Compliance January 9, 2024

Biden Re-Nominates Julie Su as Secretary of Labor

Although the nomination made it out of committee in March 2023, it has not been brought to a vote of the full Senate.

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President Joe Biden re-nominated Julie Su for Secretary of Labor on Monday. Su has been acting secretary of Labor since March 2023.

Su’s nomination passed through the Senate Committee on Health, Education, Labor and Pensions in April by an 11 to 10 vote. Her nomination then stalled in the Senate, and a full vote was never held. Presidential nominations must be renewed at the start of a new year.

Her tenure of Secretary of Labor in California was criticized by Republicans at that hearing, especially the state’s unemployment program and a new independent contractor definition rule that she implemented in California.

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In September, Senate Republicans introduced a bill, the Advice and Consent Act, which would require nominees to step down 210 days after their nomination if they have not been approved. A vote has not yet been held on that legislation.

After the Department of Labor’s retirement security proposal—sometimes called the fiduciary proposal—was proposed on October 31, some commenters argued that the DOL does not have the authority to finalize rules under an acting secretary. A letter from the American Securities Association stated that “If the proposals are approved by Julie Su, who is purporting to be the Acting Secretary of the DOL, they will be void and unenforceable because Ms. Su was not confirmed by the Senate as required by the Appointments Clause.”

Under current law, it is unclear what authorities an acting secretary possesses. An opinion issued by the Government Accountability Office argued that if the Secretary of Labor resigns, as Julie Su’s predecessor Marty Walsh did, then the deputy secretary “shall perform the duties of the Secretary until a successor is appointed.” Su had previously been confirmed as Deputy Secretary of Labor.

Hearings to re-consider Su’s nomination have not yet been scheduled.

Compliance January 9, 2024

FINRA Annual Report Highlights Crypto, Cybersecurity, Reg BI

The industry regulator provided areas of focus for the year ahead to member firms.

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The Financial Industry Regulatory Authority issued on Tuesday its annual regulatory oversight report intended to provide member brokerage firms and exchange markets with compliance and regulatory guidance in the year ahead.

The industry regulator, overseen by the Securities and Exchange Commission, covered 26 topics in the report and noted a focus this year on cybersecurity, cryptocurrency assets, artificial intelligence’s potential impact on regulatory obligations and guidance on supervision and retention of off-channel communications.

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Some of the focus areas were hot-button issues in 2023 under SEC Chairman Gary Gensler’s leadership and were also flagged in the SEC’s annual look ahead priority release in October 2023.  

“As our industry evolves, so do the compliance challenges faced by firms, which is why the report is so critical,” Greg Ruppert, FINRA’s executive vice president of member supervision, said in a statement. “Some of the topics covered will be familiar from past reports, updated for 2024, while others are new and represent emerging risks and evolving trends that are of growing importance as we look ahead.”

FINRA added four new topics areas in this year’s report to add guidance on:

  • Cryptocurrency asset-related activity and how firms should identify and address the “relevant regulatory and compliance challenges and risks”;
  • Quotations of fixed-income securities by broker/dealers in a source other than the national securities exchange, such as the OTC market for over-the-counter securities;
  • Advertised trading volume to ensure no misrepresentation of the purchase or sale of securities; and
  • Appropriate management of market access given to customers to manage risks for those clients, the firm itself, other market participants and the general “stability of the financial system.”

Other topics FINRA pointed out for close monitoring in the year ahead were: cybersecurity; money laundering, fraud and sanctions violations; Regulation Best Interest and Form CRS [customer/client relationship summary]; and Consolidated Audit Trail rules.

The report also summarized noteworthy findings and observations from recent oversight activities, outlined effective practices that FINRA observed and provided resources to member firms to help them review their supervisory procedures and controls and meet their compliance obligations.

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