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5 Trends to Watch: 2023 Financial Regulatory & Compliance

  1. Continued Rapid Pace of SEC Rulemaking – The U.S. Securities and Exchange Commission (SEC) proposed 35 new rules and adopted 17 rules in 2022 alone. The regulator’s emphasis on oversight shows no sign of abating in 2023, even as many of these rules go into effect during the coming year.

  2. Fallout Expected from Revised Rules Under the Investment Advisers Act – With amendments to Rule 206(4)-1 under the Act having gone into effect in November 2022, expect the SEC to closely monitor the marketing activities of all types of investment advisers, including those advising hedge funds and private funds. In fact, the SEC already has published two new FAQs on the Rule and expect more guidance and possible cases to come in 2023.

  3. SEC Enforcement Actions to Remain Highly Active – During the COVID-19 pandemic, the regulator increased the number of its enforcement actions. This trend is expected to continue and build further as investors generally bring more claims in a market downturn, and we don’t expect the SEC’s pace of enforcement to slow.

  4. SEC and FINRA Expected to Continue Prioritizing Examinations – The SEC and the Financial Industry Regulatory Authority (FINRA) increased both the number and length of time for their examinations during the COVID-19 pandemic – with many of these lasting as much as 18 to 20 months. Because the regulators are taking the view that even the smallest violations matter, they are expected to continue their efforts to dig deeper into companies’ procedures and programs.

  5. Pro-Active Efforts to Stay Ahead of Compliance Issues are Priorities for Financial Industry Firms – With new rules going into effect in 2023 and regulators stepping up their scrutiny and enforcement activities, many firms in the industry are seeking guidance regarding potential compliance issues and working on inhouse solutions to ambiguous issues. We are expecting new or clarified regulatory positions, potentially in the form of risk alerts but possibly via enforcement actions, on various new compliance issues that in 2022 and will arise in 2023.

About the Authors

Richard M. Cutshall is co-chair of Greenberg Traurig, LLP’s Financial Regulatory and Compliance Practice and co-chair of the firm’s Investment Management Group. He represents clients in a variety of investment management, general securities, and regulatory and examination-related matters.

William B. Mack also is co-chair of the firm’s Financial Regulatory and Compliance Practice. He advises companies on regulatory and compliance matters relating to Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority rules.

Greenberg Traurig, LLP’s Financial, Regulatory and Compliance Practice brings together attorneys from offices and practices worldwide to assist financial services firms of all types and sizes, as well as their holding companies, and investors and vendors to those firms. We provide guidance on national and global regulatory, supervisory, enforcement, litigation, legislative and policy, licensing, compliance, corporate, and governance matters.