Emerging Trends Series - Trends in Securities Trading and Markets

NET WORK

EMERGING TRENDS SERIES TRENDS IN SECURITIES TRADING AND MARKETS Andre Owens, Partner, WilmerHale

EXECUTIVE SUMMARY

EMERGING TRENDS SERIES NETWORK

Emerging Trends in Securities Trading and Markets

WilmerHale’s Andre Owens BIHC recently spoke with Andre Owens, a securities regulatory partner in WilmerHale’s Washington, D.C. office who focuses primarily on advising financial services firms on trading and markets issues.

Q: W hat are the main trends you see in securities regulation and trading and markets?

A: This is an active area of the law with a number

of key trends. One focus is the obligations of firms to customers including, for example, conflicts of interest, and best execution of customer orders.

Another area of SEC interest for all public companies is disclosure around ESG (environment, social, and governance) initiatives.

Emerging technologies, such as mobile apps for managing financial transactions and crypto assets, also are a hot topic in securities.

Q: W hat are some common themes driving these trends?

A: O ne driver is regulators re-considering the

duty of financial professionals to their customers.

Broker-dealers traditionally were held to a different standard than investment advisors who are fiduciaries, but changing expectations may move them closer to advisers. The increasing interest in ESG has been driven by investors of all types and the SEC. Finally, technology itself underlies many of the trends. Rules dating to the 1930s are governing financial products and services at the frontier of innovation. Regulated entities—and regulators— need to grapple with how that regulatory structure applies to new and evolving businesses.

Q: W hat are some best practices for GCs and companies contending with this fluid regulatory environment?

A: G Cs need to focus on the evolving standards

that their companies are held to, so they can identify potential conflicts of interest and ensure the proper disclosures. Whether or not a product is a security is an overarching question with numerous implications for companies with emerging technology products.

GCs of such companies need to weigh the level of risk that their companies are undertaking given the fact-dependent assessments of when a product is a security.

GCs employ different approaches to manage these challenges. Some GCs employ third-party mock audits, conducted by a law firm or consulting firm, examining the company and ensuring its disclosures line up with its business activities. Another helpful practice is the creation of new product committees.

As new products and services are developed, the committee evaluates them against a checklist to assure compliance, testing, and quality assurance throughout the development process. Finally, an increasingly common choice, especially for fintech companies, is to engage in the development of new regulations, either directly or through industry associations, especially as regulators weigh the limits of their authority and whether legislation is needed.

Q: H ow should GCs and in-house counsel engage their outside firms?

A: B ecause the potential impact of policy

developments on fintech and other financial service companies is so significant, company leaders need to follow trends closely. Any company assessing new business opportunities needs experienced outside counsel to not only assess the law, but to also advise on industry perspectives and intelligence about the regulatory trends. When concerned about any existing regulations, GCs benefit from outside counsel’s assessment as early as possible.

EMERGING TRENDS INTERVIEW SERIES

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EMERGING TRENDS SERIES NETWORK About the BIHC Network & Emerging Trends The Black In-House Counsel (BIHC) Network works with legal departments and law firms to advance Diversity, Equity, and Inclusion in the legal profession. We create content, events, networks, and professional development training for corporate legal departments and law firms. A key part of our mission is to showcase the talents of leading lawyers of color in top law firms to in-house legal departments.

Emerging Trends features insights from leading partners of color on key trends shaping the business landscape over the next 12 months. Each Emerging Trends briefing provides concise information on what general counsel and boards need to know about and best practices in how to approach this topic.

BIHC is pleased to hear from the following WilmerHale partners in the Emerging Trends Series:

Robert Boone

Brenda Lee

Partner

Partner

NEW YORK Complex Litigation and Investigations

WASHINGTON, D.C. Anti-Discrimination

Stephanie Evans

Andre Owens

Partner

Partner

WASHINGTON, D.C. Corporate Transactions

WASHINGTON D.C. Securities Trading and Markets Activities EMERGING TRENDS INTERVIEW SERIES

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