UpFront » April 2022

In its latest attempt to meet the SEC’s approval, a digital currency asset manager is relying on a legal detail to bolster its chances to create a crypto ETF. However, with the SEC’s current stance that crypto ETFs trade on unregulated platforms with fraud and manipulation concerns, the firm Grayscale and its large crypto investment vehicle may continue to be blocked from obtaining ETF status. Grayscale’s new application hinges on the argument that their spot…

Investment adviser firms considering bill-paying services for their clients as an added benefit should consider the associated regulatory requirements and security concerns. Amy Lynch, FrontLine’s Founder and President, spoke to BARRON’S about the primary ways firms offering these services get into regulatory trouble. Ms. Lynch states that advisers providing bill paying to clients as a “favor” without the firm’s approval would likely be caught in a branch audit, leading to compliance issues and possible regulatory…

SEC exams will continue to zero in on firms and fund companies with investors inappropriately placed in high fee share classes. With the SEC’s self-reporting program ending in 2020, FrontLine’s Founder and President Amy Lynch expects that reviews of share classes would now occur in every exam of a mutual fund company, broker-dealer or distributor, and firms with violations will likely face charges and fines. Ms. Lynch adds that the SEC would expect firms to…

A recent criminal case involving a well know investment bank shows how the lure of high fees can lead individuals to circumvent compliance policies. Despite several red flags raised by compliance about a Malaysian private wealth client, Goldman Sachs bankers in Southeast Asia pursued deals leading to acts of bribery, money laundering, kickbacks and other criminal wrongdoing. The firm’s compliance due diligence concerns were not heeded, nor enforced, as the bankers concealed the deal transactions…

The SEC has noticed the rapid growth of private fund managers and now it’s setting its sights on expansive examinations and oversight. The regulator’s recently released exam priorities, coupled with SEC Chairman Gary Gensler’s frequent public announcements, have warned of new risks for investors and markets due to the acceleration of private fund offerings during the past several years. Amy Lynch, FrontLine’s Founder and President, was interviewed by the Financial Times to discuss what could…