The Securities Compliance Podcast: Compliance In Context

Welcome back to the Compliance In Context podcast! On today’s show, we do a deep dive into a brand new compliance mapping tool developed by the NSCP, review some of the exciting developments happening at the organization over the last 12 months, and preview the upcoming 2026 National Conference. In our Headlines section, the SEC recently proposes rescinding the advisor pay-to-play rule. And finally, we close up today with another installment of Outtakes, where the SEC recently sued 38 purported advisors, alleging false Form ADV filings and related disclosure issues.

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Headlines

Interview with Melissa Loner and Heather Traeger

Outtakes

Quotes

10:35-11:06 – “So for those of you who don’t know, the NSCP took the charge in creating a proposal for a Compliance Advisory Committee to be permanently instilled within the SEC. And the intent of that is so that compliance professionals can give real-time live feedback to the SEC in regard to proposals, rules, implementation, things that they’re thinking about, educational opportunities, directly from the compliance professionals that are affected by those items every day.” – Melissa 

17:16-17:42 – “Sometimes it’s about innovation and reinventing, and a lot of these listening tours have told us that, you know, we’re doing things, and we’re doing them well. As Heather pointed out, our biggest differentiator is we are for the individual compliance professional, and to be able to give them real takeaways that help them do their job every day, but also to evolve in their professional development. And so we wanted to make sure that we weren’t losing our roots.” – Melissa 

25:26-26:01 – “The concept is that it would give the SEC direct access to, you know, the practical perspective of those who are responsible for making regulatory requirements work in real-world environments. I mean, better implementation begins with better understanding, and so the comment letter process, as we all know, it happens, you know, once the proposal is out the door, and this is a mechanism that’s earlier and more effective regulatory engagement.” – Heather 

32:42-33:15 – “This allows you, at the National Conference, to hear from so many different perspectives and experiences in one place in three days. This is one that, you know, our team- everybody’s got their hand up to come to this conference because they are looking to get that information. And because there’s multiple tracks, you know, we send as many people as we can so that we can hear from all these different speakers.” – Heather

Welcome back to the Compliance In Context podcast! On today’s show, we dive into the conversation on how firms continue to develop legal practitioners and compliance officers in an AI era. In our Headlines section, the SEC Establishes a Financial Reporting and Accounting Unit Within Division of Enforcement and the SEC’s RegFlex Agenda SEC Agenda Targets Crypto, Climate Rescission, Treasury Clearing, and finally, we close up today with another installment of What’s On My Mind, where we review a recent quote from a track coach on how we can push our compliance colleagues to become the best versions of themselves.

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Headlines

Interview with Kurt Wachholz

What’s On My Mind

Quotes

19:56 – “We had them all present to the rest of the class, and the class judged everyone's presentation, the rationale, who they selected, why they selected, all that good stuff. We get done with the assignment, and I'm going up to tell everyone who won, because they all had to turn in who they thought did the best presentation. And what I said to them is, ‘You all failed the assignment.’ And they just couldn't believe it. It's like, ‘What do you mean we failed the assignment?’ I said, ‘Because what you all decided when you were given this was that you had to make a choice with what you were given.’ And so, the part we were trying to help them with was, nobody questioned the exercise. They tried to fit the exercise around what they were told to do. So what I was trying to help them with, especially when we think about ethics and things of that nature, sometimes you have to question the premise before you go to the answer. And so I thought that one of the things that was really helpful about that exercise is that your reasoning doesn't start with your choices; it starts with the premise for it. I think that really relates to AI. A lot of times, we're going to be thinking about what's the output and is it acceptable, versus what did we start with in the first place as to why we used the tool.” - Kurt

34:49 – “Experience is not just accumulating answers. Going through an exam and responding to the request didn't necessarily give me experience. What it gave me was an identity of, like, this means that this is the production of what something is being asked to produce. But it wasn't actually helping me learn how to think. It was helping me learn how to deliver.” - Kurt

42:45 – “Knowing the right answer is not the same as being able to produce the right outcome. Knowing we're doing something wrong isn't what you're winning. It's getting the right outcome from knowing that; that really matters to the business. How we give voice to a concern can determine whether that concern is even meaningful.” - Kurt

49:36 – “Finding the reg and understanding the reg is not going to be their challenge. I can't tell you how many hours I probably wasted reading rule releases so I could understand them. Not that I'm saying we shouldn't read them anymore. But what I'm saying is that summarizing things and being able to condense down what's the stuff that I really need to take away from this, that's a huge tool that will allow me to be more effective. But applying that is the part that's missing, and I think that's the key.” - Kurt

59:12 – “Technology changes. Throughout our time in the industry, technology continues to evolve. And the constant in all of that has been the principles that are the foundation of our industry. Those things have endured. But the key component that is crucial for us as professionals is that reasoning is what connects the two.” - Kurt

Welcome back to the Compliance In Context podcast! On today’s show, we will be providing a comprehensive, deep-dive look at Ponzi schemes—what are they, historical facts and impact, themes and trends, and some best practices to keep in mind to help prevent these types of frauds from occurring inside your firms and with any underlying clients. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome in Daniel Brinks, a Partner with StoneTurn and former regulator who spent more than 15 years at the SEC, most recently serving as a forensic account in the SEC’s Division of Enforcement..

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Interview with Daniel Brinks

Quotes

05:39: “So his scheme lasted eight months. He raised, you know, $20 million. But I think that the hallmarks of his scheme are still the hallmarks of what we see today. So the hallmarks of the original Ponzi scheme, a promise of high return, low risk…an exotic investment strategy, then the theft of assets, fake account statements. And I think the hallmark of a true Ponzi scheme is the recycling of assets, where you're using the investments of new investors to meet redemption requests from prior investors.” – Daniel Brinks

08:53: “I think the unfortunate and sad truth is that most Ponzi schemes are only uncovered when investors start bringing them to the attention of regulators. So the SEC has a TCR system, and when investors can't get their money back from schemers, they start reporting, 'Where's my money?' And then the SEC starts investigating it. That's unfortunately how most of these schemes fall apart, when they can no longer meet redemption requests and people start making complaints.” – Daniel Brinks

13:44: “I think the two characteristics that exist that investors and investment advisors should be on the lookout for the most is lack of transparency…the hard to get real answers on pieces of paper, statements. Think about as a scheme grows from ten investors to 100 or 200 investors, now you're sending quarterly statements to 200 investors. Like, that's a big administrative lift that probably most schemers don't have the ability to come up with rational answers for, where you're manufacturing complete trading histories that tie out, you know, multiple sets of books. It's really complicated to have multiple sets of books. So when schemes seem to get outside the realm of what people can do easily, information gets harder and harder to come by, and people should take that as a real warning flag when they're not getting, you know, account statements and things like that, or if the account statements look weird, right? They don’t look exactly what you would expect they would look like from a core custodian.” – Daniel Brinks

17:49: “I think another explanation for why [Ponzi schemes have declined] could be because we've generally been in a strong economic cycle. So, economic recessions cause increased numbers of redemption requests, and that puts a lot of pressure on the fund, and it makes them harder to ma- make, to meet those redemption requests. And that's when, whenever there's a recession, we see the number of Ponzi schemes that are prosecuted spike almost immediately. And I think the current strong economic cycle kind of has allowed frauds to go under the radar.” – Daniel Brinks

Welcome back to the Compliance In Context podcast! On today’s show, we discuss how to build a culture of compliance in AI world and some best practices firms are using now to build AI into their respective operations and compliance programs. In our Headlines section, the SEC to Raise Qualified Client Threshold for Performance-Based Fees, SIFMA Re-urges the SEC to Overhaul Communications Retention Rules, and SIFMA Urges SEC to Overhaul Communications Retention Rules, and finally, we close up today with another installment of Outtakes, where we review a recent enforcement action involving fraud and registration charges against three venture capital fund managers and their owner.

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Headlines

Interview with Erik Olsen

Outtakes

Quotes

14:13 – “Well, it’s, it’s the new shiny toy, right? It’s the souped-up new shiny toy that, as we always hear, you know, our neighbors down the street have and we don’t have, right? The same way they do marketing or, or something like that. So yeah, I agree with you. We got to figure out what is the use case for us because in, you know, us, you, them, it-it’s not going to be equal. Even though we all do asset management, you know, as we know within even the product lineup and the strategies we offer, it’s not all equal. So we do have to do that analysis. What do we use it for? What type of firm are we? Like I said at the top, we’re about 39 people. That AI use may look totally different than a shop that’s 1,000 people, right? Not only just what it... how you use it, what you’re using it for, but even how you even get to implement it.” – Erik Olsen

16:43 – “We are Microsoft Suite users, right? Copilot is basically in there. So we gave everyone the ability to use Copilot for work-related stuff. And in our acceptable use policy, which is an IT-owned policy, we had a section dedicated to large language learning models and AI and what you--basically the limitations. It was basically Copilot or bust. Here are the finer points. You know, put restrictions around trying to get backdoor access to Claude or Gemini or ChatGPT, whatever, et cetera. So that’s been kind of the last, again, let’s say, call it a year. And of course, people want more, which is fine. And the constant pullback was, “Yes, we want, we want more. Explain that to us,” and us really meaning—my firm, IT and compliance—to help us understand. We’re not against it. Like, that’s we--that was kind of the reaction. We’re not against it. We just want to understand what you want to use it for and to the part of we need governance first.” – Erik Olsen

28:24 – “Sometimes people view any kind of AI…like they view AI like the boogeyman, right? They’re like, it, it’s scary to them, and, and they’re worried about what their employees are going to do if they get involved with it. At the same time, like, when you go and do code of ethics training right now, at the end of the day, you are relying on people, given the training that you’ve conducted, that they’re going to disclose all of their personal brokerage accounts, that they’re going to tell you about all of their outside business activities, that they’re going to inform you when they make political contributions. And of course, there are some things we can do to help supervise that or test against some of that. But at the end of the day, you’re also very much relying on employees to incorporate the training that you’ve conducted into their day-to-day business and operations, and then making them certify to the notion that, “Hey, I’ve abided by the firm’s compliance policies and procedures.” – Patrick Hayes

35:57 – “We saw one person that, you know, was maybe a little skeptical about AI, and they got shown one of the tools and what it could do, and 180 them. Like, “Oh. Oh, yeah, okay, yeah. I want that now.” So they... I think some people, right, are, are hesitant or skeptical, like a lot of things, and not just AI. But, uh, you can show them some positive, you know, nature of it, and they’ll, they’ll swing around, and-Yeah-they’ll be all over it too.” – Erik Olsen

Welcome back to the Compliance In Context podcast! On today’s show, we discuss the FINRA Forward initiative and review some of the recent FINRA rulemaking activity in areas like outside business activities, personal securities transactions, gifts and gratuities, and performance advertising. In our Headlines section, the DOL reinstates the prior fiduciary standard under ERISA and Senator Warren Questions SEC Chair on alleged political interference in enforcement, and finally, we close up today with another installment of Outtakes, where a recent lawsuit filed by a former client against an RIA raises important considerations around appropriate disclosures and applicable standards of care.

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Headlines

Interview with Ed Wegener

Outtakes

Quotes

10:55 – “It’s clear that things don’t stay the same. Things change. The way we do business, technology, all of that changes, and it’s important for the rules to keep up with that. As well as show regulators enforce those rules. And so, from time to time, it’s really important to take a look and say, ‘What’s changed?’ and ‘Do we need to realign the rules with those changes?” – Ed Wegener

22:00 – “What you’re going to see is not just much more efficient regulators, which is always good, but more effective regulators. And so it’s important for firms to keep up because what you don’t want is regulators coming in with all this information and data and things that you don’t know about.” – Ed Wegener

22:37 – “There’s an opportunity for a great partnership there, between compliance departments and regulators, and this could be a really good way to do that. And the other thing, too, is all of these things are great. It only takes one big scandal to happen for things to just snap back into a much more reactive mode. So that’s one of the things the industry’s got to keep their eye on the ball, just make sure we’re keeping things in check, because we want to continue the momentum of all these changes and don’t want to have to take a step back.” – Ed Wegener

26:44 – “Probably the most important change in the proposal is that it would only apply to investment-related outside activities. So non-investment-related outside activities (such as being employed at a ride share company or working in a retail store), those would no longer need to be reported. But on the flipside, investment-related activities (like certain real estate investments, crypto, and digital asset-related activities, things that are investment related) would still fall under the requirements of 3290.” – Ed Wegener

Welcome back to the Compliance In Context podcast! On today’s show, we will be diving into the SEC Enforcement Manual, and more specifically, to some of the recent amendments that were made and what it tells us about the state of SEC Enforcement right now. To help guide us through the conversation, we are very pleased to welcome in Brian Rubin and Ellen Connell. In our Headlines section, SEC and CFTC begin to clarify application of federal securities laws to cryptocurrency, and finally, we close up today with another installment of Outtakes, where we try to help spread the word about an active phishing campaign targeting FINRA and SEC-registered financial services firms and advisers and how to make sure to avoid getting caught flat-footed.

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Headlines

Interview with Brian Rubin and Ellen Connell

Outtakes

Quotes

11:20 – “So the enforcement manual is basically an internal playbook guiding the staff on how to conduct investigations and recommend enforcement actions. When I was there, and I don’t know if this is still the case, it was in a red plastic binder, and we referred to it as the Red Book. It’s to help ensure fairness and consistency, and transparency for the process. And it covers everything from opening investigation to collecting evidence, engaging with companies and individuals, the Wells process, negotiations, cooperation, as we’ll talk about.” – Brian Rubin

13:11 – “This is the first set of updates since 2017, so it’s been quite a while. And the then SEC enforcement director (who just as we’re recording, announced her resignation just yesterday)she was quoted, Judge Margaret Ryan, in the press release explaining the relevance, saying that these updates to the enforcement manual are intended to ensure greater uniformity, to reflect the division’s best practices, to improve the staff’s ability to carry out the SEC’s mission of work on behalf of investors.” – Ellen Connell

16:45 – “Cooperation credit is something that we’ve been talking about in the securities industry for years. It’s kind of like the weather in Chicago, or too many emails in your email box; everybody talks about it and complains about it, but nobody really does anything about it. So I think this is an attempt to try to do more on it, so they’re laying out more clearly what the SEC expects. And cooperation isn’t going to be automatic. Simply complying with subpoenas won’t work. You have to go above and beyond.” – Brian Rubin

43:20 – “It shows that the SEC overall is being thoughtful about how it handles investigations. A lot of these issues, as I said before, have been discussed for years or decades, so it’s great that they are rethinking the process, looking for consistency, transparency, and fairness. Ultimately, at the end of the day, neither the SEC staff nor the defense side wants to fight about process-type issues. The things they want to focus on are: were there violations, were there intentional violations, were people harmed?” – Brian Rubin

44:13 – “To some degree, the impact of these revisions remains to be seen. In any event, they should really help companies shape their pre-SEC enforcement engagement behavior—as it relates to how they conduct their internal investigations, how they supervise, how they enforce their policies and procedures. And these changes could really increase companies’ opportunities to be heard in the enforcement process. But it’ll be interesting to see in the coming months, whether as we see settlements being announced, whether companies are getting self-reporting and or cooperation credit in those forthcoming orders.” – Ellen Connell

Welcome back to the Compliance In Context podcast! On today’s show, we will be taking an in-depth look at two of the hottest areas in the investment management space, namely—tokenization and crypto. To help guide us through the conversation, we are very pleased to welcome in two fantastic experts in the space, Louis Froelich and Fizza Khan. In our Headlines section, the SEC is taking a hard look at an electronic delivery rule and the SEC Enforcement Director share details on the Divisions current enforcement approach, and finally, we close up today with another installment of History Has Your Back, where some old quotes from a Stoic philosopher might just give us the push we need to navigate the regulatory filing season.

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Headlines

Interview with Fizza Khan and Louis Froelich

History Has Your Back

Quotes

09:26 – “I think a good way to start to think about tokenization is to focus on what it does, not what it is, right? Tokenization is itself a very technical process. Just like sending an email to someone else is actually very technical, how that all works, right? But everyone knows what it’s like to send and receive an email. Tokenization is not unlike sending and receiving email for digital assets, and digital assets here are legally, and that’s the goal tied to something in the real world. So you can create a tokenized version of something, which is really a digital version of something. It could be a cup, it could be a tape roller…And it could be, or it could be something like a stock, right? You create something that could be transacted digitally. And, as long as we’re going to talk about this today, as long as you take the proper steps, when you create the digital version of it, then what you get is a legally enforceable, standardized version of the thing that can be more easily transferred.” – Louis Froelich

11:55 – “I think the biggest differentiator between crypto and tokenization is crypto is this catch-all term. It’s a catch-all term to define digitalized or digitized assets. And it’s also a catch-all term that these assets, these digital assets, are then transacted on a blockchain. So that in and of itself is something that we can use kind of synonymously when referring to digital assets. I think that’s kind of like the nomenclature people are just reverting back to is saying crypto. And more importantly, I think crypto is, interestingly, the systems on which you transact. So I mentioned the blockchain, but they, you know, everything’s governed by a code as, as what Louis had alluded to with the tokenization process, and it’s all on this blockchain network. Tokenization is actually looking to take advantage of that. So as Louis mentioned, when you tokenize something, it can be that cup in, you know, it can be that piece of furniture as it may be more relevant to your audience members. It can be a security, it can be real estate. But when you take that—when you would normally transact in real estate or in a security, you may not have the efficiencies that are afforded on a blockchain network, that digitalized assets do have the opportunity to be more efficient and faster. And so when you take the process of digitizing a real-world asset, as Louis described, now you’re going that step further and saying, not only am I digitizing this asset, but I’m also allowing for the end users to take advantage of these blockchain systems.” – Fizza Khan

17:18 – “I mean, you can create a digital version of anything, you know? An interesting question is if you have the right to do so? Like, I can create a version of Taj Mahal and send it to you. It doesn’t, you know, do much for anyone. But I think the things that are being tokenized that are getting a lot of momentum in industry fall into two big categories. One is financial assets that are heavily intermediated and have settlement risk, and the other is just straight-up dollars. So the, the first one is you have stocks, futures trading, etc. You have layers upon layers of intermediaries and decades of legal and regulatory guidance and careers and systems, you know, for a futures contract. You have introducing brokers and FCMs and DCMs and DCOs, all to ensure compliance with the law and reducing counterparty and settlement risk.” – Louis Froelich

Welcome back to the Compliance In Context podcast! On today’s show, we get to dive deep into one of our favorite topics on this fine show, namely what’s happening with the SEC Marketing Rule and some recent guidance that’s come out from the Division of Examinations and the Division of Investment Management.  To help guide us through the conversation, we are very pleased to welcome back to the show, Chris Mulligan and Jeff Blumberg.  In our Headlines section, we pay tribute to the service of former Commissioner Caroline Crenshaw, and we will also review a recent FINRA proposal covering the financial exploitation of senior investors and a new rule addressing suspected fraud for all customers, and finally, we close up today with another installment of Outtakes, where we continue to see an increased focus from the SEC Division of Enforcement on insider trading and related fraud schemes.

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Headlines

Interview with Chris Mulligan and Jeff Blumberg

Outtakes

Quotes

08:03 – “I think this FAQ is going to be very welcome by the industry. And it really stems from the fact that the rule itself does not seem to require a model fee. Net returns are defined as gross returns minus the fees and expenses you pay the advisor. There’s a pretty clear definition. And it provides guidance around how you can use a model fee. But it doesn’t really require it in the rule itself. However, Footnote 590–and this is why it was so controversial—said that if the fee to be charged to the intended audience is anticipated to be higher than the actual fees charged, the advisor must use the model fee that reflects the anticipated fee to be charged in order not to violate the rule’s general prohibitions.” – Chris Mulligan

15:24 – “So risk alerts are a really important part of the Division of Examinations. And, you know, they really express what the Staff is seeing on examinations, right? So the priorities come out every year and receive a lot of attention. You know, the reality is the priorities are often very similar year to year. They sort of focused on the issues that, you know, everyone generally knows they’re going to focus on. And it doesn’t talk about the results. Like, what did you actually find on these exams. And that’s where the risk alerts really come in and I think are really terrific documents that help tell industry, you know, in an anonymous way, hey, here’s the issues that you’re seeing and this can really help CCOs.” – Chris Mulligan

18:26 – “Well, the one thing I think we need to make sure we add, and we talked about this briefly when we were prepping, Chris made a point of this, I think, is that once it’s been published in a risk alert, it’s far more likely to end up as a referral to enforcement if you get it wrong. It’s very clear across the industry that this is the SEC’s position now, so you need to pay attention to it. Because if you don’t pay attention to it, you’re far more likely to end up with enforcement breathing down your neck than just a deficiency in your exam.” – Jeff Blumberg

Welcome back to the Compliance In Context podcast! On today’s show, we will be serving up everything you need to know about Regulation S-P and the upcoming compliance date for many firms—what are the new requirements, what are firms doing to prepare, and best practices on implementation.  To help guide us through the conversation, we are very pleased to welcome in Kristin Snyder and Charu Chandrasekhar from Debevoise Plimpton. In our Headlines section, we review the 2026 Examination Priorities from the SEC Division of Exams, and finally, we close up today with another installment of History Has Your Back, where we examine what an old quote from an NBA superstar can teach us about conducting annual compliance reviews and the compliance profession.

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Headlines

Interview with Kristin Snyder and Charu Chandrasekhar

History Has Your Back

Quotes

09:00 – “So the amendments, which went into effect in May of 2024. And then as we've all noted, the compliance dates are coming up for large institutions on December 3rd and then for smaller institutions later in the year into 2026 in June. The amendment is actually required, and have brought to bear, a number of significant changes. At a very high level, they now require under the amended reg SP covered institutions and the covered institutions are defined to include broker-dealers, registered investment companies, registered investment advisors, funding portals, and transfer agents must now adopt a formal incident response program and have written policies and procedures that are reasonably designed to detect and respond to and recover from any unauthorized access to or use of customer information. There's a notification requirement that now exists if sensitive customer information was or was reasonably likely to have been accessed or used with that authorization. And I think that the notification provisions are really what's significant for firms, because that notification has to be made as soon as practicable, but no later than 30 days after the advisor becomes aware of a breach.” – Kristen

15:00 – “We've seen it actually done in a combination in which you see a lot of compliance manuals have a section on privacy, on cybersecurity. There's usually a reference to Reg S-P and its obligations. But then actually to implement the reg, the policies and procedures need to live in several different areas, like incident response. That's pure cybersecurity. And so you're likely going to have cybersecurity specific procedures in terms of just drafting the notice, getting it out to customers, making sure it's out the door within 30 days.” – Charu

18:09 –  “Some of the information that I think is meant to be safeguarded (so customer information that is covered by S-P) may not necessarily be a required record, you know, book and record under the Advisers Act. And so you're very, you know, you're correct that I think with disposal, you want to have secure methods in place. – Kristen

Welcome back to the Compliance In Context podcast! On today’s show, we will be providing a comprehensive, deep-dive look at SEC Enforcement over the last twelve months—including the real story behind some of the recent numbers, distinct areas of focus, and what we’re hearing from the Paul Atkins-led SEC. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome in two expert panelists (and accomplished podcasters), Andrew Dean from Weil Gotshal and Kurt Wolfe from Quinn Emmanuel.

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Interview with Andrew Dean and Kurt Wolfe

Quotes

05:11 –  “So, you know, the SEC's fiscal year runs October 1 through September 30, and we don't have the final numbers yet from that period. Our friends at Cornerstone always put out a nice report at the end of the year that kind of, you know, tell the story. It will be a little complicated by the fact that this fiscal year was over the course of two commissions that have relatively different approaches to enforcement. And so the first three and a half months of the fiscal year were under Chair Gensler, and the remaining were under interim chair Uyeda, and then Chair Atkins. You know, it’s clear that the enforcement actions are dramatically lower under the Atkins Commission. If we just look at the period, this is our friends at King and Spaulding putout this, and we’re giving a lot of credit to others who have, kind of, done the math for us. Between February and July of 2025 there were 67 enforcement actions. Compare that to 198enforcement actions during the same time period in 2021 when there was another Commission transition.” – Andrew Dean

20:25 – “They should focus on cases where there's a lot of harm to investors or potential harm to investors and not just technical violations, not foot faults. I think many would say that's a different tone or strategy than what we saw in the last administration. He even went out of his out of his way to say, SEC enforcement should never feel like a gotcha game. My third point would be transparency and predictability. I think, again, this is sort of consistent with what we've heard from Chairman Atkins, you know, back when he was a commissioner even, he thinks enforcement action should be consistent. The results should be fairly predictable and tied to SEC policies and coordinated across the divisions.” – Kurt Wolfe