This webinar provided a mid-year review of financial regulatory priorities, with a focus on SEC and FINRA as well as a discussion on industry events from 2017 that have contributed to and shaped on-going compliance priorities. Watch recordings from the webinar here; https://mco.mycomplianceoffice.com/mco-webinar/sec-finra-2017-priorities-a-midyear-update

2. 2
Contents
What Regulators are Saying 2017 | June 28 2017
Introduction 1
Securities Regulation 1.1
Executive Order 13772 - Core Principles for Regulating the United States
Financial System
1.2
Financial CHOICE Act 1.3
Tax Reform 1.4
DOL Fiduciary Rule 1.5
What are Regulators Doing and Saying? 1.6
Speeches and Statements 2
SIFMA Seminar (General Assembly) - Interview with Ken Bentsen, SIFMA
CEO
2.1
SIFMA Seminar (General Assembly) - Regulatory Priorities Panel 2.2
SIFMA Seminar (General Assembly) - Enforcement Priorities Panel 2.3
FINRA Conference - Remarks from Robert W. Cook, FINRA CEO 2.4

3. 3
Contents
What Regulators are Saying 2017 | June 28 2017
3
Selected Topics: Conference Panel Roundup 3
SIFMA Seminar - Trading panels – Equity, fixed-income, and municipal
Securities
3.1
SIFMA Seminar - Private banking and private wealth 3.2
SIFMA Seminar - Investment banking compliance 3.3
SIFMA Seminar - Gifts and gratuities 3.4
FINRA Conference - Investment banking and research 3.5
SIFMA Seminar - Diversity & inclusion 3.6

4. Introduction

5. 5
Securities Regulation
• On January 20, 2017 Donald Trump was inaugurated as the 45th President of
the United States
• Since that time, there has been significant uncertainty about regulatory direction
for the financial industry. Though there is widespread expectation that the
President and Congress will seek some amount of financial deregulation, the
scope of such deregulation is not known.
− President Trump issued an Executive Order (No. 13772 – Core Principles
for Regulating the United States Financial System) directing the Secretary
of the Treasury to review financial regulations and prepare a report on his
findings. (Released June 12, 2017).
− Jay Clayton confirmed as Chairman of the SEC
− New SEC Corporation Finance Director and Deputy Director (William H.
Hinman & Robert Evans III)
− New SEC enforcement heads named (Stephanie Avakian & Steven Peikin)
− Christopher Giancarlo nominated to serve as Chairman of the CFTC
− New CEO at FINRA
• There has also been substantial uncertainty in the financial industry as
Congress considers topics such as the Financial CHOICE Act and tax reform.
What Regulators are Saying 2017 | June 28 2017

6. 6
Executive Order 13772 - Core Principles for Regulating
the United States Financial System
• Provided list of seven “Core Principles” that should inform regulation of the
United States financial system, including:
− Making regulation efficient, effective, and appropriately tailored;
− Restoring public accountability within federal financial regulatory agencies
and rationalizing the federal financial regulatory framework; and
− Fostering economic growth and vibrant financial markets through more
rigorous regulatory impact analysis that addresses systemic risk and market
failures, such as moral hazard and information asymmetry
• Directed the Secretary of the Treasury to prepare a report detailing a review of,
among other things, the existing regulatory framework, and what is and can be
done to promote the Core Principals listed in the Order.
− Initial report focusing on depository institutions released on June 12, 2017
detailing findings and suggesting recommendations.
What Regulators are Saying 2017 | June 28 2017

7. 7
Financial CHOICE Act
• Introduced in the House of Representatives on April 26, 2017
• Amended version passed in the house on June 8, 2017
• Bill proposes a number of significant changes to United States financial
regulatory framework, including:
− Repeal of Title II of the Dodd-Frank Act, which established the Orderly
Liquidation Authority
− Regulatory “off ramp” for well-capitalized financial institutions
− Restructuring of the CFPB
− Repeal of the DOL Fiduciary Rule
What Regulators are Saying 2017 | June 28 2017

8. 8
Tax Reform
• Currently there are a number of competing, and often conflicting, proposals for
tax reform.
• Tax reform affects everyone, and will affect the financial industry significantly
• Currently an overall, general feeling of caution and uncertainty
What Regulators are Saying 2017 | June 28 2017

9. 9
DOL Fiduciary Rule
• Took effect in part on June 9, 2017
• Full compliance date for brokers and insurance agents is January 1, 2018
• Highly contested and debated topic in the regulatory, legislative, and judicial
space.
• SEC Jay Clayton noted in a public statement that the SEC will engage with the
DOL in hopes to providing robust substantive input in shaping the standard of
care discussion and policymaking.
What Regulators are Saying 2017 | June 28 2017

10. 10
What are Regulators Doing and Saying?
• SIFMA Compliance & Legal Society Annual Seminar (March 2017)
• FINRA Annual Conference (May 2017)
• Talking and interacting with regulators in in the course of daily practice
What Regulators are Saying 2017 | June 28 2017

11. Speeches and Statements

12. 12
SIFMA Seminar (General Assembly) - Interview with Ken
Bentsen, SIFMA CEO
• Panelists
− Ken Bentsen, President and CEO, SIFMA
− Michelle Oroschakoff, Managing Director and CRO, LPL Financial LLC
• Key SIFMA priorities
− Senior Investors
− Following Washington DC:
− DOL Rule, tax reform
− Brexit consequences
• How SIFMA plans to manage priorities
− Committee structure
• Retail standard of care
− Support for a “best interest” standard for broker-dealers
− SIFMA views the SEC as the right venue for rulemaking and regulation
− Comment letter by SIFMA regarding the DOL Rule:
http://www.sifma.org/issues/item.aspx?id=8589955445
What Regulators are Saying 2017 | June 28 2017

13. 13
SIFMA Seminar (General Assembly) - Regulatory
Priorities Panel
• Panelists
− Moderated by: Allan Cohen, EVP & Global Head of Compliance, Goldman,
Sachs & Co.
− Susan Axelrod, EVP of Regulatory Operations, FINRA
− Bryan Bennett, Associate Regional Director, SEC Los Angeles
− James Bergin, Deputy GC and SVP, Federal Reserve Bank of NY
− Rodgin Cohen, Senior Chairman, Sullivan & Cromwell LLP
− Andrea Seidt, Commissioner, Ohio Department of Securities
What Regulators are Saying 2017 | June 28 2017

14. 14
SIFMA Seminar (General Assembly) - Regulatory
Priorities Panel
• Regulatory direction
− “People as policy”
− No wholesale elimination of regulation
− Future of the “broken windows” policy
− FINRA focusing on core work
• Key priorities of global regulators
− Cybersecurity
− Financial Crime and AML
− Market integrity
− Capital and liquidity
− Culture, conduct, and reputational risk
− Sales practices
− Operational risk
− Municipal advisor activity
− High risk and recidivist financial advisors
• Focus on Cybersecurity
What Regulators are Saying 2017 | June 28 2017

15. 15
SIFMA Seminar (General Assembly) - Enforcement
Priorities Panel
• Panelists
− Moderated by: Robert Khuzami, Parner, Government & Internal Investigations,
Kirkland & Ellis LLP
− Stephanie Avakian, Deputy Director, Division of Enforcement, SEC
− Stephen Cutler, Vice Chairman, JPMorgan Chase & Co.
− Gretchen Lowe, Principal Deputy Director, CFTC
− Susan Schroeder, Deputy Chief of Enforcement, FINRA
− Andrew Weissmann, Chief of the Criminal Division’s Fraud Section, DOJ
What Regulators are Saying 2017 | June 28 2017

16. 16
SIFMA Seminar (General Assembly) - Enforcement
Priorities Panel
• Agency priorities
− No major shift to enforcement priorities
− Rising profile of cybersecurity issues
− Perennial concerns regarding financial fraud and insider trading
− Focus on budget constraints
• Enforcement issues and changing leadership
− Many agencies with new leadership
− SEC
− FINRA
− CFTC
− Many positions yet unfilled
• Stacking of penalties
• Agency enforcement pipelines
What Regulators are Saying 2017 | June 28 2017

17. 17
FINRA Conference - Remarks from Robert W. Cook,
FINRA CEO
• Key FINRA priorities
• Review of FINRA operations - Three key questions
− FINRA’s policies and programs
− FINRA’s organization and operations
− FINRA’s engagement with stakeholders
• FINRA360— Top-to-Bottom Review Program
What Regulators are Saying 2017 | June 28 2017

18. 18
FINRA Conference - Remarks from Robert W. Cook,
FINRA CEO
• Key FINRA priorities
• Review Rulebook to identify areas for improvement
• Supporting Technology Innovation
− Review impact of fintech-related business models and tools on investors as
well as broker-dealer operations
• Providing New Compliance Tools and Resources
− Compliance Calendar
− Vendor Directory
− Exam Findings Report
• Enhancing Communication and Engagement
What Regulators are Saying 2017 | June 28 2017

19. Selected topics:
Conference Panel Roundup

20. 20
SIFMA Seminar - Trading panels – Equity, fixed-income, and
municipal Securities
• Equity and Fixed Income trading
• Volcker Rule
− Possible amendment
• Advancements in technology and cybersecurity
• Firm culture and compliance
− Litvak case
• Equity market structure
− Data Feeds
− Should exchanges be SROs?
− CAT
What Regulators are Saying 2017 | June 28 2017

21. 21
SIFMA Seminar - Trading panels – Equity, fixed-income, and
municipals securities
• Municipal securities
• MCDC issuer settlement takeaways and muni advisor enforcement
• MSRB rulemaking
− Municipal advisor rulemaking
− Rule G-42 – Duties of Non-Solicitor Municipal Advisors
− Rule G-37 - Political Contributions and Prohibitions on Municipal Securities
Business and Municipal Advisory Business (Pay-to-play rule)
What Regulators are Saying 2017 | June 28 2017

22. 22
SIFMA Seminar - Private banking and private wealth
• Diminished capacity/elderly investors
• Retail Standard of Care/DOL Fiduciary Rule
• Regulation by entities other than the SEC, FINRA, and the CFTC
• Robo-Advisor issues
What Regulators are Saying 2017 | June 28 2017

23. 23
SIFMA Seminar - Investment banking compliance
• Conflicts and related disclosures
• Confidential information/information barriers
• Raising capital in the private markets
• Due diligence developments
• Cybersecurity
What Regulators are Saying 2017 | June 28 2017

24. 24
SIFMA Seminar - Investment banking compliance
• IPO Allocation (Rule 5131)
• Anti-bribery
• Supervision
• Other legal issues
What Regulators are Saying 2017 | June 28 2017

25. 25
SIFMA Seminar - Gifts and gratuities
What Regulators are Saying 2017 | June 28 2017
• 2005 FINRA Memo, “Improving Examination Results”
− Noted that a primary concern is “patterns of excessive gifts, which
may improperly influence business decisions.”
• NASD Notice to Members 06-69, Gifts and Gratuities
− Discusses some of the more common compliance weaknesses
observed by FINRA
• FINRA Regulatory Notice 16-29, Gifts Gratuities and Non-Cash
Compensation Rules
− Requested comment regarding changes to Rules 3220-3222
− Seeks to potentially consolidate Rules 3220-3222 into a single rule
− Would raise gift limit from $100 to $175 per year
− Would include a de minimis threshold below which firms would not
have to keep records of gifts given or received
− Would incorporate existing guidance and interpretive letters into the
rules.

26. 26
FINRA Conference - Investment banking and research
• Material Nonpublic Information and Information Barriers
− SEC Staff Summary Report on Examinations of Information Barriers
• Research-related Issues
− Equity Rules
− Fixed-Income Rules
− Desk Commentary Safe Harbor
− FINRA Regulatory Notice 17-16
• Supervision Issues
What Regulators are Saying 2017 | June 28 2017

27. 27
SIFMA Seminar - Diversity & inclusion
• General counsel roundtable
− Becoming a diversity leader
− The importance of D&I in the client, regulatory and judiciary spaces
− Effective and inclusive leadership
− Equal pay initiatives
What Regulators are Saying 2017 | June 28 2017

28. Q & A

29. 29
Highlights
• Manage by alerts not reports
• Dashboards deliver greater oversight
• Custom questionnaire builder
• Continuous updates to the software
• Enhanced control
• 100% data capture
• 24/7/365 support
• Scalable into the future
What Regulators are Saying 2017 | June 28 2017

30. 30
Contact
MyComplianceOffice
www.mycomplianceoffice.com
Phone: (866) 951-2279
advance@mycomplianceoffice.com
@mycompliance
Shearman & Sterling
Russell Sacks - Partner
T: +1 212 848 7585
rsacks@shearman.com
Jennifer Morton - Counsel
T: +1 212 848 5187
jennifer.morton@shearman.com
What Regulators are Saying 2017 | June 28 2017

31. 31
Speakers
What Regulators are Saying 2017 | June 28 2017
• Russell Sacks - Partner
• T: +1 212 848 7585
• rsacks@shearman.com
− Russell Sacks, a partner in the global
Financial Institutions Advisory & Financial
Regulatory Group, provides advice to market
participants on a worldwide basis with respect
to regulatory, transactional, trading and
markets issues, with particular emphasis on
U.S. regulation of securities broker-dealers,
alternative trading systems, clearing agencies,
and exchanges. Prior to joining Shearman &
Sterling, he served as law clerk to The
Honourable Justice Allen M. Linden of the
Federal Court of Appeal in Ottawa, Canada.
• Bar Admission
• New York
• Education
• University of Toronto, Faculty of Law, LL.B.,
1998, with Honors
• Columbia College, B.A., 1994, magna cum
laude
• Jennifer Morton - Counsel
• T: +1 212 848 5187
• jennifer.morton@shearman.com
− Jennifer Morton, a Counsel in the global Financial
Institutions Advisory & Financial Regulatory Group,
provides advice to US and non-US banks and broker-
dealers on regulatory, transactional, trading and
markets issues. She has participated in the formation
of brokerage firms, and her responsibilities include the
representation of the firm’s underwriting clients under
the rules of the Financial Industry Regulatory Authority
(FINRA) and the state securities laws. Ms. Morton also
advises on the formation and structuring of private
wealth management businesses.
• Bar Admission
• New York
• Education
• Fordham University School of Law, J.D.; Editor-in-
Chief, Fordham International Law Journal
• Connecticut College, B.A.

32. 32
Shearman & Sterling
• As one of the first law firms to establish
a presence in key international markets, Shearman & Sterling
has led the way in
serving clients wherever they do business.
This innovative spirit and the experience we have developed
over more than 140 years make us the “go-to” law firm.
• From major financial centers to emerging markets, we have the
reach, depth and global perspective necessary to advise our
clients on their most complex worldwide business needs.
• ABU DHABI
• BEIJING
• BRUSSELS
• DUBAI
• FRANKFURT
• HONG KONG
• LONDON
• Menlo park
• MILAN
• NEW YORK
• PARIS
• ROME
• SAN FRANCISCO
• SÃO PAULO
• Saudi ARABIA*
• SHANGHAI
• SINGAPORE
• TOKYO
• TORONTO
• WASHINGTON, DC
These materials provide general information on our firm and the legal developments described above. They are
intentionally summary in nature and do not represent legal advice.
What Regulators are Saying 2017 | June 28 2017

33. Thank you