The Compliance Gap: Unmonitored Tools and Unintended Consequences

Spread the love

Table of Contents

October 2025 Capital Markets Regulatory Update

31 October 2025: America Securities and Exchange Commission (SEC) Issued an order granting temporary relaxation from certain compliance dates under Regulation NMS, extending the deadlines to facilitate orderly market operations amid recent judicial review and operational challenges.

23 October 2025: The Financial Industry Regulatory Authority (FINRA) Broker-dealer practices were reviewed as part of the pump-and-dump investigation, focusing on small-cap offerings and requesting detailed compliance documentation from firms involved in multiple offerings.

21 October 2025:UK Government consolidates AML supervision under Financial Conduct Authority (FCA)Reducing the role of the Solicitors Regulation Authority to address weaknesses identified by FATF and improve consistency in the supervision of professional services.

19 October 2025: from japan Financial Services Agency (FSA) Signaled possible reforms to its crypto framework, including considering measures to address surveillance and market-abuse risks under the Financial Instruments and Exchange Act (FIEA).

16 October 2025: The European Securities and Markets Authority (ESMA) Published its second consolidated report on sanctions, revealing over 970 administrative measures and fines of over 100 million euros in 2024, with the majority of sanctions imposed under the Market Abuse Regulation.

15 October 2025: The Securities Industry and Financial Markets Association (SIFMA) Called on the SEC to relax recordkeeping rules for advisors and brokers, arguing that existing rules are outdated and create excessive compliance costs, especially due to the proliferation of digital communications.

15 October 2025: German Federal Financial Supervisory Authority (BaFin) New restrictions were announced on the marketing, distribution and sale of Turbo Certificates (also known as callable bull/bear contracts or knock-out warrants) to retail investors after a market investigation revealed that 74% of retail traders lost a total of €3.4 billion.

14 October 2025: The FCA Published a consultation paper outlining support for tokenization in asset management, including guidance for the operation of token fund registries, a streamlined direct dealing model, and a roadmap to overcome regulatory barriers.

13 October 2025, esma Recommendations were published for significant amendments to regulatory settlement standards, including auto-collateralization, new trade allocation deadlines and machine-readable formats, to prepare the industry for the transition to T+1 settlement by October 2027 and increase settlement efficiency across the EU.

8 October 2025: The Australian Securities and Investments Commission (ASIC) released its annual report, which revealed a 50% increase in investigations and a strong increase in enforcement actions, including major inquiries into the ASX regime, AI reviews and the removal of thousands of scam websites.

6 October 2025: New Zealand Financial Markets Authority (FMA) Investors were warned about deepfake pump-and-dump scams using fake business leaders and coordinated social media ads, urging caution and coordination with foreign regulators.

3 October 2025, esma Published its 2026 annual work programme, focusing on streamlining regulations, enhancing risk-based supervision and supporting the Savings and Investments Union (SIU) strategy.

30 September 2025: the UK FCA Market Watch 84 released, which reviews the implementation of the UK EMIR refit and provides observations on change management, vendor oversight and error notifications. Companies are advised to align their derivatives reporting processes with the updated standards to ensure compliance and transparency.

29 September 2025: The seconds And CFTC A joint roundtable was held to discuss regulatory harmony in the cryptocurrency sector, clarifying that there are no plans to merge and pushing for a new era of collaboration to reduce duplication and regulatory uncertainty.

Latest fines and enforcement actions

FINRA Velocity Clearing was fined $1 million for failing to establish and implement a supervisory system capable of detecting manipulative trading activity, including spoofing and layering. The company closed thousands of alerts without investigation, exposing significant compliance and staffing deficiencies.

FINRA EFG Capital was fined $650,000 for AML-related rule violations, citing failures to monitor suspicious wire transfers and deficiencies in automated monitoring tools.
FINRA Ally Investments was fined $850,000 for recordkeeping failures, including the loss of millions of electronic communications and inadequate supervisory procedures.
FCA An advisor to ITM Power PLC (ITM) has been fined and banned for insider trading in ITM Power PLC shares, citing abuse of position and failure to obtain permission prior to trading.

SEBI Thirteen individuals were fined for front-running trades, banning them from the market and imposing fines for unlawful profits made by trading ahead of large client orders.
SEBI Following an investigation into trades made using confidential regulatory notifications, approximately US$20.78 million was seized and eight entities were sanctioned for insider trading linked to the IEX market-coupling leak.
swedish Financial Inspectorate (FI) An investigation was launched by the SEB into the handling of insider information during four major block trades in EQT shares.

SEBI Settled ongoing cases with several entities, imposing settlement fees and voluntary prohibitions on misuse of non-public information in trades associated with Societe Generale and Marcellus Group.
An Australian man has been sentenced to 11 months’ imprisonment and fined $225,447 AUD for exploiting non-public information about share placements to make insider trades in Cain Group shares, making profits and avoiding losses.
Monetary Authority of Singapore (MAS) A civil fine of $50,000 SGD was imposed on the former head of margin at RHB Securities for insider trading in Tea International and Tea Land shares, after he used non-public information to execute trades ahead of a major sales announcement.

hong kong Securities and Futures Commission (SFC) Submitted an application to freeze HKD$394 million in assets related to a ramp-and-dump scheme involving Grand Talent Group Holdings, with the aim of securing compensation for victims and preventing further squandering of funds.