Schulte Roth & Zabel partner John Nowak was recently interviewed by Private Equity Law Report for the article, “Forecasting Potential Outcomes in SEC v. Jarkesy Based on Recent Oral Arguments,” in which John shared his perspectives on the case and the potential implications of its ruling.  

Although Jarkesy raised various issues with the Supreme Court, John feels Jarkesy’s argument involving the Seventh Amendment right to jury trial will receive the most attention by the Court. He stated, “There was significant focus  ̶  and I think disagreement  ̶  on the scope and approach to the Seventh Amendment and whether individuals have a right to a jury trial in this context.” 

While the matter deals directly with the SEC, a broad ruling by the Court could potentially impact several other federal agencies that use the administrative process, including the Social Security Administration, the Commodity Futures Trading Commission, the Federal Trade Commission and the Consumer Financial Protection Bureau. “There is some concern that an expansive opinion would significantly impact other regulatory agencies, so the Court may decide to avoid that by narrowing its focus on, for example, the SEC’s anti-fraud provisions and the Commission’s ability to seek penalties as to those provisions in an administrative proceeding,” John said. 

The US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) recently proposed a rule aiming to increase regulations to prevent criminals, terrorists or other illicit actors from laundering money through financial advisors. Schulte Roth & Zabel partner and former FinCEN attorney Melissa Goldstein discussed the potential impact of the rule with RIA Intel reporter Holly Deaton for her article, “Here’s What Advisors Should Know About Treasury’s Anti-Money Laundering Rule Proposal.” 

Melissa discussed the potential implications of the rule’s adoption on registered investment advisors and exempt reporting advisers, which would include additional requirements and increase the cost of compliance outside of routine operations. She added, “[a]dvisors will now be subject to potential civil enforcement penalties for failure to comply with these AML compliance obligations,” and “[a]dvisors will now be subject to potential civil enforcement penalties for failure to comply with these AML compliance obligations.” 

The first versions of this rule were proposed in 2002 and 2003, then withdrawn and later re-proposed in 2015. Melissa noted that it is likely this proposal will become finalized because “FinCEN is under pressure from Congress to pass this rule, and in Treasury’s annual risk assessment, it identified money laundering and terrorist financing risks posed by the private fund industry.” 

Read the article, “Here’s What Advisors Should Know About Treasury’s Anti-Money Laundering Rule Proposal.”