FiSolve Weekly News Digest: November 6, 2026

Here is what we are reading in the news this week...

SEC Adopts Amendments to Update Definitions of Small Entity for Investment Companies and Investment Advisers

The Securities and Exchange Commission (SEC) adopted amendments to the rules that define which registered investment companies, investment advisers, and business development companies qualify as small entities for purposes of the Regulatory Flexibility Act (RFA). The adopted amendments recognize the substantial growth in the asset management industry over the decades since the asset-based thresholds for identifying “small entities” were initially set. The amendments (1) increase the asset-based thresholds under which investment companies, investment advisers, and business development companies are deemed small entities, (2) Update the way that related funds’ assets are aggregated for purposes of defining small entities, (3) Eliminate the investment adviser total assets threshold, and (4) Provide for inflation adjustments to the asset-based thresholds by order every 10 years. These amendments will allow more smaller firms to benefit from the SEC's consideration of regulatory burdens and economic impacts when proposing new rules, while updating eligibility thresholds to better reflect the current size and growth of the asset management industry. Read more here.

SEC Brings Action Against Investment Adviser for Breach of Fiduciary Duty in Hedge Clause Case

The U.S. Securities and Exchange Commission charged a registered investment adviser for breaching its fiduciary duty to retail clients by failing to fully and fairly disclose conflicts of interest tied to compensation received by its affiliated broker-dealer from margin lending and cash sweep money market arrangements, while also using advisory agreement “hedge clauses” that could mislead clients regarding their non-waivable rights under federal and state securities laws. The SEC found that the firm violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 by failing to disclose these conflicts and by maintaining misleading liability limitation provisions even after adopting policies intended to prohibit such language. Without admitting or denying the findings, the firm agreed to a cease-and-desist order, censure, disgorgement and interest of approximately $264,590, a $100,000 civil penalty, and the creation of a Fair Fund to compensate affected clients. Read more here.

Employee Engagement Hits 15-Year Low as AI Adoption Outpaces Workplace Support

A new Gallup study found that U.S. employee engagement fell to 29% in the third quarter of 2026. This marks the first time in 15 years that engagement has dropped below 30% and representing roughly 11 million fewer engaged workers since its 2020 peak. The decline was most pronounced among hybrid and fully remote employees, particularly within organizations adopting artificial intelligence, where workers reported less clarity about job expectations and were less likely to feel cared for by managers or colleagues. While earlier research showed AI adoption could boost engagement when supported by clear communication and managerial guidance, that advantage has narrowed significantly, suggesting many organizations are implementing AI faster than they are providing the leadership, training, and support needed to help employees adapt. Gallup concludes that employers should focus on clarifying AI-related expectations, equipping managers to support employees through workplace changes, and closely measuring AI’s impact on both productivity and employee engagement. Read more here.

FINRA Fines Firm $4.2 Million for Anti-Money Laundering, Identity Theft and Best Execution Violations

FINRA announced a $4.2 million enforcement action against a broker-dealer for significant anti-money laundering, identity theft prevention, and best execution deficiencies that occurred during a period of rapid business growth. According to FINRA, the firm failed to reasonably verify customer identities, approved thousands of accounts despite obvious red flags, did not adequately monitor or investigate suspicious transactions, and lacked surveillance systems designed to detect various forms of fraud and potentially manipulative trading activity. FINRA also found that the firm failed to conduct reasonable reviews of execution quality across competing market centers and did not sufficiently assess whether customer orders were receiving best execution. In addition to the monetary sanction, the firm was required to remediate its AML and identity theft controls and retain an independent consultant to address best execution deficiencies, underscoring FINRA’s expectation that compliance and supervisory systems scale appropriately as firms grow. Read more here.

Financial Action Task Force Identifies Jurisdictions with Anti-Money Laundering, Combating the Financing of Terrorism, and Counter-Proliferation Finance Deficiencies

The Financial Crimes Enforcement Network (FinCEN) issued guidance following updates by the Financial Action Task Force (FATF) to its lists of jurisdictions with strategic anti-money laundering, counter-terrorist financing, and counter-proliferation financing deficiencies. FATF removed Bulgaria, Cote d’Ivoire, Democratic Republic of the Congo, and Monaco from its increased-monitoring list, while maintaining Iran, Democratic People’s Republic of Korea (DPRK), and Burma on its list of high-risk jurisdictions subject to enhanced scrutiny. FinCEN reminded U.S. financial institutions to incorporate these developments into their risk-based compliance programs, correspondent account due diligence, sanctions screening, and suspicious activity monitoring processes, while emphasizing that firms must remain vigilant in identifying and reporting potential money laundering and terrorist financing risks without engaging in indiscriminate de-risking of customers or counterparties. Read more here.

SEC Grants Relief from Treasury Clearing Requirements

The SEC issued exemptive relief related to Treasury clearing requirements for certain inter-affiliate and non-U.S. repurchase transactions. The action is significant for dealer groups, large financial institutions, and market participants preparing for expanded Treasury clearing mandates. The relief provides additional flexibility while firms continue implementation efforts. Read more here.

OCC Imposes Record AML Penalties, Signaling Heightened Compliance Expectations

The Office of the Comptroller of the Currency (OCC) announced significant enforcement actions against large national banks for deficiencies in their Bank Secrecy Act and anti-money laundering compliance programs, including failures related to suspicious activity monitoring, timely suspicious activity reporting, customer due diligence, and internal controls. The OCC emphasized that banks are expected to maintain effective systems capable of identifying and escalating potentially suspicious transactions, and it warned that prolonged compliance breakdowns, inadequate staffing, and weak governance can pose risks to the U.S. financial system. The actions underscore regulators’ continued focus on AML compliance, transaction monitoring, sanctions controls, and governance oversight, and serve as a reminder that institutions with persistent deficiencies should expect substantial enforcement consequences. Read more here.

FCA Brings ESG Rating Providers

Under Regulatory Oversight

The Financial Conduct Authority (FCA) announced a new regulatory framework that will bring ESG rating providers under FCA supervision for the first time, with the goal of improving the transparency, reliability, and comparability of ESG ratings used by investors, asset managers, lenders, and other market participants. The regime introduces requirements relating to governance, conflicts of interest, systems and controls, transparency, and engagement with rated entities, while taking a proportionate approach based on a firm's size and activities. Firms providing ESG ratings in the UK will be able to apply for authorization beginning June 2027, with the new framework taking full effect in June 2028. The FCA stated that the rules are intended to strengthen confidence in ESG-related information and support informed investment decision-making while promoting competition, innovation, and growth in the market. Read more here.

FiSolve Announces its Next

Compliance Anonymous Session

FiSolve's next Compliance Anonymous session is scheduled for 12 PM ET on December 2. This confidential forum brings together legal, compliance, and operations professionals to openly discuss real-world challenges without attribution or judgment. Participation is free, but to ensure meaningful engagement, seating is limited. Reserve your spot here.

📢 WEBINAR ANNOUCEMENT 📢

12 PM ET on November 17

Join Steven Yadegari and a panel of experts, David Campbell, Davie Baccei and Ziggy Kozelsky discuss the SEC's 2027 Examination Priorities. Our program will highlight several areas that financial services firms should be evaluating now, from cybersecurity and AI governance to outsourcing oversight and compliance program effectiveness. There is no cost to attend this webinar. Register here.

💡FiSolve's Negotiation Tip of the Week💡

Generosity Builds Influence

In important professional relationships, particularly with clients, business partners, and colleagues, generosity is often one of the most underutilized negotiation tools. Generosity does not mean making unnecessary concessions or accepting unfavorable terms. Rather, it means looking for opportunities to create value for the other party through small accommodations, useful insights, timely introductions, or flexibility that carries little cost to you but meaningful benefit to them. People tend to remember those who help them succeed, and goodwill accumulated outside of a specific negotiation often pays dividends when difficult conversations arise later. In financial services, where long-term trust and reputation are critical assets, a thoughtful act of generosity can strengthen relationships, increase collaboration, and create a foundation for more productive negotiations when the stakes are highest.

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