The SEC brought its first enforcement action this year for alleged violations of Reg BI, which requires that broker-dealers act in the best interest of their clients. The action came almost two years after Reg BI took effect. There are signs that there will be more Reg BI enforcement this year as the agency has issued subpoenas to dozens of broker-dealers. Toby Galloway, chair of the securities litigation and enforcement practice at Winstead PC stated, “They’ve got this rule that hasn’t been enforced a whole lot just yet. But they’re going to use it.” Reg BI isn’t the only enforcement action expected to take place this year. Communication technology and other issues are expected to see new enforcement actions in 2023. For example, several big banks were fined close to $2 billion in September for failing to monitor employees’ communications on messaging apps such as WhatsApp. Bloomberg News reported that the SEC’s probe into communication is expanding to other industry players such as asset managers. In addition, the agency is working to finalize new climate disclosure requirements for companies, while also looking for ways to bring litigation related to ESG issues under existing regulations.

Finsum:The SEC is expected to litigate more violations of Reg BI, communication technology, and ESG-related issues this year.