Enforcement

SEC Charges Purported Crypto Trading Platforms and “Investment Clubs”

Summary: The SEC filed charges in federal court against multiple purported crypto asset trading platforms and several “investment clubs,” alleging they misappropriated at least $14 million from U.S. retail investors through an “investment confidence scam.” According to the complaint, the clubs used WhatsApp and social media advertisements to solicit investors, provided purported “AI-generated” trading tips to build credibility, and then directed investors to fund accounts on fake crypto trading platforms and to purchase nonexistent “Security Token Offerings.”

Why it matters: The case underscores the SEC’s continued focus on digital-channel solicitation—including social media and messaging apps—and on the use of “AI” marketing claims to lend legitimacy to investment pitches. For compliant managers, it also serves as a reminder that regulators expect strong controls around communications, third-party promotion, and investor-facing representations, particularly where new platforms and “investment clubs” blur the lines between education, marketing, and solicitation.

Potential action: Firms should review policies governing employee and third-party communications on messaging apps and social platforms, reinforce training on red flags associated with “club-style” solicitations and AI-driven claims, and confirm incident-response and escalation procedures when clients or prospects reference potential scams. Managers marketing digital asset strategies should also ensure that all platform, licensing, and product statements are accurate, well-documented, and applied consistently across all channels.

Read More Here (SEC)

Rulemaking

CFTC Staff Issues Interim No-Action Relief on CPO Registration

Summary: The Commodity Futures Trading Commission issued a staff no-action letter stating it will not recommend enforcement action against certain SEC-registered private fund managers that withdraw from, or do not register as, Commodity Pool Operators (CPOs), provided specified conditions are met. The relief applies on an interim basis to registered managers advising privately offered funds limited to Qualified Eligible Persons (QEPs) and that continue to satisfy applicable reporting and notice requirements.

Why it matters: The action addresses long-standing concerns around duplicative SEC and CFTC oversight and could reduce compliance burden, overlapping examinations, and NFA obligations for eligible private fund managers advising sophisticated investors.

Potential action: Managers should evaluate whether their fund structures, investor base, and reporting obligations satisfy the conditions of the relief and consider whether continued CPO registration is necessary while monitoring for potential permanent rulemaking.

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Foreign Private Issuer Insiders to be Subject to Section 16 Reporting

Summary: The FY2026 National Defense Authorization Act, signed December 18, 2025, includes the “Holding Foreign Insiders Accountable Act,” which extends Exchange Act Section 16(a) insider reporting to officers and directors of foreign private issuers (FPIs). Starting March 18, 2026 (90 days after enactment), covered FPI insiders must file Section 16 reports on Forms 3, 4, and 5 (including reporting ADR activity, since ADRs are treated as derivatives of the underlying equity).

Why it matters: This is a meaningful shift for US-listed FPIs that historically relied on the SEC’s accommodation and exemptions from Section 16. Importantly, the new law does not (extend Section 16(b) short-swing profit disgorgement, extend Section 16(c) short-sale prohibitions, or impose Section 16 reporting on 10% beneficial owners of FPIs—so the change is targeted to officers/directors, but still introduces fast-turn public reporting (e.g., Form 4 within two business days) and heightened scrutiny/reputational risk for late or inaccurate filings.

Potential action: FPIs (and compliance/legal teams supporting FPI insiders) should begin readiness work now: identify who qualifies as an “officer” under Rule 16a-1(f) (function/duties-based), map insider holdings and equity-comp arrangements (including indirect/family/trust holdings), set up the operational plumbing—EDGAR Next access, filing codes, powers of attorney, and any filing-agent delegations—and refresh insider trading/pre-clearance controls and training so equity grants/vesting/exercises and 10b5-1 plan trades are captured and reported on time.

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What Regulators are Saying

SEC Investor Advocate Highlights Private Market and Disclosure Focus in 2025 Report to Congress

Summary: On Dec. 17, 2025, the SEC’s Office of the Investor Advocate delivered its FY 2025 Report to Congress, discussing investor research, advocacy efforts, and issues affecting private markets and disclosure, including engagement on rule proposals and investor challenges.

Why it Matters: The report underscores continued attention on private markets, investor protection, and disclosure processes — themes that may presage future guidance or enforcement priorities relevant to advisers, including those managing private funds.

Potential Actions: Advisers should Monitor evolving SEC disclosure expectations for private market products.Ensure client communications and offering documentation align with current disclosure best practices. Track potential future rule proposals impacting private funds and reporting.

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Events

IAA Investment Adviser Compliance Conference Returns to D.C.

Summary: The Investment Adviser Association will host its Investment Adviser Compliance Conference on March 18–20, 2026 in Washington, D.C. The conference brings together SEC staff, CCOs, legal advisers, and compliance professionals for practical discussions on current regulatory priorities and compliance best practices.

Why it matters: The event is a key forum for advisers to hear directly from regulators, stay current on exam and enforcement trends, and benchmark their compliance programs against industry standards.

Potential action: Firms should consider registering early, identifying priority sessions aligned with their regulatory focus, and using the conference to connect with peers and regulators.

Read More Here (IAA)