The SEC recently instituted administrative proceedings against a Wyoming-based distributed autonomous organization (DAO) seeking to stop the registration of crypto asset offerings. The Order alleges that the Form S-1 registration statement failed to include required information and contained materially misleading statements and omissions in violation of the federal securities laws, including inconsistent statements as to the status of the tokens as securities. The Order further alleges that the company failed to cooperate with the SEC's examination of the registration statement.
This month, the Financial Industry Regulatory Authority (FINRA) announced that it is conducting a "targeted exam of firm practices regarding retail communications concerning [c]rypto [a]sset products and services." This sweep is reportedly examining approximately 20 brokerage firms regarding potential advertising of crypto to retail investors without properly communicating the risks associated with the assets. Specifically, the request is for the period July 1, 2022, through Sept. 30, 2022, and seeks, among other things, retail communications, whether the communications were filed with FINRA, whether a registered principal of the firm approved the communications, the firm's written supervisory procedures related to the approval and dissemination of the communications, and compliance materials relevant to the communications.
For more information, please refer to the following links:
- Speech: Commissioner Jaime Lizárraga: Digital Assets: Putting Investors First
- SEC Seeks to Stop the Registration of Misleading Crypto Asset Offerings
- FINRA is conducting a targeted exam of firm practices regarding retail communications concerning Crypto Asset1 products and services.
- FINRA Targets Brokers Hawking Crypto
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.