Responsibilities When Outsourcing to Third-Party Service Providers

Guest Post from REVERSE Inquires by Mayer Brown, VOLUME 01, ISSUE 05 | August 14, 2018

Discussions on regulatory requirements generally focus on substance. Less often highlighted is how the nuts and bolts of compliance and daily operations are actually carried out—often by third-party service providers. FINRA recognizes the role third-party service providers play and even hosts the Compliance Vendor Directory. We discuss FINRA’s guidelines for the use of third-party service providers below using examples relating to technology governance, cybersecurity and anti-money laundering (“AML”) programs. These topics were included in the FINRA 2018 Regulatory and Examination Priorities Letter and were chosen to highlight the role of outsourcing across various focus areas.

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Delaware Court of Chancery Finds a Material Adverse Effect and Permits Termination of Merger Agreement

Post from Insight & Analysis: Wilson Sonsini Goodrich & Rosati

In a 246-page post-trial decision issued this week, the Delaware Court of Chancery ruled that a buyer could terminate a $4.75 billion public company acquisition because of material adverse effects that had occurred at the seller following signing.1 The decision is the first Delaware case to reach such an outcome and provides critical guidance for such situations going forward.

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Takeaways from SEC’s First Ever Enforcement Actions Against Cryptocurrency Firms for Failing to Register as a Broker-Dealer and Investment Company

Guest post by Michael S. Dicke and Alexis I. Caloza of Fenwick & West LLP

Over the past year, the U.S. Securities and Exchange Commission has ramped up its scrutiny of cryptocurrencies and other digital token offerings. On Sept. 11, 2018, the SEC escalated its crackdown when it announced a pair of settled enforcement actions against non-issuers participating in the offer and sale of cryptocurrencies it deemed unregistered securities. As with prior cryptocurrency cases, the SEC charged the defendants with offering or selling securities without filing a registration statement or having a valid exemption from registration. However, these cases mark the SEC’s first cryptocurrency enforcement actions against non-issuers for failing to register as broker-dealers and investment companies. As such, they highlight the SEC’s continuing efforts to bring the purchase and sale of cryptocurrencies within a regulated framework, including by targeting third parties who facilitate the purchase and sale of such assets.

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