The Board of Governors of the Federal Reserve System ("FRB") has issued the Guidance on Managing Outsourcing Risk to remind financial institutions supervised by the FRB to exercise appropriate risk management and oversight when using service providers. According to the guidance, a "service provider" is defined as any organization or entity, such as a consultant, that enters into a contractual relationship with a financial institution to provide business functions or activities, such as accounting, auditing, loan review, compliance, or risk management. The guidance describes factors that

The Board of Governors of the Federal Reserve System ("FRB") issued a final rule amending Part 234 or Regulation HH ("Designated Financial Market Utilities") of the FRB's regulations. The final rule sets out the conditions and requirements for a Federal Reserve Bank to open and maintain accounts for, and provide financial services to, financial market utilities ("FMUs") designated as systemically important by the Financial Stability Oversight Council ("FSOC"). Additionally, the rule authorizes a Federal Reserve Bank to pay interest on the balances maintained by a designated FMU. The rule

FINRA has ordered a broker-dealer firm to pay restitution to 84 customers for sales of unsuitable leveraged and inverse exchange-traded funds ("ETFs") and for excessive mutual fund switches. FINRA found that the broker-dealer failed to establish and maintain a reasonable supervisory system and instead supervised leveraged and inverse ETFs ("Non-Traditional ETFs") in the same manner that it supervised traditional ETFs. In addition to not providing adequate training regarding ETFs, the firm allowed its registered representatives to recommend these complex ETFs without performing reasonable

The SEC Office of Investor Education and Advocacy has issued a bulletin to provide information on SEC's delinquent filing program. The SEC stated that it has the authority to suspend or revoke the registration of companies that fail to submit periodic reports, file materially deficient periodic reports, or do not submit the reports in a timely manner. The SEC explained that timely and complete submissions of periodic reports provides investors with information to help them make informed investment decisions. See: SEC Investor Bulletin.

The SEC has published additions to its Securities Act Compliance and Disclosure Interpretations ("C&DIs"). The additions cover questions regarding Rule 506 ("Exemption for Limited Offers and Sales without Regard to Dollar Amount of Offering"), including when an issuer is required to determine whether the bad actor disqualification applies, clarification of the definition of "affiliated issuer," and disqualifications under the rule. See: Updated SEC C&DIs. Related news: SEC Updates Securities Act Rule Q&A (November 14, 2013).