FINRA has begun a broad review of the rules governing its arbitration forum. In Regulatory Notice 26-06 (“RN26-06”), FINRA requested public comment on a wide range of potential changes to arbitration procedures and policies. The request forms part of the organization’s broader FINRA Forward initiative, which aims to modernize FINRA’s rulebook and regulatory systems.

FINRA and the SEC have proposed replacing FINRA Rules 3270 and 3280 with a single new Rule 3290 designed to narrow reporting to investment-related activities and preserve stricter controls for outside securities transactions, especially when selling compensation is involved. This proposed regulation is currently before the SEC and may be adopted this spring.

California is close to putting generative AI obligations for lawyers into a statute. Senate Bill 574 (SB 574), authored by Senator Thomas Umberg, would add explicit duties for attorneys who use generative AI in the practice of law and would restrict certain uses of AI by arbitrators.

The U.S. Department of Labor has issued a new Notice of Proposed Rulemaking addressing how to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. The proposal would rescind the Department’s 2024 final rule and largely restore the framework adopted in 2021, with certain modifications.

On November 17, 2025, the staff of the Securities and Exchange Commission (“SEC”) issued a no-action letter to the Financial Services Institute that meaningfully alters the regulatory landscape governing how registered representatives may receive transaction-based compensation. Previously, there was an absolute ban on broker-dealers paying transaction-based compensation to anyone other than the registered person generating the commissions. For the first time, however, the SEC staff stated it would not recommend enforcement action when a broker-dealer pays transaction-based compensation to an unregistered, pass-through, personal services entity wholly owned by one or more registered representatives, provided a detailed set of conditions is satisfied.

Effective January 1, 2026, AB 692 marks California’s newest effort to limit employer-imposed restraints on workers by banning repayment obligations tied to separation from employment. The law builds on California’s aggressive pro-mobility statutory framework, particularly recent expansions to Business & Professions Code § 16600, and creates new compliance obligations for employers who use training-repayment agreements, “clawback” provisions, or similar contract structures.

On November 17, 2025, the SEC Division of Examinations (the “Division”) issued its annual Examination Priorities (“Exam Priorities”) for fiscal year 2026. Exam Priorities outline the key areas where the SEC intends to focus its oversight in the coming year, including heightened attention to cybersecurity, operational controls, and core investment adviser compliance obligations.

The deadline for California-registered investment adviser representatives (“IARs”) to complete their required Investment Adviser Representative Continuing Education (“IAR CE”) hours is quickly approaching. Every IAR registered in California must comply with these requirements, regardless of whether they are associated with a state-registered or federally covered investment adviser.

Do you have a plan for your business’s future? What would happen to your business if a sudden unforeseen event made you unable to work? Would your family or estate know who to contact or how to operate the business in your absence? Planning ahead is an essential part of protecting your business, your clients, and your legacy.

Earlier this year, FINRA released its proposal to update Rule 3220, Influencing or Rewarding Employees of Others (the “Gift Rule”)[1]. The Gift Rule prohibits any member or person associated with a member, directly or indirectly, from giving or allowing to be given anything of value in excess of $100 to any person where such gift is in relation to the business of the recipient[2]. Similar to the current rule, this proposed rule would not apply to gifts from a member to its own associated persons, or gifts from a member or its associated person to an individual retail customer[3]

On June 12, 2025, the SEC withdrew fourteen regulations that were proposed over the past three years, stating they have no intent to issue final rules regarding the proposed.[1] When asked about the mass withdrawal, the SEC stated it is “getting back to [its] roots.”[2] Amongst the rules withdrawn included:

At the annual conference on federal and state securities cooperation, the Acting SEC Chairman, Mark T. Uyeda, announced the SEC may revisit the current minimum asset under management (“AUM”) threshold for investment advisers to registered with the SEC. The last time the AUM threshold was increased was the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). The SEC’s goal is to sustain its focus on oversight of large investment advisers and maintain the balance between federal and state registered advisers.

In early April 2025, NASAA amended its model rules for Dishonest or Unethical Business Practices of Broker-Dealers and Agents (“Conduct Rule”) to limit use of the term “advisor” or “adviser” in title, purported credential, or professional designation of a broker dealer, without additionally being licensed as an investment adviser or investment adviser representative.

California’s Clean Slate Act, composed of Assembly Bill 1076 and Senate Bill 731, aims to expand opportunities for individuals with past criminal convictions by allowing automatic record sealing under specific conditions. While these laws provide significant relief at the state level, they do not override federal regulatory requirements—particularly for individuals pursuing licensure in federally regulated activities such as the financial services industry.

On December 20, 2024, the Securities Exchange Commission announced that it had settled with multiple entities for failing to timely file Forms D for several unregistered securities offerings in violation of Rule 503 of Regulation D under the Securities Act of 1933 (the “Securities Act”). [1] These entities include:

In December of last year, I was fortunate to try a case in the Delaware Court of Chancery, generally regarded as the world’s foremost court for the resolution of intra-corporate disputes. This article will provide some background about the Court and discuss its practices and procedures, a number of which make it a highly desirable forum for matters within its jurisdiction and expertise.

On August 28, the Financial Crimes Enforcement Network (“FinCEN”), within the U.S. Treasury Department, issued a final rule, the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (“Final Rule”), which extends certain anti-money laundering (“AML”) compliance obligations to most investment advisers (“RIAs”) registered with the Securities and Exchange Commission (“SEC”), and investment advisers that report to the SEC as exempt reporting advisers (“ERAs”).

FINRA recently announced in Regulatory Notice (“Reg. Notice”) 24-12, amendments to Rule 3240 (the “Rule”) which generally prohibits borrowing from or lending to customers by registered persons. These amendments include: modernizing the "immediate family" definition; narrowing exceptions for personal and business relationships; and introducing stricter notice and approval requirements for permissible arrangements. In addition, the Rule’s scope now extends to arrangements made before and after the broker-customer relationship, with new obligations on member firms to assess risks associated with such arrangements. These amendments will take effect on April 28, 2025 (the “Compliance Date”).

On October 21, 2024, the U.S. Securities and Exchange Commission (SEC) Division of Examinations released its annual examination priorities for the fiscal year 2025, outlining areas of risk and focus for market participants. As in past years, the SEC’s areas of focus include upholding fiduciary obligations, avoiding conflicts of interest, and cybersecurity. The SEC’s newer areas of focus include ensuring proper use of artificial intelligence (AI) and private fund adviser regulations. The SEC’s priorities reflect both longstanding concerns and emerging risks in the financial markets.

The Supreme Court's decision in SEC v. Jarkesy (“Jarkesy”) curtails the Securities and Exchange Commission’s (SEC) use of SEC-appointed judges in its enforcement actions. Jarkesy sets a new precedent for how regulatory enforcement actions might be adjudicated moving forward, not only for SEC actions, but also enforcement actions across other regulatory agencies, including the Financial Industry Regulatory Authority (FINRA). Such potential ramifications of this ruling are detailed below.