Tag Archives: Robin M. Bergen

SEC Staff Play the Hits: 2024 Exam Priorities Focus on Private Funds, Marketing and Crypto

by Robin M. Bergen, Elizabeth Lenas, Amber V. Phillips, and Anna Bintinger

Photos of the authors

From left to right: Robin M. Bergen, Elizabeth Lenas, Amber V. Phillips, and Anna Bintinger (Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

The U.S. Securities and Exchange Commission (“SEC”) Division of Examinations (the “Division”) released its 2024 examination priorities on October 16, 2023 (the “2024 Priorities”), launching a new release schedule to align with the fiscal year. As in the 2023 examination priorities (the “2023 Priorities”), private fund advisers received special focus, with broad topic areas spanning both the existing Staff sweeps on custody, marketing and artificial intelligence, as well as renewed scrutiny of valuations and investment processes.  Despite its release causing much fanfare, there was surprisingly little overlap between the 2024 Priorities and the newly adopted Private Fund Adviser Rules; the focus on fees and expense allocation carried over from the Private Fund Adviser Rules, and the Division picks up a theme from its adopting release by taking a shot at limited partnership advisory committees (“LPACs”) and compliance with private fund governance procedures. 

The 2024 Priorities address private funds; standards of conduct (particularly fiduciary duties and conflicts of interest); information security and operational resiliency; emerging technologies and crypto; regulation systems compliance and integrity; broker dealers and exchanges; anti‑money laundering; oversight of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board programs and policies; and oversight of municipal advisers, security-based swap dealers and transfer agents.

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SEC Proposes Rules Limiting the Use of Artificial Intelligence by Registered Investment Advisers and Broker-Dealers

by Robin M. Bergen, Brant K. Brown, James R. Burns, Jennifer Kennedy Park, Rahul Mukhi, and Mohit Rathi

Photos of the authors

Robin M. Bergen, Brant K. Brown, James R. Burns, Jennifer Kennedy Park, Rahul Mukhi, and Mohit Rathi (photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

On July 26, 2023, the Securities and Exchange Commission (“SEC”) proposed new rules targeting the use of predictive data analytics and artificial intelligence (“AI”) by registered investment advisers (“RIAs”) and broker-dealers.[1]  The new proposed rules focus on the potential for conflicts of interest and the possibility that newer, more complex analytics models (including those using AI) might optimize decision making for RIAs and broker-dealers by placing those firms’ interests above the interests of their clients.[2]  The proposed rules would require RIAs and broker-dealers to: (i) evaluate whether their use of technologies “that optimize for, predict, forecast or direct investment-related behaviors or outcomes” create such a conflict of interest, and (ii) either stop using or address the effects of tools that place a firm’s interests before the interests of clients.  RIAs and broker-dealers will also will be required to adopt policies to ensure compliance with the new proposed rules.[3] 

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CFTC Division of Enforcement Releases Guidance on Evaluating Compliance Programs

by Joon H. Kim, Colin D. Lloyd, Breon S. Peace, Jennifer Kennedy Park, Rachel Lerner, Robin M. Bergen, and Nowell D. Bamberger

On September 10, 2020, the Division of Enforcement (“Division”) of the Commodity Futures Trading Commission (“CFTC”) released guidance (“CFTC Guidance”) outlining factors the Division will consider when evaluating compliance programs in connection with enforcement actions.[1] The CFTC Guidance ties into guidance released by the Division in May directing staff to consider an entity’s compliance program when recommending a penalty or other resolution as part of an enforcement action.[2]

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