Welcome back to the Compliance In Context podcast! on today’s show, we will be tackling one of the most significant topics being discussed so far in all of 2025, namely cryptoassets and the SEC’s Crypto Task Force. To help guide us through the conversation, we are very pleased to welcome back to the show, SEC Commissioner Hester Peirce. As the head of the task force, Commissioner Peirce shares her unique perspective regarding specific focus areas, collaboration with the industry, and other notable items from the first of 2025. In our Headlines section, FinCEN recently announced that the compliance date for the AML Rule for investment advisers is being delayed by two years, and finally, we close up today with another installment of History Has Your Back, where the story of a famous stockbroker and humanitarian demonstrates the importance of unsung heroes.

Show

Headlines

• Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that the compliance date for the anti-money-laundering rule for investment advisers is being delayed by two years.

Interview with SEC Commissioner Hester Peirce

• Background on the SEC’s Crypto Task Force
• What areas has the Task Force been focused on of late?
• Has there been additional collaboration with the industry?
• How will the area of issuance evolving over the next few years and how can the SEC establish itself as a leader in this space both domestically and internationally?
• Why is the issue of custody so challenging in the crypto space?
• How might self-custody be a safer option for some crypto assets?
• How will the issue of taking self-custody of crypto assets evolve over the next several years?
• Is there an expectation that broker-dealers will go to market with a “super app” that offers trading in securities and non-securities and other financial services all under a single roof?
• Do you think further guidance or rulemaking may be helpful for enabling the listing and trading of crypto assets on national securities exchanges?

History Has Your Back

• Famous stockbroker Nicholas Winton demonstrates the significance and impact of unsung heroes

Quotes

11:35 - “Well, I’m glad that you highlighted Chairman Atkins’ speech because he has taken a position which has just been really refreshing for me to see, which is that this is work that we can do. It’s work that we should be doing and we’re going to do this work. And really setting the tone for wanting to create a welcoming atmosphere for innovation, but also recognizing that there are areas where our existing regulatory framework touches upon crypto and we have to apply it. Now, we do also have a lot of authority from Congress already to use exemptions as necessary to provide relief from regulatory obligations when that makes sense to do that. And so I think with respect to issuance specifically, we do think that a rulemaking would be helpful.” – Hester Peirce

19:13 - “I should say that self-custody, that term can mean different things, right? I think someone with crypto assets—does that advisor need to go to a third party custodian or can that advisor hold those crypto assets itself? One reason may be that there isn’t a third party that’s out there that’...

Welcome back to the Compliance In Context podcast! On today’s show, on today’s show, we will be taking a topic known all too well by those in the compliance space, namely maximizing your compliance resources, doing less with more, and getting the most out of what’s available to effectively run your firm’s compliance program to the best of your ability. To help guide us through the conversation, we welcome Louis Dempsey and Bart McDonald from Renaissance Regulatory Services. In our Headlines section, we review a some recent rule withdrawals and some leadership changes at the SEC , and finally, we close up today with another installment of Outtakes, where a recent enforcement action reminds us of the importance of having proper disclosures for fees and conflicts of interest.

Headlines

• SEC Withdraws 14 Rulemaking Proposals
• SEC Chair Atkins Fills Key Leadership Roles

Interview with Louis Dempsey and Bart McDonald

• Background on maximizing your compliance resources
• Discussing best practices to operate on a limited budget
• Evaluating the impact of new regulations, including the FinCEN AML Rule and Regulation S-P
• Analyzing compliance efficiencies in Code of Ethics, electronic communications, conflicts of interest, registration and licensing, compliance testing, and documentation of completed tasks
• Reviewing the significance of a strong training program.
• How does your firm’s registration type impact how you can best maximize compliance resources?

Outtakes

• Recent enforcement action reminds us of the importance of having proper disclosures for fees and conflicts of interest.

Quotes

08:48 – “Really, the risk assessments are incredibly important to help you focus where you want to put your energy and put your time and we'll get into some of that later. From a bigger picture standpoint, you want to leverage your custodians, your custodial relationship. They all have tools that they provide and can help from a compliance perspective, whether those are exception reports, trade reports—and don't forget you also most of them have discounts for other vendors—so whether it's proxy services or really a whole host of items, you want to become familiar with that, you want to stay on top of the reporting capabilities, and...you also have the NSCP. So you really want to look at joining compliance roundtables or other peer networks—that really helps from a practical standpoint.” – Bart McDonald

13:06 – “Think of compliance as a journey, as a road trip. You've got a certain amount of things that you need to get done and you've got 365 days to get them done in. Create a map, create a checklist, create a calendar on what you're going to do and when you're going to do it. Don't wait till the end of the year to do all your testing. Do things throughout the course of the year. If you're a big picture person, no matter how much you know the rules, no matter how much you know the laws, no matter how long you've been in the industry, you still have to have that. And if you're not a detailed organized person and you have the resources, hire somebody t...

Welcome back to the Compliance In Context podcast! On today’s show, we will be taking an in-depth look at one of talked compliance items from the first half of the year, the two new recently published FAQs to the SEC Marketing Rule. To help guide us through the conversation, we welcome in Issa Hanna from Eversheds Sutherland and Ted McKutcheon from Securities Law Counsel. In our Headlines section, we review a recent denial from the SEC of an attempt by 16 firms to revise settlements they made with the commission regarding their supervision of employees’ off-channel communications, and finally, we close up today with another installment of What’s On My Mind, where we review a quote from a famous chef and author to help provide us in the compliance space with a little bit of satisfaction and peace of mind at this time of year.

Show

Headlines

• SEC denied an attempt by 16 firms to revise settlements they made with the commission regarding their supervision of employees’ off-channel communications

Interview with Issa Hanna and Ted McKutcheon

• Background regarding SEC Marketing Rule FAQs
• Practical challenges related to performance marketing and demonstrating gross versus net
• What problems did firms face with implementation?
• What solutions do the new Marketing Rule FAQs provide?
• Recap of the new Marketing Rule FAQs
• What specific guidance can firms takeaway from the footnotes to the Marketing Rule FAQs?
• What is the broader impact of the new FAQs related to performance marketing?
• What strategic decisions will firms need to make before utilizing the benefits of the new FAQs?

What’s On My Mind

• Reviewing a quote from Anthony Bourdain and the satisfaction of completing another regulatory filing season.

Quotes

13:21 – “Folks will recall that the Marketing Rule was officially adopted at the very tail end of the Clayton-era SEC…There were lots of issues that were debated from an interpretive perspective under the rule that fit there. And you had this new category of performance that the SEC seemed to have just made up out of thin air called (so-called) extracted performance. And folks were, kind of, struggling to, kind of, figure out how existing practices in the industry, particularly the private fund industry, would fit into that category of performance.” – Issa Hanna

40:53 – “Remember that, sure, we're getting some relief with respect to the net of fees requirement here, and certain circumstances. It doesn't necessarily get you an out from the Marketing Rule altogether. That's a really important thing to remember is that if the extracted performance that you're dealing with is still an offer of your advisory services or an offer of a private fund that you're advising, you know, that's still an advertisement subject to other applicable requirements of the rule, including the general prohibitions of the rule. So, you know, you do have to keep that in mind.” – Issa Hanna

44:45 – “The part of the approach that's deemed okay with respect to the principle of making fair and balanced presentations is this layered disclosure or layered approach to di...

Welcome back to the Compliance In Context podcast! On today’s show, we will be reviewing a multitude of regulatory and compliance topics, including artificial intelligence, books and records, types of marketing materials, the SEC Marketing Rule, post-commitment management fees, private fund recycling, and many more fantastic issues in our first ever Compliance Grab Bag! To help guide us through the conversation, we welcome in Christine Schleppergrell from Morgan Lewis and Christopher Mulligan from Weil Gotshal. In our Headlines section, we review the first Advisers Act enforcement action under the new administration and what it tells us about future actions, and we close up today with another installment of What’s On My Mind, where a recent statement from Commissioner Peirce provides us deep insight into the future state of crypto and digital currencies and the road ahead.

Show

Headlines

• First Advisers Act enforcement case under the new administration

Interview with Christine Schleppegrell and Chris Mulligan

• What are some of the regulatory and compliance issues you’re seeing in AI right now?
• How are AI recordkeeping and marketing issues addressed during SEC exams?
• How are firms implementing AI inside their firms?
• What other SEC Marketing Rule items are in focus during SEC exams?
• What areas of the SEC Marketing Rule are you hoping the industry receives more guidance?
• What are some of the current areas of focus from the SEC as it relates to private funds?
• What are some of the challenges between outsourcing versus duplication of services?
• What other areas of focus have you seen recently from the SEC and how do you think they will be impacted by a new administration?

What’s On My Mind

• Reviewing “The Journey Begins” by Commissioner Hester M. Peirce and her commentary on the SEC Crypto Task Force

Quotes

15:17 - “There’s a temptation. So there are temptations on both sides, on the exam side and on the registrant side here, right? So investment advisors, obviously AI is a huge force in the economy and investing, and people what to talk about it. And that’s fine in terms of talking about, you know, how this is going to impact markets, how this is going to impact due diligence processes generally, right? You, sort of, can’t live today and not talk about AI. That’s fine. The problem is it’s easy to, sort of, fall into, it’s easy to fall into the representation of how you either use it, how you look for portfolio companies that use it, how it’s part of your management process, right? So it goes to, sort of, a high-level discussion of AI in our, sort of, you know, in, sort of, our culture and our society. And it goes into specific representations about how you are using it.” - Chris

17:25 - “I think also the other side of the coin is the use of AI for non-investment purposes, so think compliance, operational purposes, to the point that you made earlier, just assessing staffing needs and how those can be addressed, and AI can be...

Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we will be providing a comprehensive, deep-dive look at the 2024 SEC Enforcement numbers published at the end of last year—including what was behind some of the eye-popping numbers, distinct areas of focus, and what firms can expect next under a Paul Atkins-led SEC. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome a fantastic panel of experts, Brian Rubin from Eversheds Sutherland and Jim Lundy from Foley and Lardner.

Show

Interview with Brian Rubin and Jim Lundy

• What were the 2024 SEC Enforcement numbers and what do they tell us?

• What trends were present in areas like off-channel business communications and marketing and advertising?

• Did firms get any credit for cooperating with the SEC and how did that manifest?

• What can we expect from Enforcement under a Paul Atkins-led SEC?

• What do you expect from Enforcement pre- and past-Wells letter and with regard to other parts of the process including virtual meetings and open jacket discovery?

• Where do you see Enforcement making substantive changes to its approach under Atkins?

• Can we glean anything from Atkins’ prior dissents that can give us insight into his own priorities as the new Chair?

• What does the future leadership of the SEC look like and what’s next for the Division of Enforcement?

Quotes

11:22 - “Speaking of past data not being indicative of future results. In fiscal year ‘24, the commission brought cases against more than 70 firms, resulting in $600 million more in additional penalties, for those of us who’ve been living through this for the past several years. There’s no surprise that prior to January 2025, that leads to some pretty big numbers. And in the release, enforcement touted that since December of 2021, the initiatives in this space have resulted in changes against more than 100 firms and civil penalties in excess of $2 billion. As Brian mentioned, enforcement continued to be busy after the election through its first fiscal quarter for this fiscal year. And recently announced on January 13th, 12 more actions brought against nine investment advisors and three broker-dealers for off-platform books and records, record-keeping violations, and an additional $63.1 million in total penalties brought against those 12 firms” - Jim

23:17 - “We have a list of a few things that may happen. So, one of them is that there’s probably going to be a push to reduce the time that it takes to investigate cases. Everybody on the defense side and on the enforcement side thinks it takes too long and there’s a variety of reasons that it does take a while. One idea is a simple idea to just simply shorten the time period that investigations have. And although President Trump said he did not read Project 2025, which was a huge sort of white paper on things the new administration could do, one of the recommendations it contained called for statutorily limiting the time for investigations to two years.” - Brian

32:25 - “My personal view, I’m sure Brian wou...

Welcome back to the Compliance In Context podcast! On today’s show, we welcome in former NSCP Chair and current CCO of Robinhood, Norm Ashkenas, to discuss how firms can build a culture of compliance inside their firms and what it takes to build out an effective compliance team. In our Headlines section, the SEC Investor Advisory Committee considered draft recommendations on mandatory arbitration clauses and the expansion of retail investor access to alternative assets (among other items), and a dually registered firm settled SEC charges for failing to timely investigate and report suspicious transactions to FinCEN. And finally, we'll wrap up today's show with another installment of What’s On My Mind, where an old quote from Winnie the Pooh might just be the best thing we can do for our friends and loved ones during the holidays and these cold winter months.

Show

Headlines

• The SEC Investor Advisory Committee considered draft recommendations on mandatory arbitration clauses and the expansion of retail investor access to alternative assets
• Dual registrant settled SEC charges for failing to timely investigate and report suspicious transactions to FinCEN

Interview with Norm Ashkenas

• What is a culture of compliance? What does it mean? How do you know it’s present?
• How can you build a culture of compliance?
• Best practices when building out your compliance team
• Key things to look for when sourcing and building out your compliance team
• The importance of diversity of thought and perspective on your compliance team
• How should firms think about compliance collaboration with other business units as part of the hiring process?
• How should firms view unique skillsets and experiences when building out their compliance team?
• Best practices when using pre-formed hiring questions or question banks

What’s On My Mind

• Using a quote inspired by Winnie the Pooh, part of building our compliance team includes letting them know we’re there for them when they need us most

Quotes

12:20 – “Somebody I didn’t know reached out to me via Slack and said, ‘Hey, so-and-so senior executive thought I should reach out to you because we’re thinking about doing A and he said ‘You should talk to Norm and compliance first to see what they think and how to get it done.’’ That’s what I want to have happen. It’s not about me, it’s about somebody else thinking of compliance when we weren’t there.” – Norm Ashkenas

22:15 – “If you’re asking questions, certainly you’re starting with the technical expertise. If you’re looking for somebody who does surveillance on municipal securities, they have to know a great deal about that space to start, if that’s what you want them to do. So certainly you’re testing for that. Obviously, you are certainly looking for culture fits, again, another overused phrase. But if your firm is the type of firm that seeks to get alignment from everybody and its a firm where they don’t want somebody to present a solution, they want to have conversations with everybody who might be a stakeholder, get them all on the same page, and then have a final discussion, you need to find people who can do that kind of thing. If it’s a firm that’s more entrepreneurial, where it’s, ‘We want you to go solve the problems and see how many people react,’ you have to try to ask quest...

Welcome back to the Compliance In Context podcast! On today’s show, we welcome in Ranah Esmaili and Louis Froelich to help us review the current state of crypto and digital assets, the impact of a new administration, how firms operating in this space should be thinking about custody, and what the SEC Enforcement Division is focused on as it relates to this embattled asset class. In our Headlines section, President-elect Donald Trump has named his choice to run the Securities and Exchange Commission, and finally, we’ll wrap up today’s show with another installment of Outtakes, where we examine what a recent SEC complaint against the chief investment officer of a large investment advisory firm can teach us about the importance of trade allocation and avoiding instances of cherry picking in the delivery of advisory services.

Show

Headlines

• President-elect nominates former SEC Commissioner Paul Atkins to lead SEC

Interview with Ranah Esmaili and Louis Froelich

• What is the current state of crypto?
• What is the impact of a new administration on the SEC broadly?
• What is the impact on crypto, specifically?
• What baseline SEC rules should registrants still keep in mind?
• In the digital asset/crypto space, what is the current state of enforcement?
• What will the SEC continue to investigate (no matter the change in administration)?
• Do you think cases against platforms for being unregistered BDs will go away?
• What about custody? What is the current state of the Custody Rule proposal?
• What are SEC examination teams focused on when conducting examinations in the crypto/digital asset space?
• Are there any specific cases currently in litigation that you’re paying attention to and why?
• Using your crystal ball, what do you see changing in the crypto/digital asset space in 2025?

Outtakes

• The SEC recently sued a former CIO for allegedly orchestrating a “cherry picking scheme” allocating better performing trades to certain favored portfolios, and worse performing trades to other portfolios

Quotes

10:24 – “You know, I think [crypto] is here to stay. I also think that even in a decade from now, people maybe asking the same question. Let’s dive into where we’re at right now. Crypto is everything that you’ve said. It’s a wildly volatile asset class considered its own asset class right now. Most people still don’t really understand what the stuff does. As you know, if their businesses start to invest with it or trade with it, you know, kind of where to begin.” ~ Louis Froelich

11:50 – “The crypto lobby is a very real thing. It was one of the largest spenders in the last campaign. And so when sometimes people look at the headlines of the results or why is crypto such a thing, I don’t think it’s a coincidence, right? I think there’s a lot of people that made a lot of money in the space, had vested interests, have worked very hard and deliberately to kind of have the election results that we have and have crypto, kind of, part of the national conversation.” ~ Louis Froelich

17:42 – “So I expect we’re going to continue to see crypto asset offering fr...

Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we welcome an august panel to provide an in-depth look at the embattled DOL Fiduciary Rule—including where are we now, what’s next, and what other best practices firms should firms have in place currently regarding any investment recommendations being made and other services provided to retirement investors. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome in august panel of experts—Jason Berkowitz with the Insured Retirement Institute, David Kaleda with the Groom Law Group, and Jason Roberts with the Pension Resource Institute.

Show

Interview with Jason Berkowitz, David Kaleda, and Jason Roberts

• Reviewing the current state of the DOL Fiduciary Rule
• Is there a path where the DOL gets the decision reversed or where PTE 2020-02 gets separated out?
• With the recent DOL Fiduciary Rule getting stayed, where does that leave ERISA investment fiduciaries? What is the status quo?
• Understanding the 1975 regulation and PTE 2020-02
• What is the impact of the Florida district court ruling?
• Best practices around providing investment recommendations to retirement investors
• What are the types of things compliance officers can build into their programs now to ensure compliance to PTE 2020-02?
• What about disclosures for IRAs to IRAs?
• What about the annual review?
• Reviewing Reg BI, NAIC, and the full regulatory framework and the related obligations for market participants
• What is the current state of enforcement in this area?

Quotes

05:57 – “Let me just start with a quick overview of what the regulatory package is, that was adopted earlier this year. It included four components. The first component is a change in the definition of who is a fiduciary under ERISA. And then the other three changes, or the other three components, rather, were changes to what are called prohibited transaction exemptions, which are essentially the rules that ERISA fiduciaries have to follow in order to receive compensation for their services. And, in effect, essentially the way that, at least for my organization and our members, we look at this final regulatory package as significantly expanding the reach of fiduciary status to reach almost any financial professional who interacts in any way with a retirement saver and create significant new burdens and hassles for those individuals in order to get paid.” – Jason Berkowitz

09:18 – “So at this point we're still waiting to see how this will be resolved. There are really two tracks here. One is just this effective date stay, and the other the next track is the merits of the case, whether the DOL even has the authority to do this in the first place. So the DOL did file a notice of interlocutory appeal, which basically means they're appealing the stay at this point and also all the parties had been working on a decision on the underlying regulation and exemptions that's being put on hold so that the DOL can at least consider what they're going to appeal. At this point, they've just noticed the court that they could appeal. Whether they do or not, I guess, remains to be seen.” – David Kaleda