SDDco Perspective Newsletter

January, 2020

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 http://sddco.com/resources-newsletter.

CRYPTOCURRENCY

Bryon Lyons
CEO, SDDco Brokerage Advisors, LLC

Bryon Lyons

British Cryptocurrency Ponzi Schemer on the Lam

There’s a good reason why U.S. regulators are treading slowly into regulation of the nascent digital assets world. It’s a wild-west of cautionary tales taking place in a marketplace yet to develop systems integrity.

In early January 2020, a little more than six (6) months since the Virtual Currency Task Force in the Division of Enforcement at the United States Commodity Futures Trading Commission (CFTC) filed its original complaint in the U.S. District Court for the Southern District of New York against Control-Finance Limited, a UK based cryptocurrency trading fraud, and its Director, Benjamin Reynolds, the Commission is back in Court requesting that it authorize service of process on the defendant “by publication in The Daily Telegraph,” a London based newspaper of record. According to the Commission’s memorandum, it has been unable to locate Mr. Reynolds.

Control-Finance Limited and Mr. Reynolds are charged with “exploiting public enthusiasm for Bitcoin by fraudulently obtaining and misappropriating at least 22,858.822 Bitcoin—worth at least $147 million at the time [June 2019]—from more than 1,000 customers. The Ulsan District Prosecutors’ Office in South Korea and the British Columbia Securities Commission are also involved in this international man-hunt.

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CYBERSECURITY

Erin Furtado
Head of Marketing

Erin Furtado

The U.S. Should Brace for Iran To Cross Red Lines in Cyberspace

In retaliation for killing one of Iran’s top Generals, the U.S. is urged to brace ourselves for Iran to launch bold cyberattacks designed to cause major financial damage or threaten American lives in parts of the country. Cybersecurity experts say Iranian hackers could launch attacks to shut down electricity, destroy financial records, disrupt hospital or transportation systems, hack companies that encrypt their data or target U.S. government contractors. However, attacks like these take time to carry out. It’s not a matter of IF but possibly more of a matter of WHEN… Protect your firm in case your city is targeted. SDDco Cyber is here for you.

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COMPLIANCE & REGULATORY

Ross Marlin
Associate Director

Ross Marlin

CCO Loses Appeal of FINRA Discipline for Inadequate Email Reviews

On appeal, the SEC upheld a 30 day suspension and $40,000 fine assessed by FINRA against a broker-dealer CCO who conducted email reviews only sporadically, when the Firm’s WSPs required daily reviews. The SEC found that, although the WSPs designated the CEO as the party responsible for email reviews, this did not exculpate the CCO because the CCO had assumed and acknowledged responsibility for the task.

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

LEGAL

Casey Muller
Director of Legal & Internal Compliance

Casey Muller

Non-Attorneys Will Soon be Precluded from Representing Parties in FINRA Arbitration

FINRA’s Board recently voted to revise its Code of Arbitration Procedure to bar Non-Attorney Representatives (NARs) from representing parties in FINRA arbitration cases. The rule change is pending approval from the Securities and Exchange Commission.

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SDDco SERVICE OF THE MONTH:

SDDco CYBER’s COMPLIANCE AND GUIDANCE OFFERING:

  • 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

Armor Your Network Against Vulnerabilities

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Cybersecurity Brochure

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

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.

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