Perspective - SDDco Group

February 4, 2019  |  Vol 5. 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

Government Shutdown Having Direct Effect on Capital Markets

With the shutdown of the U.S. Government over funding for a border wall with Mexico, more and more issuers and broker dealers are coming to the realization that planned timelines are no longer valid. As reported by Law360 and experienced by this writer, the absence of most of the SEC Staff in its Division of Corporate Finance has stalled indefinitely the review of offerings and the issuance of Effectiveness or Qualification Notices across the IPO, REIT, and Reg A+ industries.

According to Sarah Hanks at CrowdCheck, while there is an avenue an issuer may take to remove the delaying amendment from their IPO registration statement and have it be declared “effective” faster, Reg A filers have no such option. She suggests that the SEC Commissioners may very well have the authority to qualify Reg A offerings in a similar fashion, especially during a government shutdown.

Law360 Shutdown Effects
SEC Operational Status Shutdown Notice
SEC Division of Corp Fin Shutdown Notice

Institutions Leading the Way in the Adoption of Digital Assets as an Investment Class

Fidelity’s entry into the digital asset market place with its institutional platform is the harbinger of a trend. As reported by TokenReporter, although the U.S. has not been a first mover in creating a regulatory landscape for digital asset trading, PwC’s Arslanian says in a Bloomberg interview that more banks and institutions will be entering the space in 2019. In the first half of the year, the Intercontinental Exchange (ICE) will bring to market Bakkt, a Bitcoin futures trading and custody platform, and Nasdaq also plans to roll out a Bitcoin futures platform in the first quarter of 2019.

PwC’s Henri Arslanian Speaks
NASDAQ Bitcoin Futures


Erin Furtado
Head of Marketing

FINRA’s Report on Selected Cybersecurity Practices for 2018

FINRA released its Report on Selected Cybersecurity Practices for 2018 to provide information that can help broker-dealer firms further develop their cybersecurity programs. Cybersecurity is an established operational risk for broker-dealers, yet FINRA continues to see problematic cybersecurity practices in its examinations. In selecting topics for the report, FINRA considered its most frequent cybersecurity findings and the evolving cybersecurity landscape. Their topics are:

(1) Strengthened cybersecurity controls in branch offices
(2) Limiting phishing attacks
(3) Identifying and mitigating insider threats
(4) Elements of a strong penetration program
(5) Establishing and maintaining controls on mobile devices

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

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


Gary Fox

FINRA’s 2019 Risk Monitoring and Exam Priorities

FINRA announced the 2019 Risk Monitoring and Exam Priorities on Tuesday, January 22, 2019. While the release contained many of the now stalwart topics that FINRA continues to examine every year, such as cybersecurity and suitability, there were new entries that firms would be wise to review before their next visit from the exam staff. Of note are the following areas from FINRA.

Supervision of Digital Assets Business

According to FINRA, some firms have expressed interest in participating in activities related to digital assets, and FINRA encourages firms to notify FINRA if they plan to engage in such activities, even where a membership application is not required. 

Online Distribution Platforms

FINRA stated that firms are increasingly involved in the distribution of securities through online platforms in reliance on Rule 506(c) of Regulation D and Regulation A under the Securities Act. FINRA is concerned that member firms believe they are not selling or recommending securities when involved with online distribution platforms despite evidence to the contrary, including handling customer accounts and funds, or receiving transaction-based compensation. The exam staff will evaluate how firms conduct their reasonable basis and customer-specific suitability analyses, supervise communications with the public, and meet AML requirements.


Ross Marlin
Associate Director

SEC Announces 2019 Exam Priorities

On December 20, 2018, the SEC announced its 2019 examination priorities. The areas noted as priorities included: compliance and risks in critical market infrastructure; protecting seniors and retail investors; cybersecurity; and AML.  Read more >

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


Bob Fortino
Managing Partner

New Tax Law Simplifies Filing but May Reduce Incentive to Donate

The Tax Cut and Jobs Act has changed the tax law to help reduce the tax burden of many Americans. The Act will also substantially reduce the number of taxpayers that can itemize their deductions when filing their tax returns. This reduction results from the doubling of the standard deduction. While this is great news for the simplification effort, it can potentially spell trouble for the charitable organizations depending on taxpayer contributions. The new rules may in effect reduce the ability of many taxpayers to deduct charitable contributions, thereby reducing some of the incentive to donate.  Read more >


Casey Muller
Director of Legal & Internal Compliance

Intent to Defraud or Negligence: Which Standard of Review should be used in a Shareholder’s Direct Suit?

In a shareholder’s direct, class action lawsuit under the Securities and Exchange Act, do shareholders need to show an intent to defraud when suing a company over statements made during the M&A process, or should a negligence standard of care be used instead? This legal question will be addressed by SCOTUS when it hears Broadcom’s appeal of a 9th U.S. Circuit Court of Appeals decision.  Read more >


Keep a look out for us at 2019 LINC:


San Diego, CA | February 6-8, 2019

Grand Hyatt
1 Market Place
San Diego, CA, 92101
Tel: 619-232-1234

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