SDDco Perspective Newsletter

July 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


Bryon Lyons
CEO, SDDco Brokerage Advisors, LLC

Bryon Lyons

EU Moves to Create Digital Regime. NYDFS and OCC Try to Move Closer to a Regulatory Framework

“A new regulatory regime for cryptocurrency will not only cover unregulated digital assets, but it will also consolidate and homogenize existing standards across the continent,” said Valdis Dombrovskis, the European Union’s Executive Vice President of the European Commission for An Economy that Works for People. Stablecoins, such as initiatives like Facebooks’ Libra, operate on a global scale, which can “raise additional challenges,” Dombrovskis said – they can disrupt financial and monetary stability.

In New York, the Department of Finance Services announced new virtual currency initiatives on June 24, 2020, including a Memorandum of Understanding (MOU) that launches a new SUNY BLOCK virtual currency program “to develop the next-generation of developers, researchers, and leaders.” The announcement included a conditional licensing program for startups partnering with an existing entity authorized by DFS to engage in virtual currency business activity; and in certain instances, licensees will have the ability to self-certify the use of new coins, and all licensees will be able to adopt from a list of approved coins.

The OCC recently floated the idea of a special purpose national charter for banks, payment and fintech companies, giving them the ability to operate on a “nationwide servicing platform” that provides a federal preemption of state laws. In an earlier version of the charter, the NYDFS filed suit against the OCC. That suit is now in the second circuit court.

EU Creating regulatory Regime - Coindesk
NYDFS – BitLicense FAQs
NYDFS – June 24, 2020 Announcement
OCC Floats Special Purpose National Bank Charter

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Gary Fox

Gary Fox

OCIE Publishes a Risk Alert Related to Cybersecurity and Ransomware

On July 10, 2020, The Office of Compliance Inspections and Examinations (OCIE) published a risk alert, stating that it “has observed an apparent increase in sophistication of ransomware attacks on SEC registrants, which include broker-dealers, investment advisers, and investment companies, and also ransomware attacks impacting service providers to registrants.”

According to OCIE “…perpetrators behind these attacks typically demand compensation (ransom) to maintain the integrity and/or confidentiality of customer data or for the return of control over registrant systems.”

It should come as no surprise that hackers remain focused on finding new methods to steal information and assets, and that cybersecurity must remain a part of ongoing diligence for any financial services firm, regardless of business model. Experience has taught us that no firm is too small to escape the notice of hackers, and that a mindset of “we don’t have anything a hacker would find valuable” will lead to significant regrets the morning a firm’s employees discover they can’t access any of their computers, files, or other electronic medium as the CEO gets the message from the hackers demanding payment to get back into the firm’s systems. Don’t let your cybersecurity planning be event-driven. We can help.

Read the full OCIE Alert here >


Ross Marlin
Associate Director

Ross Marlin

FINRA Warns of Increased Fraud Risk During Covid-19 Pandemic

On May 5, 2020, FINRA issued Regulatory Notice 20-13, which reminded firms and investors to be alert to “heightened threat of frauds and scams” during the covid-19 pandemic. The notice specifically highlighted four common scams: (1) fraudulent account openings and money transfers; (2) firm imposter scams; (3) IT Help Desk scams; and (4) business email compromise schemes. The notice also suggested measures that firms should take to avoid falling victim to such scams.

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Casey Muller
Director of Legal & Internal Compliance

Casey Muller

Factors for broker-dealers to consider when transitioning to a remote work environment

Companies worldwide are being forced to transition to a remote work model in the wake of the COVID-19 pandemic. It’s a complicated undertaking for businesses, requiring consideration of many different factors. Such an undertaking becomes even more difficult for industries that are highly regulated, such as brokerage services. To guide broker-dealers in their transition to remote work, FINRA has issued Regulatory Notice 20-16, which shares “common themes observed through discussions with firms about the steps they reported taking to transition to a remote work environment during the coronavirus (COVID-19) pandemic.”

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SDDco makes this general information, the contents of which were not originated from SDDco, available for promotional and educational purposes only. SDDco is not affiliated with any of the authors or publishing entities of the articles herein. SDDco does not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information or any sites linked to in this newsletter.

The information provided should not be construed as legal advice and it is not intended to be a substitute for professional consultation. Please contact a financial services professional, such as SDDco or otherwise, if you have questions regarding the regulatory and compliance industry. This email may constitute an advertisement under U.S. law. | | (212) 751.4422