SDDco Perspective Newsletter

July 8, 2019  |  Vol 10. 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


Anti-Sexual Harassment Legislation Affects Business in New York State
Elizabeth Drivas, Business Consultant, Paychex

Elizabeth Drivas

Elizabeth Drivas
Business Consultant, Paychex

New York state continues to update legislation to create work environments for everyone that are free from sexual harassment. The latest updates include provisions that expand the definition of protected individuals and outline employer responsibilities and compliance mandates.

As of Oct. 9, 2018, employers in New York state must comply with the following:

  • Adopt a sexual harassment policy
  • Distribute the policy to all employees and ensure they have access to it
  • Adopt an internal complaint form
  • Implement annual, interactive training*

Even if your company is not at fault, there are obvious and hidden costs related to a claim:

  • Reduced productivity
  • Legal fees and settlements that affect profitability
  • High turnover and hit to morale
  • Lasting damage to reputation

New York City has passed stricter legislation. If you would like help staying compliant with HR laws and regulations or would like to have a conversation about it, reach out to our dedicated Paychex representative Elizabeth Drivas at (646) 228-5529. Click here for any additional questions.


Bryon Lyons

Bryon Lyons
CEO, SDDco Brokerage Advisors LLC

Facebook’s Libra Coin and Calibra Wallet Face Headwinds from Congress and Others

In a response to Facebook’s recent announcement that the social media company will be launching its own digital currency, Libra Coin, and the related “wallet,” Calibra, in 2020, Forbes reported this week that a group of thirty-three consumer, privacy, economic policy, and other organizations recently wrote an open letter calling for a moratorium on the project citing “profound questions about national sovereignty, corporate power, consumer protection, competition policy, monetary policy, privacy and more….”

The House of Representatives’ Committee on Financial Services also wrote to the largest social media company in the world calling for “Facebook and its partners [to] immediately cease implementation plans until regulators and Congress have an opportunity to examine” the serious privacy, national security, cyber security, and trading risks involved. The Committee stated that since Facebook is “already in the hands of over a quarter of the world's population” it “risks [creating] a new Swiss-based financial system that is too big to fail.”

Forbes – Congressional Committee Calls for Moratorium
Libra’s Privacy Documentation
Reuters – UK’s FCA Eyes the Impact of Facebook Crypto’s Size and Scale

SEC Approves Additional NASDAQ Requirements for Regulation A Listings

On June 28, 2019, the U.S. Securities and Exchange Commission (“SEC”) issued an order granting approval of the NASDAQ Exchange’s new listing requirement that “any company listing on the Exchange in connection with an offering under Regulation A…have a minimum operating history of two years at the time of approval of its initial listing application.”

A blockchain company, Longfin Corp., is one example of recent Regulation A offering exchange listed companies that have had problems being “ready for the rigors of being a public company.” The SEC stated in its order that the new requirement is consistent with Section 6(b)(5) of the Securities Exchange Act of 1934, as it prevents fraudulent and manipulative acts and practices, promotes just and equitable principles of trade, and, in general, protects investors and the public interest.

SEC – Order Granting Additional Regulation A NASDAQ Requirements
U.S. District Court – SEC vs. Longfin Corp. (Case No. 18-cv-2977; 4/4/2018)
Law360 – SEC Approves NASDAQ Plan


Erin Furtado

Erin Furtado
Head of Marketing

Robo-Advisors vs Human Advisors: Who’s Better at What?

Do you ever wonder if robo-advisors surpass human advisors’ capabilities? Well, each has their own strengths and weaknesses like anything else. It is believed that over time robos and human advisors will each specialize in what they do better. They are both equal is pre-tax , pre-expense performance, customization and tax and accessibility. However, robo-advisors have an edge over human advisors in price, post-expense performance and transparency. Human advisors beat robos when it comes to coaching, advocacy and trust. While the current state of the market doesn’t 100% fit the above strengths, in a futuristic state robos will only continue to do what humans can provide. Competing based on holistically overseeing and guiding the client’s financial wellbeing is the alternative route human advisors can take.

Read More >

Watch this video on “How do robo-advisors work?” >

The Ins and Outs of Cybersecurity Insurance

Policies are designed to help companies survive major cyberattacks. But knowing exactly what’s covered can be tricky. The idea of cybersecurity insurance seems straightforward: Being hacked not only can disrupt business, it also can be extremely costly and hurt a company’s reputation. Businesses want to protect themselves against those losses. There’s no question that cyber insurance is on the rise, though growth in the U.S. slowed last year to 8% from 37% in 2017, according to Fitch Ratings. These policies are designed to help companies survive major cyberattacks by offsetting the costs of recovery but knowing exactly what’s covered can be tricky. The cyber insurance category is new, so there isn’t much standardization in the way insurers are determining risk or even defining attacks. Coverage gaps can be created by uninformed choices. Here are some questions companies need to ask themselves.

  • What do we need to cover?
  • What’s the difference between first-party and third-party cyber liability insurance?
  • What cyber incidents do insurers typically exclude from coverage?
  • If the breach is the company’s fault, is the insurer always off the hook?
  • How long after a breach occurs does a company have to report it to an insurer?
  • How do insurers price cyber insurance?

Read More >


  • 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

Cybersecurity graphic

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


Gary Fox

Gary Fox

The SEC is Asking Important Questions About Private Securities Offerings. You Should Answer Them

On June 18, 2019, the SEC announced it was seeking public comment on ways to harmonize private securities offering exemptions. According to SEC Chairman Jay Clayton, “We are taking a critical look at our exemptions from registration to ensure that our multifaceted private offering framework works for investors and entrepreneurs alike.”

In the accompanying concept release, the SEC stated “…The focus of this concept release is to seek input on whether, in light of the increased activity in the exempt markets, the current exempt offering framework is working effectively to provide access to capital for a variety of issuers, particularly smaller issuers, and access to investment opportunities for a variety of investors while maintaining investor protections…We also seek public input on the review of the exempt offering framework as a whole, and whether and how to best achieve our goal of improving and harmonizing the framework.”

The following questions are only a sample of the breadth and depth of what the SEC is asking for.

  • Does the existing exempt offering framework provide appropriate options for different types of issuers to raise capital at key stages of their business cycle?
  • What types of changes should we consider addressing any such gaps in the exempt offering framework?
  • Would legislative changes be necessary or beneficial to address any such gaps?
  • Should we revise our exemptions across the board to focus consistently on investor protections at the time of sale rather than at the time of offer?
  • If our exemptions focused on investor protections at the time of sale rather than at the time of offer, should offers be deregulated altogether?

This may be the beginning of a significant change to the way private securities offerings are regulated and conducted, as well as to whom they may be offered. It won’t be quick, but the effort is welcome and necessary. The current structure is a patchwork of regulations, enacted during various eras over the last 85 years with various business climates, congressional moods, technology innovations, etc. There have been three significant congressional acts affecting capital raising since 2012 alone. An apt comparison is to a house that has numerous additions built and remodels performed over the years to suit (then-immediate) needs, but sometimes without regard for what an addition meant to the rest of the structure. After a while, the whole house needs to be reviewed for logic, flow, and efficiencies. If your business is involved in any fashion with private securities offerings, we suggest you take some time to review the SEC’s release and consider providing your opinions and experience to them.

Read More >

Ross Marlin

Ross Marlin
Associate Director

FINRA Reminds Firms of June 27, 2019 CAT Reporting Registration Deadline

On May 21, 2019, FINRA issued a Regulatory Notice reminding firms with CAT reporting obligations to register for CAT reporting by June 27, 2019. Industry Members that must register include any:

(1) member of FINRA or a national securities exchange that handles orders or quotes in NMS stocks, OTC equity securities or exchange listed options; and

(2) third-party CAT reporting agent that is or will be authorized to submit data to the CAT on behalf of an Industry Member.

Read more >

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


Bob Fortino

Bob Fortino
Managing Partner

How Bitcoin Is Taxed

Bitcoin is a complicated investment, but its tax treatment is not. The biggest complication to figuring out the tax treatment of bitcoin is using the correct terminology so that the proper tax treatment can be applied. At the end of the day bitcoin is taxed like most stocks, not like a currency or a commodity. If bitcoins are held for more than one year, they will receive long-term capital gain treatment.

Read More >


Casey Muller

Casey Muller
Director of Legal & Internal Compliance

Morgan Lewis provides the Financial Industry with a 2018 Manual on FINRA and the SEC

The law firm of Morgan Lewis released its “2018 Year in Review: Select SEC and FINRA Developments and Enforcement Cases.” Morgan Lewis compiled the key regulatory happenings of 2018 into a single resource for broker-dealers, investment advisers, and investment companies. Consider this document a one-stop reference library of 2018 FINRA and SEC developments, including industry analysis and statistics as well as individual case summaries and rulings.

Read more >


Keep a look out for us at upcoming conferences!

NSCP National Conference

NSCP National Conference

Baltimore, MD | Oct 21-23, 2019

Register Now:

FINRA Small Firm Conference

FINRA Small Firm Conference

Santa Monica, CA | Oct 23-24, 2019

Register Now:

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