SDDco Perspective Newsletter

June 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.

FINANCIAL INDUSTRY

Bryon Lyons
CEO, SDDco Brokerage Advisors, LLC

Bryon Lyons

Hong Kong’s Special Status as World Financial Center Reconsidered

After civil unrest and protest in Hong Kong in 2019 over the extradition bill then being considered by the Hong Kong legislature, Hong Kong is being rocked further by Beijing’s decision to draw up its own national security law for the Special Administrative Region that would extend to Hong Kong the mainland’s practice of using its national security laws to crack down on activists, journalists, lawyers, and other human rights defenders seeking to protect the promise made to Hong Kong by the Sino-British Joint Declaration of 1997 that the people of Hong Kong would continue to enjoy their own way of life free of the mainland’s authoritarianism. The model of 'one country, two systems' was designed to guarantee human rights, the rule of law, and the progression towards democracy in Hong Kong.

The U.S. Administration’s announcement last week that it intends to revoke Hong Kong’s special trade status and travel privileges has thrown into question Hong Kong’s status as Asia’s global financial center protecting through the rule of law more than 1300 U.S. companies operating there that are now considering other plans.

“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” U.S. Secretary of State Mike Pompeo announced May 27th. “While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself.” China’s growing authoritarian influence over the pacific region is an ominous sign for financial markets around the world.

Time – U.S. Threatens HK Special Trade Status
U.S. Department of State – PRC Proposal on Hong Kong
Sino-British Joint Declaration of 1997
Time – China’s New National Security Law for Hong Kong
FT – Donald Trump to Revoke Hong Kong Trade Privileges

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SDDco CYBER
COMPLIANCE & SUPPORT OFFERING

  • Become compliant with all state and federal requirements including FINRA, NYDFS, SEC, etc.
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Speak with an SDDco consultant about how we can help you navigate the nuances of armoring your firm through  SDDco Cyber.

COMPLIANCE & REGULATORY

Gary Fox
Director

Gary Fox

FINRA Puts More Focus on Unpaid Arbitration Awards

FINRA has published Regulatory Notice 20-15, which details how FINRA has amended its Membership Application Program (MAP) rules to create incentives for the timely payment of arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of arbitration awards. FINRA states “The amendments will address situations where: (1) a FINRA member firm hires individuals with pending arbitration claims, where there are concerns about the payment of those claims should they go to award or result in a settlement, and the supervision of those individuals; and (2) a member firm with substantial arbitration claims seeks to avoid payment of the claims should they go to award or result in a settlement by shifting its assets, which are typically customer accounts, or its managers and owners, to another firm and closing down.”

According to Michelle Ong, Senior Director, Strategic Communications/Corporate Communications at FINRA, “This is one of several steps FINRA is taking as part of a broader effort to help address the issue of unpaid arbitration awards.”

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COMPLIANCE & REGULATORY

Ross Marlin
Associate Director

Ross Marlin

States Concerned about Cybersecurity

Consistent with the SEC’s and FINRA’s recently increased focus on cybersecurity, NASAA’s 2020 Investment Adviser Section Annual Report indicated that, between January and June 2019, state examiners found deficiencies relating to cybersecurity in more than one-quarter (26%) of their examinations, up from 23% during the last series of coordinated examinations in 2017. The most prevalent cybersecurity-related deficiencies included: no testing of cybersecurity vulnerability, lack of procedures regarding securing or limiting access to devices, lack of procedures related to internet connectivity, weak or infrequently changed passwords, and inadequate cybersecurity insurance.

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HUMAN RESOURCES

Elizabeth Drivas
SMB Sales Representative at Paychex

Elizabeth Drivas

Navigating the NY Workplace During
COVID-19

To be an employer in New York State is challenging on any given day, but it has become increasingly more so amid the COVID-19 pandemic as businesses have been forced to navigate new laws, regulations, and orders.

Check out this video, Navigating the NY Workplace During COVID-19 if you’re looking for clarity on any of the following:

  • New York COVID-19 sick leave provisions
  • Family Medical Leave Act enhancements for COVID-19
  • NYS-WARN
  • Other laws, orders, and regulations impacting your business

If you have any immediate questions about ensuring your business is compliant, reach out to our dedicated Paychex representative Elizabeth Drivas at (646) 228-5529. Paychex is currently offering 3 free months of HR Support to any new clients in June.

IN THE SPOTLIGHT

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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.

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