The Compliance Gap: Unmonitored Tools and Unintended Consequences

October 2025 Capital Markets Regulatory Updates

31 October 2025: The U.S. Securities and Exchange Commission (SEC) issued an order granting temporary exemptive relief from certain compliance dates under Regulation NMS, extending deadlines to facilitate orderly market functions amid recent judicial review and operational challenges.

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

21 October 2025: The U.K. government consolidated AML supervision under the Financial Conduct Authority (FCA), reducing the role of the Solicitors Regulation Authority to address vulnerabilities identified by FATF and improve consistency in professional services oversight.

19 October 2025: Japan’s Financial Services Agency (FSA) signaled potential reforms to its crypto framework, including considering oversight under the Financial Instruments and Exchange Act (FIEA) and measures addressing market‑abuse risks.

16 October 2025: The European Securities and Markets Authority (ESMA) published its second consolidated report on sanctions, revealing over 970 administrative measures and fines exceeding 100 million euros in 2024, with most 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(SIFMA) called on the SEC to relax recordkeeping rules for advisors and brokers, arguing that current regulations are outdated and create excessive compliance costs, especially as digital communications proliferate.

15 October 2025: The German Federal Financial Supervisory Authority (BaFin) announced new restrictions on the marketing, distribution, and sale of turbo certificates (also known as Callable Bull/Bear Contracts or knock-out warrants) to retail investors, following a market investigation that revealed 74% of retail traders suffered losses totaling €3.4 billion.

14 October 2025: The FCA published a consultation paper outlining plans to support tokenization in asset management, including guidance for operating tokenized fund registers, a streamlined direct dealing model, and a roadmap to address regulatory barriers.

13 October 2025: ESMA published recommendations 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 enhance 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 strong growth in enforcement actions, including major inquiries into ASX governance, AI reviews and the takedown of thousands of scam websites.

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

3 October 2025: ESMA published its 2026 Annual Work Program, focusing on streamlining rules, enhancing risk-based supervision and supporting the Saving and Investments Union (SIU) Strategy.

30 September 2025: The U.K. FCA released Market Watch 84, reviewing the implementation of the U.K. EMIR Refit and providing observations on change management, vendor oversight and error notifications. Firms are advised to align their derivatives reporting processes with updated standards to ensure compliance and transparency.

29 September 2025: The SEC and CFTC held a joint roundtable to discuss regulatory harmonization in the cryptocurrency sector, clarifying there are no plans for a merger and emphasizing a new era of collaboration to reduce duplication and regulatory uncertainty.

Latest Fines and Enforcement Actions

The FINRA fined Velocity Clearing $1 million for failing to establish and enforce a supervisory system capable of detecting manipulative trading activity, including spoofing and layering. The firm closed thousands of alerts without investigation, highlighting significant compliance and staffing deficiencies.
The FINRA fined EFG Capital $650,000 for AML-related rule violations, citing failures in monitoring suspicious wire transfers and deficiencies in automated surveillance tools.
The FINRA fined Ally Invest $850,000 for recordkeeping failures, including loss of millions of electronic communications and inadequate supervisory procedures.
The FCA fined and banned an advisor for ITM Power Plc (ITM) for insider dealing in ITM Power Plc shares, citing abuse of position and failure to obtain permission before trading.
The SEBI imposed penalties on 13 individuals for front-running trades, barring them from the market and imposing fines for unlawful gains made by trading ahead of large client orders.
The SEBI impounded approximately $20.78 million USD and barred eight entities for insider trading linked to the IEX market-coupling leak, following a probe into trades made using confidential regulatory notifications.
The Swedish Finansinspektionen (FI) launched an investigation into SEB’s handling of insider information during four major block trades in EQT shares.
The SEBI settled front-running cases with multiple entities, imposing settlement charges and voluntary debarments for misuse of non-public information in trades linked to Societe Generale and Marcellus group.
An Australian man was sentenced to 11 months imprisonment and fined $225,447 AUD for insider trading in Cann Group shares, exploiting non-public information about a share placement to profit and avoid losses.
The Monetary Authority of Singapore (MAS) imposed a civil penalty of $50,000 SGD on the former Head of Margin at RHB Securities, for insider trading in Tee International and Tee Land shares, after he used non-public information to execute trades before a major sale announcement.
The Hong Kong Securities and Futures Commission (SFC) submitted an application to freeze $394 million HKD in assets related to a ramp-and-dump scheme involving Grand Talents Group Holdings, aiming to secure compensation for victims and prevent further dissipation of funds.