Regulatory Developments
CFTC Staff Provides CTA Registration Relief for Family Offices
The CFTC’s Division of Swap Dealer and Intermediary Oversight issued CFTC Staff Letter 14-143 providing no-action relief from commodity trading advisor (CTA) registration similar to that previously provided in CFTC Letter 12-37, which provided no-action relief from commodity pool operator (CPO) registration to CPOs meeting the definition of “family office” under the SEC family office exclusion from adviser registration. Consistent with this prior relief, CFTC Letter 14-143 grants no-action relief from CTA registration for family offices eligible for relief under CFTC Letter 12-37 in connection with their advisory services to “family client[s]” as defined under the SEC family office exclusion from adviser registration. Relief under CFTC Letter 14-143 is not self-executing, but requires submission to the Division of a claim for relief.
Enforcement & Litigation
SEC Settles with HSBC’s Swiss Private Banking Unit Over Failure to Register Before Providing Cross-Border Investment Advisory and Brokerage Services to U.S. Clients
The SEC announced that it had settled administrative proceedings against HSBC Private Bank (Suisse), SA, HSBC’s Swiss-based private banking arm, over the Commission’s findings that, although aware of applicable broker-dealer and investment adviser registration requirements, HSBC Private Bank failed to register with the SEC before providing cross-border brokerage and investment advisory services during the period from at least 2003 through 2011 to approximately 368 client accounts that held securities and were beneficially owned by permanent U.S. residents. These U.S. client relationships constituted as much as $775 million in assets under management and generated pre-tax income of approximately $5.7 million. In addition to admitting the facts in the settlement order and acknowledging that its conduct violated the federal securities laws, HSBC Private Bank agreed to pay $5.7 million in disgorgement, $4.2 million in prejudgment interest, and a $2.6 million penalty. In the Matter of HSBC Private Bank (Suisse), SA.
