Perspective - SDDco Group

March 5, 2019  |  Vol 6. Edition 1

Dear SDDco Clients and Colleagues: Our SDDco Perspective includes industry news, guidance, regulatory rule updates, deadlines, and other timely matters impacting brokers, advisors, fintech firms, taxpayers, investors, and their service professionals. The SDDco Perspective is made available on our website monthly at


Bryon Lyons
CEO, SDDco Brokerage Advisors LLC

Moody’s: The Event Risk of Cyberattacks Effects Four Industries Most Clearly

In a report last week, Moody’s Investors Services singled out the four most vulnerable industries to cyberattacks. The report, entitled Cross-Sector - Global: Credit implications of cyber risk will hinge on business disruptions, reputational effects, highlighted banks, investment firms, securities exchanges, and hospitals as not only responsible for holding more than $11.7 trillion in debt, but due to the interconnectedness of these organizations with the rest of the world, a significant cyberattack on them could have “far-reaching impact on other sectors.”

Moody’s November 2015 Cyber Warning
Moody’s February 2019 Cyber Warning
Washington Post

SEC and CFTC Discussing the Way Forward in Cryptocurrencies

SEC Commissioner Hester Peirce, aka “Crypto Mom,” and CFTC Commissioner Brian Quintenz discussed key regulatory issues for 2019, including the tension between the two agencies’ approaches to cryptocurrencies. In the February 2, 2019 Bipartisan Policy Center event, The Year Ahead for Capital Markets, the two commissioners discussed how they could work together on the issue. Commissioner Quintenz noted that the CFTC’s enforcement powers stop with commodities and that a unified approach by the SEC and CFTC to the oversight of ICOs would be beneficial.

Bipartisan Policy Center: The Year Ahead
SEC and CFTC Consider a Joint Approach


Erin Furtado
Head of Marketing

The Equifax Data Breach – A Cybersecurity Gift that Keeps on Giving

For companies in the Securities Industry responsible for the safeguard of sensitive data, such as PII, the recent data breach debacle with Equifax has provided a valuable cautionary tale. Its most recent “moral of the story” came courtesy of the U.S. District Court for the Northern District of Georgia, which granted the continuance of a securities fraud class action case against Equifax. The lesson learned: if investors are likely to review a company’s data security representations when deciding to invest, than that company is not only responsible for their standards of cybersecurity, but also how it portrays or represents such cyber security standards to investors.

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  • Become compliant with all state and federal requirements including FINRA, NYDFS, SEC, etc.
  • Infrastructure Testing including Penetration Testing
  • Customized and Tested Policies and Procedures
  • Fully Managed Incident Response Coverage
  • Data Security Training
  • Vendor Due Diligence
  • Risk Assessments

Speak with an SDDco consultant about how we can help you navigate the nuances of armoring your firm through SDDco Cyber.


Gary Fox

Come into the Light: FINRA Announces its 529 Plan Share Class Initiative

On Monday, January 28, FINRA launched its initiative for member firms to self-report 529 savings plan violations. The focus of the new initiative is to encourage broker-dealers to “promptly compensate harmed investors and promote firms’ compliance with the rules governing the recommendation of 529 savings plans.” FINRA’s guidance is that broker-dealers should review their supervisory systems and procedures governing 529 plan share-class recommendations. The broker-dealer would self-report supervisory violations and provide FINRA with a plan to remediate harmed customers. In response, FINRA’s Department of Enforcement stated that it “will recommend that FINRA accept a settlement that includes restitution for the impact on affected customers and a censure, but no fine."

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Ross Marlin
Associate Director

FINRA Announces 2019 Exam Priorities

On January 22, 2019, FINRA announced its 2019 examination priorities. The areas noted as priorities included risks related to: associated persons with a problematic regulatory history, cybersecurity, online distribution platforms, regulatory technology, and fixed income mark-up disclosure.

FINRA also indicated that it will continue to examine firms for compliance with longstanding focus areas such as: suitability; outside business activities and private securities transactions; communications with the public; anti-money laundering; best execution; insider trading and market manipulation; net capital and customer protection; trade and order reporting; data quality and governance; recordkeeping, etc.

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This letter should be read together with the Examination Findings Letter published by FINRA in December 2018 to create a checklist of compliance risks that firms should be sure to address.

To learn more about how SDDco can help strengthen your firm’s compliance program, click here .


Bob Fortino
Managing Partner

Treasury Proposes Regs to Address Estate/Gift Basic Tax Exclusion Sunset

The 2017 Tax Act increased the amount a person can transfer tax-free by gift or through an estate, from $5 million to $10 million. The only catch is that this particular provision of the 2017 Tax Act has a sunset date of January 1, 2026, at which point the increased exclusion amount will revert back to $5 million (adjusted for inflation). Taxpayers were unsure of the ramifications of the sunset on gifts that took advantage of the higher exclusion amount. The IRS recently issued proposed regulations which clarify that gifts given during the period with the higher exclusion amount will retain their exclusion from tax, even after the sunset provision takes effect.

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Casey Muller
Director of Legal & Internal Compliance

One Bad Apple – Ex-Apple Securities Lawyer charged with Insider Trading

According to the SEC’s recently filed lawsuit, Gene Levoff, Apple’s senior director of corporate law and corporate secretary until September 2018, used insider access to “trade on material nonpublic information about Apple’s earnings three times during 2015 and 2016.” Imagine - the person responsible for monitoring compliance breaks one of the exact rules he is tasked with enforcing.

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Keep a look out for us at the FINRA Annual Conference:

Washington, DC | May 15-17, 2019

Marriott Marquis Washington, DC
901 Massachusetts Avenue, NW
Washington, DC 20001

SDDco Group makes this general information available for educational purposes only, the contents of which were not originated from SDDco. SDDco is not affiliated with any of the publishing persons or entities of the articles herein. The information provided should not be construed as legal advice. This email may constitute an advertisement under U.S. law. | | (212) 751.4422