SEC Proposes Revisions to the “Accredited Investor” Definition

Emily HayesMarket Rules & Responsibilities


Just in time for the holidays, the U.S. Securities and Exchange Commission (“SEC”) gifted investors and other financial market participants with a notice of proposed changes to the “Accredited Investor” definition to expand access to private capital markets. The proposed rule would add new categories of persons that qualify as accredited investors based on professional knowledge, certifications, and investment holdings. Currently, the SEC is seeking comments from interested parties on the proposed rule change and will consider such comments when the SEC votes to adopt or reject the proposed rule change. Read More

Illinois Recreational Marijuana Legislation and its Impact on Local Government

Eydie VanderboschOperations, Startup Tips & Resources


Illinois Governor J. B. Pritzker signed into law recreational marijuana legislation this Tuesday, after the Illinois legislature voted by large margin to approve the landmark 700-page Cannabis Regulation and Tax Act (“the Act”).  A copy of the bill voted upon is located here but the Act has yet to be fully published online. The new law is expected to go into effect the first of next year.

Municipalities and other local units of government should thoroughly understand how they may be impacted under the Act along with local government powers of enforcement and regulation under the Act. Read More

SEC Approves Regulation Best Interest for Broker-Dealers, Form CRS

Emily HayesBest Practices, Market Rules & Responsibilities, Operations


The U.S. Securities and Exchange Commission (“SEC”) adopted “Regulation Best Interest” (“Reg BI”) on June 5, 2019, requiring broker-dealers to act in the best interest of their retail customers when recommending securities or a particular investment strategy. Additionally, the SEC adopted a new Exchange Act Rule 17a-14, 17 CFR § 240.17a-14, that requires broker-dealers to prepare, file with the SEC, and send to their retail customers the Form CRS Relationship Summary.  This summary must describe the broker-dealers’ services, fees, conflicts of interest, disciplinary history, and legal standard of conduct. Broker-dealers have until June 30, 2020, to comply with these new regulations.Read More

Two Things that Stand out About Illinois’ Landmark New Legislation Legalizing Cannabis

Jesse HudsonOperations, Startup Tips & Resources


On Friday, May 31st the Illinois House approved a law legalizing recreational cannabis, or marijuana, in the state, making Illinois the 11th of the United States to do so. The law, referred to as the Cannabis Regulation and Tax Act (“CRTA” or the “Illinois law”) is on the desk of Illinois Governor J.B. Pritzker, who has championed legalization, to sign and then will go into effect January 1st, 2020. Two things make the Illinois law stand out from the rest of the nation’s cannabis legalization legislation. Read More

NY Office of the Attorney General Alleges Bitfinex Engaged in $850 M Fraud

WebContentCase Studies, Cryptocurrency, Market Rules & Responsibilities


On April 25, 2019, the New York Office of the Attorney General (“OAG”) announced that it obtained a court order against the operators of Bitfinex1 demanding the online digital asset exchange turn over a plethora of important documents related to previous subpoenas the OAG issued to Bitfinex. The order’s accompanying petition alleges that Bitfinex “borrowed” funds from its affiliate, Tether,2 the issuer of the “tether” virtual currency that trades under the symbol “USDT,” after Bitfinex could no longer access approximately $850 million of assets to process customer withdrawals from Bitfinex. The OAG’s main allegation is that both companies, Bitfinex and Tether, were not only owned by the same people, but were also willing to shift risk around in order to avoid a potential collapse of either company. Read More


Gretchen HelfrichCryptocurrency


Blockchain technology, if you believe the hype, is going to revolutionize, well, everything.  In an effort to bring a little sobriety to the Blockchain party, Forbes last year identified ten industries in which Blockchain genuinely seemed likely to disrupt the status quo.  Banking, healthcare, and politics topped the list. Alas, Forbes failed to spot Blockchain’s actual highest and best use, which was achieved earlier this year.Read More

SEC’s FinHub Publishes Digital Asset Analysis Framework

Emily HayesMarket Rules & Responsibilities, Operations


On April 3, 2019, the Securities and Exchange Commission’s (SEC’s) Strategic Hub for Innovation and Financial Technology, a.k.a. the SEC FinHub, released its “Framework for ‘Investment Contract’ Analysis of Digital Assets,” (the “Framework”)1 providing further guidance on how the SEC will analyze whether a given digital asset2 is an investment contract and, therefore, a security under the federal securities laws. An “investment contract” is only one type of security, but as the Framework notes, both the SEC and federal courts typically use the “investment contract” analysis to determine whether a digital asset is subject to the federal securities laws.3Read More

NFA Institutes New Requirements for CPO Internal Controls Systems

Chelsea EllisBest Practices, Market Rules & Responsibilities, Operations


Effective April 1, 2019, every National Futures Association (“NFA”) member commodity pool operator (“CPO”) that handles customer funds must implement an internal controls system (“ICS”) that “is designed to deter fraudulent activity by employees, management, and third parties” to ensure that each Member CPO properly safeguards customer funds, provides accurate and timely financial reports, and fully complies with CFTC and NFA requirements regarding the handling of customer funds. See NFA Interpretive Notice 9074 (the “Notice”). The requirement that each Member CPO implement an ICS is based on already existing NFA Rule 2-9 mandating that each NFA Member diligently supervise its employees and agents. Read More