Enforcement

SEC Hits RIA for Hype & SPV Profits

Summary: The SEC charged an RIA and its owner with misleading private-fund marketing and undisclosed conflicts, including overstated performance used to raise capital and undisclosed personal profit on a BitClout SPV. Gao agreed to a bifurcated settlement with injunctions and an officer-and-director bar; penalties to be determined, subject to court approval.

Why it matters: Reinforces strict expectations under the Marketing Rule and conflict-of-interest disclosures, especially for SPVs, principal transactions, and performance claims in decks.

Potential action: Re-verify all performance and track-record claims, inventory SPVs for pricing/affiliate conflicts, update disclosures, and tighten approval/version-control for investor materials.

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Rulemaking

NFA Updates Digital-Asset Rule 2-51

Summary: NFA Compliance Rule 2-51 sets conduct, anti-fraud, and supervision standards for Members and Associates engaged in activities involving digital asset commodities. The rule prohibits deceptive communications, false records, price-manipulative acts, and misappropriation; requires “just and equitable” principles of trade; and imposes diligent supervision over employees/agents. It applies to digital asset commodities that have related commodity-interest products certified or approved for listing under CFTC Part 40. Originally adopted May 31, 2023, amendments took effect Dec. 3, 2025.

Why it matters: CPOs/CTAs and other NFA Members touching crypto must align marketing, trading, custody, and surveillance programs with Rule 2-51’s anti-fraud and supervision requirements. RIAs with affiliated CPO/CTA entities—or with strategies referencing listed crypto-related products—face heightened expectations around disclosures, controls, and personnel oversight.

Potential action: Map all digital-asset activities to determine if they involve commodities with related listed products; update communications controls, trade-surveillance/market-manipulation monitoring, wallet/custody procedures, and supervisory documentation; refresh staff training and evidencing of reviews; and align vendor/technology oversight with NFA standards.

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What regulators are saying

CFTC Eases Cross-Border Rules

Summary: The CFTC’s Market Participants, Clearing & Risk, and Market Oversight Divisions issued no-action relief addressing inconsistencies across the 2013 Cross-Border Guidance, the 2016 Cross-Border Uncleared Margin Rule, and the 2020 Cross-Border Rule. Staff will not recommend enforcement if firms classify counterparties using either the 2020 definitions of “U.S. person” and “guarantee,” or legacy classifications made under the 2013 Guidance/2016 margin rule, so long as one framework is applied consistently and appropriately documented. The relief affects swap-dealer de minimis calculations, margin, and business-conduct requirements tied to counterparty status.

Why it matters: The letter reduces immediate enforcement risk from mixed legacy representations and evolving definitions that directly impact SD registration thresholds and margin obligations, key for advisers with swap activity, CPO/CTA affiliates, and cross-border counterparties.

Potential action: Inventory counterparty reps and classifications, document which framework (2013/2016 vs. 2020) you rely on, align SD de-minimis and margin calculations to that choice, and update procedures and client files while monitoring for permanent rule harmonization.

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Spot Crypto Receives CFTC Greenlight

Summary: The CFTC announced that spot cryptocurrency products may begin trading on CFTC-registered futures exchanges, bringing on-exchange spot crypto under the agency’s market-integrity and customer protection framework. The move is positioned as part of a broader “Crypto Sprint” to enable tokenized collateral and related rule updates.

Why it matters: This opens a regulated U.S. venue path for spot crypto exposure. For RIAs and private-fund managers, it may expand access, improve price discovery and surveillance, and shift diligence toward exchange-listed contract standards versus offshore venues.

Potential action: Reassess crypto strategy, counterparty and venue selection, and custody/risk controls; update offering docs and trading policies to address listed spot products, exchange rules, and surveillance/recordkeeping implications.

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FINRA’s 2026 Priorities: AI to Fraud

Summary: FINRA released its 2026 Regulatory Oversight Report, distilling findings from regulatory operations into practical guidance. Key themes include generative-AI use, cyber-enabled and small-cap fraud, third-party/vendor risk, senior-investor protection, books-and-records, communications/marketing, market integrity, and firms’ nexus to crypto. The report is positioned as a planning tool for firms’ 2026 risk assessments and training.

Why it matters: Even for RIAs with affiliated broker-dealers or distribution partners, FINRA’s focus areas overlap with adviser programs, AI governance, data security/incident response, retail communications, and crypto touchpoints. The report offers concrete exam observations that can be translated into controls and testing plans.

Potential action: Map each section of the report to your 2026 compliance testing calendar; formalize an AI-use policy and inventory; re-validate cyber incident-response playbooks and third-party/vendor oversight; refresh retail-communications reviews (including social/digital); and document how these updates flow into training and board/CCO reporting.

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OIEA Chief Lori Schock to Depart

Summary: Just as Orical is noticing an uptick in SEC examinations, the SEC announced that Lori J. Schock, Director of the Office of Investor Education and Advocacy (OIEA) from 2009, will retire at the end of December. The release highlights OIEA initiatives under her tenure, including Investor.gov, investor alerts/bulletins, “Director’s Take” articles, and the agency’s investor-assistance program.

Why it matters: Leadership transitions at OIEA can influence the Commission’s investor-education priorities and retail-protection messaging—areas that often shape examination themes around disclosures, fees, senior investors, and digital-communication practices.

Potential action: Monitor OIEA publications and alerts through year-end and into 2026; align retail-facing materials (fees, risks, plain-English disclosures) and complaint-handling procedures with evolving OIEA guidance; confirm your proxy/communications policies reflect current investor-education themes.

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In the news

SEC Eases Bank Research Rules

Summary: Ropes & Gray reports that on December 5, 2025, the SEC consented to modify portions of the early-2000s Global Research Analyst Settlement, relaxing certain communications “firewall” restrictions between investment banking and equity research at major banks. The change responds to bank motions and reflects the adoption of FINRA Rule 2241 and a sunset provision in the original judgments; court approval is required.

Why it matters: Looser bank research constraints may increase research coverage and change how managers access and evaluate street research, with potential shifts in conflicts controls and diligence of research providers. Expect firms to revisit policies around research interactions with banking teams and distribution practices.

Potential action: Update research-provider due-diligence and conflicts assessments; refresh policies on receipt/use of bank research, analyst interactions, and wall-crossing; document supervisory and recordkeeping adjustments aligned with FINRA Rule 2241 and your code of ethics.

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Events

SEC Sets Privacy Roundtable

Summary: The SEC’s Crypto Task Force released the agenda and panelists for its rescheduled public roundtable on Financial Surveillance and Privacy, set for Dec. 15 (1–5 p.m. ET) at SEC HQ with a live webcast. Commissioner Hester M. Peirce highlighted the goal of reassessing surveillance tools alongside civil-liberties concerns. Panels feature industry, policy, and civil-society voices; in-person attendees must register.

Why it matters: Surveillance, data-sharing, and privacy expectations shape how advisers use analytics, blockchain-forensics vendors, and client-monitoring tools. Signals here may inform future guidance affecting recordkeeping, Reg S-P programs, digital-asset diligence, and communications oversight.

Potential action: Assign a compliance/tech led to watch the webcast and capture takeaways; review your data-governance and surveillance stack (vendor contracts, minimization, access controls, retention, and notice); confirm Reg S-P incident-response and privacy disclosures align with evolving expectations.

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SEC Sets Reg S-P Session

Summary: The SEC announced the second event in its Regulation S-P compliance-outreach series—a webinar for transfer agents on Dec. 17, 1–2 p.m. ET. Staff will cover the 2024 amendments, exam expectations, and take audience questions; a small-firm session will follow later.

Why it matters: Even though this session targets transfer agents, the amended Reg S-P drives broader requirements (incident-response programs, 30-day notifications, vendor oversight) now hitting many “larger entities,” with smaller entities following in 2026. RIAs that custody investor data or work with transfer-agent affiliates should align programs and testing.

Potential action: Register a compliance lead to attend/watch; map the amendments to your policies (incident response, customer notification, service-provider contracts, records); run a tabletop and evidence testing ahead of upcoming compliance dates.

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