Category Archives: Investor Protection

Cryptoasset Developments: Observations on the Thawing Crypto Winter

by Kevin S. Schwartz, Rosemary Spaziani, David M. Adlerstein, Samantha M. Altschuler, and Sabina M. Beleuz Neagu

Photos of the authors

Left to right: Kevin S. Schwartz, Rosemary Spaziani, David M. Adlerstein, Samantha M. Altschuler and Sabina M. Beleuz Neagu (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

The U.S. cryptoasset industry just rang in the new year with the watershed SEC approval of the first spot ETFs for a digital asset.  With the approval of the first bitcoin Spot ETFs, making possible a path for millions of Americans to have direct bitcoin exposure in retirement and other traditional investment accounts, it is an appropriate time to reflect on significant recent developments that may shape the crypto industry in the year to come.

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SEC Marketing Rule Settlements Total 10 Before One Year Anniversary of Compliance Date

by Marc Berger, Michael Osnato, David Blass, and Meaghan Kelly

Photos of the authors.

From left to right: Partners Marc Berger, Michael Osnato, David Blass, and Meaghan Kelly. (Photos courtesy of Simpson Thacher & Bartlett LLP.)

On September 11, 2023, the SEC announced settled charges against nine registered investment advisers for violations of the Amended Marketing Rule (“Marketing Rule”) for advertising hypothetical performance to the general public on their websites without adopting and/or implementing policies and procedures required by the Marketing Rule. The advisers settled to anti-fraud charges (Section 206(4) of the Advisers Act) and violations of the performance section of the Marketing Rule (Rule 206(4)1-d). Two of the nine advisers also settled to related record-keeping violations. The advisers paid civil penalties ranging from $50,000 to $175,000 each, for a total amount of $850,000 in combined penalties. Continue reading →

SEC Proposes Rule to Eliminate or Neutralize Conflicts in the Use of “Predictive Data Analytics” Technologies

by Andrew J. Ceresney, Charu A. Chandrasekhar, Avi Gesser, Jeff Robins, Matt Kelly, Gary E. Murphy, Jarrett Lewis, Robert B. Kaplan, Marc Ponchione, Sheena Paul, Catherine Morrison, Julie M. Riewe, Kristin A. Snyder, and Mengyi Xu

Photos of the authors

Top left to right: Andrew J. Ceresney, Charu A. Chandrasekhar, Avi Gesser, Jeff Robins, Matt Kelly, Gary E. Murphy, and Jarrett Lewis.
Bottom left to right: Robert B. Kaplan, Marc Ponchione, Sheena Paul, Catherine Morrison, Julie M. Riewe, Kristin A. Snyder, and Mengyi Xu.
(Photos courtesy of Debevoise & Plimpton LLP)

On July 26, 2023, the U.S. Securities and Exchange Commission (“SEC”) issued proposed rules (the “Proposed Rules”) that would require broker-dealers and investment advisers (collectively, “firms”) to evaluate their use of predictive data analytics (“PDA”) and other covered technologies in connection with investor interactions and to eliminate or neutralize certain conflicts of interest associated with such use. The Proposed Rules also contain amendments to rules under the Securities Exchange Act of 1934[1] (“Exchange Act”) and the Investment Advisers Act of 1940[2] (“Advisers Act”) that would require firms to have policies and procedures to achieve compliance with the rules and to make and maintain related records.

In this memorandum, we first discuss the scope of the Proposed Rules and provide a summary of key provisions. We also discuss some key implications regarding the scope and application of the rules if adopted as proposed. The full text of the proposal is available here.

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