed rule change by a self-regulatory organization must be filed with the SEC and is subject to review and approval.
- The withdrawal is a setback for the cryptocurrency sector in ,idst of the ongoing regulatory challenge in bringing digital assets into established traditional financial system.
To read this news in detail click here
Goldman Sachs Embraces Bitcoin ETFs Despite Previous Scepticism; Hedge Funds Bullish on Crypto Miners
On 15 August 2024, Goldman Sachs officially disclosed substantial investments in Bitcoin exchange-traded funds (ETFs) in its quarterly 13F filing, which demonstrates a shift from its previously skeptical stance on cryptocurrencies.
- The bank now holds significant positions in several Bitcoin ETFs, with a total investment of $418 million, including major stakes in the iShares Bitcoin Trust and Fidelity’s Bitcoin ETF.
- Despite the bank’s significant investments in Bitcoin ETFs, its past statements have often reflected a cautious, if not outright dismissive, attitude towards cryptocurrencies.
- Hedge funds like Millennium Management, holds over $1.1 billion worth of shares in various Bitcoin ETFs have aggressively increased their exposure to Bitcoin ETFs and crypto mining companies, driven by the intersection of AI and cryptocurrency mining.
- Despite the inherent volatility of the crypto market, the ongoing investments by major financial institutions indicate a growing belief in the long-term potential and transformative impact of digital assets on the global financial landscape.
To read this news in detail click here
IMF Advocates for Higher Energy Taxes on Crypto Miners and Data Centers to Curb Carbon Emissions
On 15 August 2024, the International Monetary Fund (IMF) published a blog proposing significant increase in energy taxes aimed specifically at cryptocurrency miners and AI data centers to curb carbon emissions and make a way forward to a sustainable future
- The IMF’s blog strongly suggests increasing electricity prices for crypto mining by 85% could generate an additional $5.2 billion annually while reducing carbon emissions by 100 million tons, equivalent to the yearly emissions of Belgium.
- The economists emphasize the energy-intensive nature of both crypto mining and AI processing, drawing attention to the environmental impact of these rapidly growing industries.
- Countries like Sweden and Norway are already taking steps to promote renewable energy use in cryptocurrency mining, and the European Union is exploring stricter environmental regulations for data centers and crypto operations.
To read this news in detail click here
Google Faces $5 Million Lawsuit Over Malicious Crypto Wallet App on Play Store
On 15 August 2024, Google was hit with a $5 million lawsuit filed by Maria Vaca, who claims that a fraudulent crypto wallet app downloaded from the Google Play Store led to the loss of her entire savings.
- What’s the extent of Google’s responsibility in vetting and ensuring the security of financial apps available on its platform, especially those handling sensitive transactions like cryptocurrency?
- Vaca trusted the app due to its presence on the Play Store, but shortly after installation, it turned out to be malicious, leading to a substantial loss of digital assets.
- The case establishes the broader implications for tech giants like Google in safeguarding their users against increasingly sophisticated digital fraud, particularly in the field of cryptos and NFTs.
To read this news in detail click here
MAS Issues 1-Year Prohibition Order Against Former HSBC Representative Mr. Aw Jun Ray Reko Corinthians
On 19 August 2024, the Monetary Authority of Singapore (MAS) announced the issuance of a one-year prohibition order against Mr. Aw Jun Ray Reko Corinthians, a former representative of HSBC Bank, for serious misconduct.
- The prohibition order bars Mr. Aw from engaging in any financial advisory services and from holding key positions in financial firms regulated under the Financial Advisers Act (FAA) and the Securities and Futures Act (SFA).
- Under Section 32(2)(b) of the FAA 2001, any individual who, in connection with their principal’s lodgment of any document, omits to state any matter or thing that results in the document being misleading in a material respect, is guilty of an offence. The penalty for such an offence includes a fine of up to $50,000.
- Section 99O(2)(b) of the SFA 2001 outlines that individuals who fail to disclose material information, leading to a misleading document, are liable to the same penalty.
- Individuals holding positions of trust and responsibility, such as financial advisors, are expected to adhere to the highest standards of conduct.
To read this news in detail click here
MAS Issues Nine-Year Prohibition Order Against Former OCBC Bank Representative Mr. Hoi Wei Kit
On 19 August 2024, the Monetary Authority of Singapore (MAS) issued a nine-year prohibition order against Mr. Hoi Wei Kit, a former OCBC Bank representative, following his conviction for multiple serious offenses including fraud and money laundering.
- The prohibition order, bars Mr. Hoi from providing any financial advisory services, participating in the management, acting as a director, or becoming a substantial shareholder of any financial advisory firm under the FAA for a period of nine year.
- Mr. Hoi, convicted of five counts of cheating under section 420 of the Penal Code, one count of acquiring benefits from criminal conduct under section 47(1)(c) of the CDSA, and one count of giving false information to a public servant.
- Mr. Hoi was found guilty of defrauding customers by falsely claiming that OCBC was offering time deposit accounts, leading to significant financial losses for the victims.
- MAS has zero-tolerance policy towards financial misconduct, especially when it involves a breach of trust with clients.
To read this news in detail click here
MAS Reaffirms Commitment to Safeguarding Customer Data Amid Growing Concerns
On 19 August 2024, in response to rising concerns about the protection of customer data, the Monetary Authority of Singapore (MAS) reaffirmed its commitment to enforcing stringent data protection measures among financial institutions.
- This follows a letter by Dr. Pei Sai Fan, published in Lianhe Zaobao on 10 August 2024, which called for enhanced protection of citizens’ data held by insurance companies and other financial institutions.
- MAS emphasized that all financial institutions, including insurers, must implement robust IT security policies to prevent unauthorized access or disclosure of customer data.
- The regulatory framework also includes compliance with the Personal Data Protection Act (PDPA), ensuring that personal data is only used for legitimate purposes or with explicit consent.
- This strong stance by MAS is aimed at maintaining public trust in Singapore’s financial system, particularly in an era of increasing cyber threats.
To read this news in detail click here
CFTC Orders Houston-Based Firm and Managing Member to Pay Over $520,000 for Forex Fraud Violations
On 20 August 2024, the Commodity Futures Trading Commission (CFTC) ordered Get Money Tradez LLC and its managing member, Jeffrey Carmon Jr., to pay over $520,000 in penalties and restitution for engaging in a fraudulent forex trading scheme and soliciting nearly $1 million from 19 unsuspecting participants, only to misappropriate significant portions of those funds for personal use.
- The CFTC’s enforcement action includes a permanent trading ban for Carmon and the firm, reinforcing the agency’s commitment to protecting the integrity of the financial markets.
- Get Money Tradez LLC had commingled pool funds and failed to register as required under the Commodity Exchange Act (CEA).
- This case involves combating sophisticated financial fraud by stricter ongoing reqyurements and the importance of regulatory oversight in safeguarding investors.
To read this news in detail click here
SEC Issues 2025 Fee Adjustment Order: Impacts Traditional and Crypto Securities Alike
On 20 August 2024, the U.S. Securities and Exchange Commission (SEC) issued “Order Making Fiscal Year 2025 Annual Adjustments to Registration Fee Rates” adjusting the registration fee rates for fiscal year 2025, which will take effect on 1 October 2024.
- The new fee rate of $153.10 per million dollars of securities registered is designed to align with the SEC’s regulatory needs in overseeing a dynamic and complex financial market.
- The adjusted fee rate will lead to increased costs for these companies as they prepare to issue new securities. For large corporations issuing substantial amounts of securities, this could mean a significant increase in their regulatory costs.
- This adjustment will affect both traditional financial institutions and crypto and DeFi entities particularly those whose tokens or digital assets have been classified as securities by the SEC, requiring them to adapt to the new cost structure associated with registering securities.
To read this news in detail click here
SEC Approves Updated PCAOB Audit Standards: Addresses Auditor Responsibilities, Contributory Liability Rule, and Technology Use
On 20 August 2024, the SEC approved updates to PCAOB audit standards, effective from 15 December 2024, focusing on auditor responsibilities, technology-assisted audit tools, and shifting contributory liability from recklessness to negligence.
- These changes include revisions to the general responsibilities of auditors, the integration of technology-assisted data analysis in audit procedures, and amendment to the PCAOB’s contributory liability rule.
- the shift in the contributory liability rule from recklessness to negligence is aimed to rectify negligence-based professional conduct standard
- Auditors and associated persons within audit firms will now need to exercise heightened diligence in their review and reporting processes, as any lapses could result in legal and professional consequences under the revised standards.
- The inclusion of technology-assisted tools in audit procedures is effective especially for industries like cryptocurrency, where transactions are inherently digital and often involve Distributed ledger technology.
To read this news in detail click here
Tether Announces Launch of Dirham-Pegged Stablecoin
On 20 August 2024, Tether, the world’s largest issuer of stablecoins, announced the launch of a new stablecoin pegged to the UAE Dirham (AED), in collaboration with UAE-based companies, backed by liquid reserves within the UAE.
- This development is a result of collaboration between Tether and UAE-based companies Phoenix Group and Green Acorn Investments, aiming to introduce a digital asset fully backed by liquid reserves within the UAE.
- The launch of the Dirham-pegged stablecoin is part of the UAE’s plan to integrate Distributed ledger technology into its financial ecosystem, so that businesses and vendors in the UAE only accept crypto payments backed by Dirham-pegged tokens, as mandated by the UAE Central Bank’s Payment Token Services Regulation (PTRS).
- This stablecoin is expected to enhance financial transactions in the UAE and internationally, aligning with the UAE’s vision to become a leader in digital finance and blockchain innovation.
- UAE’s broader vision of becoming a leader in digital finance, supported by the establishment of the Virtual Asset Regulatory Authority (VARA) and the emergence of Dubai and Abu Dhabi as global innovation hubs for crypto assets and blockchain technology.
To read this news in detail click here
SEC Updates Definition of Qualifying Venture Capital Funds with Inflation Adjustment
On 21 August 2024, the SEC raised the threshold for “qualifying venture capital funds” from $10 million to $12 million, under the Investment Company Act of 1940,adjusting for inflation as mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA).
- Designed to maintain the effectiveness of the regulatory exemption for venture capital funds, allowing them to operate with greater flexibility and free from the more stringent regulations that apply to traditional investment companies.
- The SEC’s structured approach for future inflation adjustments, reassesses the threshold every five years based on the Personal Consumption Expenditures Chain-Type Price Index (PCE Index).
- This adjustment allows smaller and emerging venture capital funds, including those in the crypto sector, to raise more capital while maintaining regulatory exemptions, ensuring flexibility in their operations.
To read this news in detail click here
