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News this week

• SEC issues policy statement: Mandatory arbitration provisions will not affect acceleration of registration statements

  • On Sept. 17, 2025, the SEC adopted a Policy Statement clarifying that the presence of an issuer-investor mandatory arbitration provision (i.e. requiring investor claims arising under the federal securities laws to be arbitrated) will not influence whether the SEC staff will accelerate the effectiveness of a registration statement under the Securities Act.

  • The statement indicates that, going forward, staff will focus on the adequacy of disclosure (including disclosure about any arbitration clause) rather than whether the clause exists per se.

  • To accompany the policy, the SEC also amended its rules of practice governing Commission review of staff actions (e.g., regarding delegated authority on effectiveness determinations).

  Implication: While not directly about internal control or material weakness, this policy shift signals the SEC’s evolving attitude toward issuer governance provisions and “contractual waivers” of investor rights. For issuers disclosing internal control issues, clarity about which governance provisions are permissible and how they must be disclosed is increasingly important.

• SEC approves generic listing standards for commodity-based trust shares (including digital assets)

  • Also on Sept. 17, the SEC voted to adopt generic listing standards on three national securities exchanges so that exchange-traded products holding spot commodities (including digital assets) may be listed under these standards without each needing a separate rule filing.

  • In conjunction, it approved the listing and trading of the Grayscale Digital Large Cap Fund, and p.m. settled options on the Cboe Bitcoin U.S. ETF Index as well as Mini-Bitcoin index options.

  Implication: While this is more market-structure / product-listing regulation than internal controls, its relevance to your readership might lie in how digital-asset ETP issuers will need robust controls, disclosures, risk management and internal control regimes if they adopt these new structures.

• CFPB considers furloughs due to funding constraints

  • According to Reuters, on Sept. 18 sources reported that the CFPB is considering furloughing employees as the agency grapples with a deepening funding crunch.

  • Under the Trump administration, the CFPB has avoided drawing further funding and has sought to reduce its workforce significantly (by ~90%) - but legal challenges have stalled immediate mass firings.

  • The potential furloughs would be a temporary unpaid suspension of employment, and the uncertainty of the timing, scale, and implementation is creating concern internally.

  Implication: Budget and staffing pressures may amplify control risks inside the agency (e.g. weakened oversight, supervision capacity) and could slow or disrupt regulatory or enforcement activity, with knock-on effects for regulated entities and compliance expectations.

• FINRA Adopts Portal Requirement for OHO Proceedings

  • On Sept. 17, 2025, FINRA published Regulatory Notice 25-10, adopting amendments that require the use of a secure electronic portal (the “OHO Docket Portal”) for filing and service of documents in Office of Hearing Officers (OHO) disciplinary proceedings, replacing email as the primary method.

  • The new portal is intended to improve efficiency, ensure more reliable service and filing, and better preserve the integrity of the record in disciplinary matters.

  • The amendment is effective October 7, 2025.

  Implication: This change suggests greater expectations on firms (and individuals) for procedural rigor in FINRA enforcement proceedings. Firms will need to ensure compliance with the portal’s technical and procedural standards, and internal controls around document management, filing deadlines, and audit trails become more critical.

• FINRA Launches Crypto & Blockchain Education Program

  • On Sept. 16, 2025, FINRA announced a new Crypto and Blockchain Education Program for member firms and their employees.

  • The program includes self-paced e-learning modules (via FINRA’s FLEX platform) and an in-person applied learning component (in partnership with Georgetown University).

  • The curriculum covers crypto/blockchain terminology, operations, market structures, common fraud schemes, and firm-level considerations around crypto exposure.

  Implication: As firms increasingly engage with crypto and blockchain products, this initiative underscores FINRA’s expectation that firms maintain knowledgeable compliance personnel. For internal controls, firms must ensure that education/training is integrated, that compliance staff are adequately trained, and that risk or control gaps associated with crypto exposure are identified and managed.

• White House / OMB Board Proposes Elimination of “Unnecessary and Redundant Accounting Requirements” for Federal Contractors

  • On September 10, 2025 (just before your target window), the OMB Board announced a proposal to eliminate dozens of accounting requirements deemed unnecessary or redundant for federal contractors.

  • The idea is to streamline contracting processes, reduce administrative burden, and focus oversight on material risks rather than low-value compliance minutiae.

  Relevance to material weaknesses / internal control audience: This proposal suggests a push from OMB to reorient oversight toward higher risk areas. For entities doing business with the government, relaxing certain accounting burdens could shift scrutiny toward where control gaps are more likely to matter. It also raises the question of whether reductions in required disclosures or controls might inadvertently increase the risk of control deficiencies if not managed carefully.

• CFTC Withdraws Proposed Rule for Parts 37 and 38

  • On September 15, the CFTC announced that it is withdrawing the proposed rulemaking for Parts 37 and 38. 

  • The withdrawal reflects the agency’s decision to reassess how those proposed rules would perform given evolving market structures and innovations. Part 37 of CFTC regulations governs Swap Execution Facilities (SEFs). SEFs are trading facilities that operate under CFTC regulatory oversight pursuant to Section 5h of the Commodity Exchange Act, created by the Dodd-Frank Act for the trading and processing of swaps eCFR Commodity Futures Trading Commission. The stated goals of the Dodd-Frank Act are to promote the trading of swaps on SEFs and to promote pre-trade price transparency in the swaps market Swaps Execution Facilities (SEFs).  Part 38 of CFTC regulations governs Designated Contract Markets (DCMs). DCMs are boards of trade (or exchanges) that operate under the regulatory oversight of the CFTC, pursuant to Section 5 of the Commodity Exchange Act. DCMs are most like traditional futures exchanges

    Implication: For firms, this signals regulatory uncertainty in areas originally targeted by those rules. From a controls and compliance standpoint, one result may be a delay or rethinking of required compliance investments tied to those proposals. Entities should monitor how the CFTC re-engages with Parts 37/38 over time and ensure flexibility in their internal control planning.

  • CFTC Announces New Leadership & Members of Global Markets Advisory Committee

    On September 19, the CFTC released a press statement naming new members of its Global Markets Advisory Committee (GMAC), and updating leadership roles under Acting Chairman Caroline Pham. Key appointments under Pham include Scott Lucas, Managing Director and Head of Markets Digital Assets at J.P. Morgan who was named co-chair of the Global Markets Advisory Committee's Digital Asset Markets Subcommittee, joining existing co-chair Sandy Kaul from Franklin Templeton. Commodity Futures Trading Commission.  Additional strategic appointments included Robert Booij (CEO, Eurex) as new GMAC member, Katherine Minarik (Chief Legal Officer, Uniswap Labs) and Avery Ching (CEO, Aptos Labs) to the Digital Asset Markets Subcommittee, Laura Fuson (VP, Cboe Global Markets) to the Global Market Structure Subcommittee and Brad Sullivan (COO, ICE Futures U.S.) to the Technical Issues Subcommittee.

    • The advisory committee will assist the CFTC in evaluating cross-border and global market issues, including harmonization, innovation, and market structure challenges. 

      Implication: The refreshed advisory committee may influence the agency’s future priorities and regulatory approaches—especially in derivatives, cross-border coordination, and emerging markets. Firms should watch the agenda and outputs from GMAC, as they may signal upcoming regulatory scrutiny or themes relevant to internal controls and risk.

    • CFTC Sanctions Trading Firm for Wash Sales

      On September 17, the CFTC issued an order sanctioning Shinhan Securities Co., Ltd. for engaging in wash sales, and imposed a civil penalty. Shinhan Securities Co., Ltd. is a major South Korean securities brokerage and investment banking company that was founded in 1973. It's a subsidiary of Shinhan Financial Group, one of Korea's "Big Five" financial groups Shinhan Financial Group.  The CFTC issued an order requiring them to pay a $212,500 civil monetary penalty and cease and desist from further violations of the Commodity Exchange Act and CFTC regulations for engaging in wash sales and non-competitive transactions on the New York Mercantile Exchange (NYMEX).  Wash sales are transactions designed to give a misleading appearance of genuine market activity without incurring any real economic exposure Key characteristics of wash sales and that they create the illusion of liquidity and trading volume without reflecting genuine market demand or supply, they negate the risk or price competition incidental to an open and competitive marketplace, and they distort the transparency of prices and compromise the open, competitive nature of derivatives markets.

      • The enforcement action underscores the CFTC’s vigilance in policing manipulative or abusive trading practices in commodity markets. 

        Implication: For trading firms and commodity derivatives participants, this is a reminder that internal surveillance, trade monitoring, and compliance controls must be strong. Control systems should detect and prevent improper wash trades or trading abuse in derivative markets.

A thought from our Author Norm Osumi 

In this week’s podcast, our guest, Wayne Robinson MBA, shares an Enterprise AI Strategy Framework. Recent surveys show that while 86% of finance teams are experimenting with AI, only 6% have scaled. ROI measurement remains inconsistent, with 22% not measuring at all. Wayne’s framework provides CFOs and CTOs a structured approach to move from pilots to measurable impact. If you want more information, download the pdf below.

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