Compliance & Ethics

The Securities and Exchange Commission (SEC) is attempting to bolster the integrity of the financial markets by adopting Securities Act Rule 192. This rule, crafted to align with Section 621 of the Dodd-Frank Act, introduces a framework to prevent the sale of asset-backed securities (ABS) tainted by material conflicts of interest. The newly adopted rule, which will become effective 60 days after publication in the Federal Register, seeks to enhance transparency and protect investors in the securitization market.

In a recent meeting, Chinese Premier Li Qiang, serving as the head of the Communist Party's newly established Central Financial Commission (CFC), emphasized the need to intensify regulations and mitigate risks in the nation's financial sector. The CFC was created earlier this year as part of a broader initiative to enhance the party's supervision and control over China's financial landscape.

The Consumer Financial Protection Bureau (CFPB) has mandated that Toyota Motor Credit Corporation, the U.S.-based auto-financing arm of Toyota Motor Corporation, pay $60 million in consumer redress and penalties for engaging in an illegal scheme. The scheme aimed to prevent borrowers from canceling product bundles that increased their monthly car loan payments, while also withholding refunds or refunding incorrect amounts on these bundled products. The company is accused of knowingly damaging consumers' credit reports with false information.

The Securities and Exchange Commission (SEC) has reported a robust enforcement performance for fiscal year 2023, filing a total of 784 enforcement actions, marking a 3% increase over the previous fiscal year. The enforcement actions comprised 501 original ("stand-alone") actions, representing an 8% rise from the previous fiscal year. The SEC also initiated 162 "follow-on" administrative proceedings and 121 actions against issuers allegedly delinquent in their filings.

The legal profession is on the brink of a technological revolution, with a recent survey indicating that 73% of lawyers anticipate integrating Generative AI into their legal workflows within the next year. Wolters Kluwer, a global information, software, and service provider, conducted the survey, garnering insights from 700 legal professionals across law firms, corporate legal departments, and business services firms in the U.S. and Europe for its fifth "Future Ready Lawyer" report.

Corlytics, a leading provider of regulatory risk intelligence and compliance management solutions, has released its Q3 2023 global enforcement fines report, revealing a significant surge in fines to $5.65 billion. This marks a robust 30% increase compared to the cumulative penalties in the previous two quarters ($1.5 billion and $2.27 billion, respectively).

The Securities and Exchange Commission (SEC) has filed charges against Jake Soberal and Irma Olguin, Jr., former co-CEOs of Bitwise Industries Inc., a private technology services startup based in Fresno, California. The charges stem from allegations that the executives misled investors about the company's financial health while raising approximately $70 million in 2022. Soberal and Olguin have agreed to settle the charges brought against them.