Katten’s Financial Markets and Funds Quick Take is a monthly newsletter that highlights key developments potentially impacting financial markets and funds.
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Seven leading AI development companies agree on codes of conduct that can be considered the first “best practices” in the industry
By Gary DeWaal, Dan Davis
Seven leading developers of artificial intelligence (AI) technologies have voluntarily agreed to meet eight specific commitments to help mitigate the risks of AI, a ceremony announced at the White House on July 21. These are based on three core principles, which The White House said: “Security and trust must be fundamental to the future of AI.” The commitments follow the release of a draft “AI Bill of Rights” by the White House, which also included principles for the “design, use, and deployment of automated systems to protect the American public in the age of artificial intelligence.” Read more about AI best practices.
Federal Reserve warns of potential risks from quantum computing and AI
By Gary DeWaal, Dan Davis
The advent of quantum computing and generative artificial intelligence could potentially pose new risks to the US financial system, the Federal Reserve System Board of Governors warned in a report submitted to Congress Aug. 1 (the Report). These and other threats require unspecified “collective action by government and close collaboration with the private sector in advancing policies to understand and mitigate risks,” the report said. Read more about the issues raised in the report.
Disagreements arise between judges of the same courthouse in the decision to deny the motion to dismiss the SEC enforcement action against Terraform Labs
By Gary DeWaal, Dan Davis
A U.S. federal district court judge challenged in the affirmative the analysis of another district judge sitting in the same courthouse and denied defendants’ motion to dismiss in the Securities and Exchange Commission’s (SEC) enforcement action against Terraform Labs Pte. away. ltd and Do Kwon. Judge Jed S. Rakoff said he disagreed with Judge Analisa Torres’ approach when she ruled in connection with motions for summary judgment from both the SEC and Ripple Labs, Inc. Read more about Judge Rakoff’s conclusions.
SEC Proposes Rules for IAs/BDs Regarding Digital Engagement Practices (Gamification) and Proposes Changes Regarding Robo-Adviser Registration
By Adam Bolter
On July 26, the SEC voted to propose new rules and amendments aimed at addressing certain conflicts of interest related to the use of predictive data analytics (known as “gamification”) by investment advisers (IAs) and broker-dealers (BDs). The SEC also voted unanimously to approve amendments to modernize the robo-adviser exemption from the SEC’s ban on small-scale investment advisors from registering. These rule proposals continue to meet the SEC Chairman’s rulemaking priorities in the Spring 2023 regulatory agenda. Read more about the SEC’s recent votes.
DTCC announces closure of Global Markets Entity Identifier business
By Carolyn Jackson, Neil Robson, Nathaniel Lalone, Christopher Collins, Ciara McBrien
On July 27, the Depository Trust & Clearing Corporation (DTCC) announced its decision to withdraw from the Global Markets Entity Identifier (GMEI) business by August 22. Through its GMEI business, DTCC has issued Legal Entity Identifiers (LEIs) in more than 140 jurisdictions. This corresponds to around 50 percent of all LEIs issued worldwide. As part of the financial crisis regulatory reform, LEIs must be provided for most financial transactions, including derivative transactions, to identify legal entities and their financial transactions in a globally accessible database. Read more about the resolution of the DTCC.
California court delays enforcement of CPRA until March 2024
By Trisha Sircar
The California Superior Court ruled on June 30 that the California Privacy Protection Agency (CPPA) cannot begin enforcing the California Privacy Rights Act of 2020 (CPRA) until March 29, 2024. Read more about the CPRA.
Improving Privacy: A Look at Texas’ New Consumer Protection Act
By Trisha Sircar, Eric Hail, Lisa Prather, Jose Basabe
On June 18, Texas Governor Greg Abbott signed the Texas Data Privacy and Securities Act (TDPSA) into law. Substantial portions of the TDPSA, also known as HB 4, are scheduled to go into effect on July 1, 2024, making Texas the 10th state to implement comprehensive privacy laws. Read more about the TDPSA.
ICYMI
Here’s a look back at Katten’s recent client advice.
“Key Principles and Considerations for Participation in the EU-US Privacy Framework”, 25 July 2023
“CFPB’s Focus on Standard Consumer Agreements Guarantees a ‘Fresh Look’ at Consumer Template Disclosure,” July 26, 2023
“Mallory v. Norfolk Southern Railway Co.: Supreme Court Acknowledges Existence of Consent-Based General Personal Jurisdiction Theory,” August 2, 2023
The content of this article is intended to provide a general guide to the topic. Professional advice should be sought as to your specific circumstances.
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