Lawmakers Probe SEC and FINRA Over ‘Shady Approval’ of Prometheum

U.S. lawmakers are probing the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regarding the “shady approval” of Prometheum “as the archetypal and lone peculiar intent broker-dealer for integer assets.” They raised concerns astir the timing and circumstances surrounding the approval, noting that Prometheum has nary customers, operational history, and way record. In addition, the lawmakers stressed that the institution has ties to the Chinese government.

SEC, FINRA Probed Over ‘Shady Approval’ of Prometheum

The U.S. House Financial Services Committee announced Tuesday that the committee’s chairman, Patrick McHenry (R-NC), has led Republican committee members successful probing the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regarding the “shady approval” of Prometheum.

Referencing the letters dated Aug. 9 that the lawmakers sent to SEC Chair Gary Gensler and FINRA President and CEO Robert Cook, the Twitter relationship for Financial Services GOP wrote:

Chairman Patrick McHenry led Republicans connected the Financial Services Committee successful letters to FINRA and SEC regarding the shady support of Prometheum arsenic the lone peculiar intent broker-dealer for integer assets.

Congressman Scott Fitzgerald (R-WI), who besides signed the letter, tweeted: “It’s concerning that SEC Chair Gensler’s archetypal and lone support of a peculiar intent broker-dealer for integer assets was done for a institution with beardown ties to the CCP [Chinese Communist Party]. I joined [the Financial Services Committee] successful demanding transparency astir this decision.”

In their missive to the SEC, the lawmakers asked the regulator to “provide each documents and communications, betwixt and among SEC employees, related oregon referring to Prometheum’s exertion to go a peculiar intent broker-dealer, arsenic soon arsenic imaginable but nary aboriginal than 5:00 pm, August 22, 2023.”

The SEC created a caller people of broker-dealers called peculiar intent brokers-dealers (SPBDs) successful 2020 to let for the custody of integer plus securities. FINRA approved the archetypal SPBD, Prometheum Ember Capital LLC, successful May 2023. Several different firms person applied for SPBD approval, but FINRA has not yet approved them. The lawmakers stressed: “The timing and circumstances surrounding the support of Prometheum arsenic the archetypal SPBD rise superior questions.”

They added: “The support comes arsenic the Committee is considering addressing gaps successful the regularisation of integer assets … The authorities was yet released connected June 2, 2023. The timing of the support raises concerns that it was aimed astatine demonstrating that authorities is not needed due to the fact that determination is simply a workable regulatory model for the custody of integer plus securities.”

The lawmakers elaborate that Prometheum “has not yet served a azygous customer,” emphasizing: “It has besides refused to marque nationalist the integer plus securities that Prometheum ATS would enactment connected its level … Furthermore, Prometheum is not presently capable to execute clearing oregon colony services, which would beryllium required to run arsenic an alternate trading system.” They stressed:

It is unclear wherefore FINRA would person chosen to o.k. a steadfast with nary operating past and nary way grounds of serving customers implicit each the applications that it has received.

Moreover, the lawmakers raised concerns that Prometheum “has ties to the Chinese government,” which they presumption arsenic superior nationalist information and information privateness concerns. U.S. Congressman Ritchie Torres has antecedently called for an investigation into the peculiar intent broker-dealer licence fixed to Prometheum by the SEC.

What bash you deliberation astir the SEC and FINRA approving Prometheum? Let america cognize successful the comments conception below.