In 2022, the SEC filed 760 enforcement actions, which was up 9% from 2021. They imposed a record-breaking $6.44 billion in monetary penalties, up 67% from 2021. These drastic increases are a result of the SEC ramping up enforcement efforts, charging steep penalties, and rewarding large sums to whistleblowers. As we all know, the consequences of compliance failures extend further than monetary penalties. These events can take a toll on your firm’s reputation and undermine employee morale.
In 2023, Artificial Intelligence is transforming the way we conduct business around the world. As new technology emerges in the financial services industry, many professionals in the investment industry are wondering how this may change Compliance and Regulatory Technology. While we may not know exactly what these changes will look like, we can make sure we are prepared and updated on changes in technology.
In February 2023, the SEC proposed expansive changes concerning Safeguarding Advisory Client Assets (Safeguarding Proposed Rule), which would amend rules around the custody of client funds or securities. Under Rule 206(4)-2, investment advisers must safeguard client funds and securities in their possession or where they have the authority to obtain control of them. The proposed rules would make broad and significant changes to the current custody rule, enhancing the role of custodians and increasing compliance burdens on advisory firms.