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SEC’s Priority Examination List in 2020 indicates focus on Regulations in Crypto industry

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Jayashree Ingle Follow

INDIA

Jan, 20 2020

Jan, 20 2020

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Highlights

  • SEC Indicates focus on Crypto Regulations in 2020
  • CAM filed Lawsuit against Legal Firm Faegre Baker

The Securities and Exchange Commission (SEC) from its Office of Compliance Inspection and Examinations (OCIE) department has published its annual 2020 examination Report. It states SEC’s top priority towards monitoring the financial regulatory issues in the ongoing new Year. The report for the year 2020 states that it will be vigilant towards the market to protect the interest of investors. In a 22 pages document by OCIE, It has mentioned that it will further closely scrutinize the:
i) Suitability of Investments
ii) stability of Investments
iii) safety of client funds
iv) Valuation and pricing trading
v) practices and portfolio management
vi) transfer agents
vii) Compliance protocols and viii) external business activities of the digital market players and their employees.

OCIE stated that the speedy growth of crypto assets brings various risks in which the general investor gets victimized. As he is not aware of the difference between the traditional and these assets.  It also has indicated that it will examine two important functions of transferring the agent involved in the settlement of security transactions and their participation in maintaining the records and protecting the funds.  OCIE states, “Examination candidates will include transfer agents that serve as paying agents for transferring agents for issuers, transfer agent developing blockchain technology, and transfer agents that provide services to issuers of micro-cap securities, private offerings, funded securities or digital assets.

CAM filed Lawsuit against Legal Firm Faegre Baker
At the start of this year, two investment firms have charged their legal advisory firms for practicing malpractices and for offering appropriate legal advice to them. Both of the firms were unregistered and still, they had promoted the first crypto asset fund in the country. They also have raised 3.6 million from 44 investors without registering their company with the SEC. After the court verdict ordered them to pay a penalty of $ 200 000, they had accused their law firm that it misguided them with inaccurate analysis and un-appropriate legal advice that their crypto-assets were not securities. The lawsuit was filed by Digital Capital Management firm towards its legal firm Faegre Baker.

In September 2018, the Crypto Asset Management (CAM) was charged by the US. Securities and Exchange Commission for violating the registration rules and regulations. The firm then took a neutral stand and had agreed for ‘cease-and-desist order’ and the penalty of $200,000. And now in 2020, it has sued the law firm. 

#SEC #DigitalCapitalManagement #FaegreBaker #CryptoAssetRating


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Jayashree Ingle

CBW - External Analyst

INDIA

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