Tag Archives: SEC

New RIA Marketing Rule Impacts Solicitor Relationships

As noted in our earlier articles, the reforms made to the Investment Advisers Act of 1940 (“Act”) that were adopted by the Securities and Exchange Commission (“SEC”) to modernize rules that govern investment adviser adverting, also impacted testimonials, endorsements, and integrated solicitor activities into that rule (collectively the “Rule”).  This article focuses specifically on the … Continue reading New RIA Marketing Rule Impacts Solicitor Relationships

Testimonials and Endorsements – Impact of the New RIA Marketing Rule

As noted in our earlier articles, the Securities and Exchange Commission (“SEC”) adopted reforms under the Investment Advisers Act of 1940 (“Act”) to modernize rules that govern investment adviser advertisements and payments to solicitors (collectively the “Rule”).  In those articles we discussed the Rule from a 50,000-foot level, and  then we drilled down into the … Continue reading Testimonials and Endorsements – Impact of the New RIA Marketing Rule

Overview of Advertising – Impact of the New RIA Marketing Rule

As previously noted, the Securities and Exchange Commission (“SEC”) adopted reforms under the Investment Advisers Act of 1940 (“Act”) to modernize rules that govern investment adviser advertisements and payments to solicitors (collectively the “Marketing Rule”).   It is the intent of the SEC to provide a rule with principles-based provisions, designed to accommodate the continual evolution … Continue reading Overview of Advertising – Impact of the New RIA Marketing Rule

SEC Proposes Exemption for Finders

The Securities and Exchange Commission (“SEC”) has proposed a conditional exemption from broker registration requirements for certain “finders” who assist issuers with raising capital in private markets from accredited investors. If adopted, the proposed exemption would permit natural persons to engage in certain limited securities activities involving accredited investors, without registering with the SEC as … Continue reading SEC Proposes Exemption for Finders

SEC Proposes Amending Form 13F Reporting Thresholds

Proposed Amendments The Securities and Exchange Commission (the “SEC”) has proposed amendments to Section 13(f) of the Securities Exchange Act of 1934 (“Form 13F”).  The most significant amendment change would raise the current reporting threshold from $100 million, to $3.5 billion.  This change is the first amendment to Form 13F in 45 years, and is … Continue reading SEC Proposes Amending Form 13F Reporting Thresholds

Credential Compromise Risk Increasing for Client Accounts

The Securities and Exchange Commission (“SEC”) recently issued a Risk Alert addressing client account credential compromises against SEC-registered investment advisers (“advisers”) and brokers and dealers (“broker-dealers,” and together with advisers, “firms”). These compromises utilized “credential stuffing”, which is a method of cyber-attack to client accounts that uses compromised client login credentials, resulting in the possible … Continue reading Credential Compromise Risk Increasing for Client Accounts

Release of Regulation Best Interest to be Considered by SEC on June 5

The Securities and Exchange Commission (SEC) announced that it has scheduled an open meeting on June 5 to consider pending rulemaking related to the relationship of broker-dealers and investment advisers with their customers stemming from proposed Regulation Best Interest, and addressing the standard of care that investors should receive from broker-dealers and investment advisers. The … Continue reading Release of Regulation Best Interest to be Considered by SEC on June 5

Net Capital Computation (Month ending 12/31/2018)

In accordance with SEC Rule 15c3-1, each broker/dealer registered pursuant to Section 15 of the Act must have evidence of the computation of net capital monthly. That computation should be completed and approved by the FINOP within 17 business days after the end of each month.

Government Shutdown Impacts SEC Operations

As a result of the federal government shutdown, if you would like Division of Corporation Finance of the Securities and Exchange Commission (Corp Fin) to consider a request for acceleration of the effective date of a pending registration statement or qualification of a pending offering statement, effective December 26th you should contact Larry Spirgel at … Continue reading Government Shutdown Impacts SEC Operations

SEC Adopts Rules Promoting Research on Investment Funds

The Securities and Exchange Commission (SEC) recently adopted rules and amendments designed to promote research on investment funds.  These funds include mutual funds, exchange‑traded funds, registered closed-end funds, business development companies, and similar covered investment funds. These changes are intended to reduce obstacles to providing research on investment funds.  This should be realized by harmonizing the … Continue reading SEC Adopts Rules Promoting Research on Investment Funds

SEC Requests Comments: Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities

The SEC is proposing amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered, and issuers’ affiliates whose securities collateralize securities registered or being registered in Regulation S-X to improve those requirements for both investors and registrants. The proposed changes are intended to provide investors with material information given … Continue reading SEC Requests Comments: Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities

SEC Request for Comment: Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital Requirements for Broker-Dealers

The Securities and Exchange Commission (“Commission”) is reopening the comment period and requesting additional comment (including potential modifications to proposed rule language) on the following: proposed amendments and new rules that would establish capital and margin requirements for security-based swap dealers (“SBSDs”) and major security-based swap participants (“MSBSPs”) that do not have a prudential regulator, … Continue reading SEC Request for Comment: Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital Requirements for Broker-Dealers

SEC Request for Comments: Amendments to Rules for Nationally Recognized Statistical Rating Organizations

The Securities and Exchange Commission (“Commission”) is proposing amendments to rules for nationally recognized statistical rating organizations (“NRSROs”) under the Securities Exchange Act of 1934 (“Exchange Act”). The amendments would provide an exemption from a rule for NRSROs with respect to credit ratings if the issuer of the security or money market instrument referred to … Continue reading SEC Request for Comments: Amendments to Rules for Nationally Recognized Statistical Rating Organizations

SEC Request for Comments: Amendment to Single Issuer Exemption for Broker-Dealers

The SEC (Commission) is proposing an amendment to the exemption provisions in the broker-dealer annual reporting rule under the Securities Exchange Act of 1934 (“Exchange Act”). The amendment would provide that a broker-dealer is not required to engage an independent public accountant to certify the broker-dealer’s annual reports if, among other things, the securities business … Continue reading SEC Request for Comments: Amendment to Single Issuer Exemption for Broker-Dealers

SEC Chairman Clayton Addresses SEC Staff Views

To address recent comments regarding the concept that the Securities and Exchange Commission (“SEC”) is de facto rulemaking based on the views of staff, SEC Chairman Jay Clayton issued a public statement regarding SEC staff views.  It was noted that the staff of the SEC frequently makes their views known through a variety of communications, … Continue reading SEC Chairman Clayton Addresses SEC Staff Views

SEC Proposes Amendments to Whistleblower Rule

The Securities and Exchange Commission (SEC) has proposed for public comment several amendments to the SEC’s rules implementing its whistleblower program.  The whistleblower provisions of the Securities Exchange Act of 1934 (Exchange Act) provides, among other things, that the SEC shall pay an award to eligible whistleblowers who voluntarily provide the SEC with original information … Continue reading SEC Proposes Amendments to Whistleblower Rule

SEC Request for Comment: Code of Arbitration Procedures

The SEC published a proposed rule change to amend FINRA Rules 12600 and 12800 of the Code of Arbitration Procedure for Customer Disputes (”Customer Code”) and 13600 and 13800 of the Code of Arbitration Procedure for Industry Disputes (“Industry Code,” and together with the Customer Code, the ”Codes”), to amend the hearing provisions to provide … Continue reading SEC Request for Comment: Code of Arbitration Procedures

SEC Covered Securities Amendment to Rule 146

The Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) is adopting an amendment to Rule 146 under Section 18 of the Securities Act of 1933, as amended (‘‘Securities Act’’), to designate certain securities listed, or authorized for listing, on Investors Exchange LLC (‘‘IEX’’ or ‘‘Exchange’’) as covered securities for purposes of Section 18(b) of the Securities … Continue reading SEC Covered Securities Amendment to Rule 146

Investment Advisers Face Enhanced Information Reporting

The  Securities and Exchange Commission  (SEC) adopted amendments to several Investment Advisers Act rules, including the investment adviser registration data collection and reporting forms to enhance the reporting and disclosure of information by Investment Advisers.  These amendments are intended to improve the quality of information that investment advisers provide to investors and the SEC. “These … Continue reading Investment Advisers Face Enhanced Information Reporting

SEC Released Agenda for Meeting of Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission (“SEC”) announced the agenda for the next meeting of its Advisory Committee on Small and Emerging Companies.  The committee will discuss the Sarbanes-Oxley Act auditor attestation requirement and explore whether updates are needed to Securities Act Rule 701, which many companies use to provide stock and option awards.  The committee … Continue reading SEC Released Agenda for Meeting of Advisory Committee on Small and Emerging Companies

Compliance Date for T+2 Settlement Cycle for Securities Transactions

The SEC adopted an amendment to shorten the standard settlement cycle for most broker-dealer securities transactions by one business day (“T+2”).  Currently, the standard settlement cycle for these transactions is three business days, known as T+3.  The amendment to Rule 15c6-1(a) shortens the settlement cycle to two business days.   The compliance date for broker-dealers … Continue reading Compliance Date for T+2 Settlement Cycle for Securities Transactions

Phishing Scam Targeting EDGAR Filers

The Securities and Exchange Commission (“SEC”) has recently noted that there have been reports of malicious emails sent to some EDGAR filers that appear to be part of a phishing campaign that appears to be meant to compromise company network systems and obtain access to non-public information.  The malicious emails purport to be communications from the … Continue reading Phishing Scam Targeting EDGAR Filers

Supreme Court Decision limits SEC Disgorgement Powers

The Supreme Court ruled that the Securities and Exchange Commission’s power to require the disgorgement of illegally obtained profits can only be applied to funds obtained up to five years before the SEC files its claim. SIFMA supported the plaintiff in an amicus brief, calling on the court to limit the SEC’s powers to make … Continue reading Supreme Court Decision limits SEC Disgorgement Powers

SEC Approves FINRA’s Capital Acquisition Broker (CAB) Rules

The Securities and Exchange Commission (SEC) approved FINRA’s rule set for firms that meet the definition of “capital acquisition broker” (CAB) and that elect to be governed under this rule set. CABs are firms that engage in a limited range of activities, essentially advising companies and private equity funds on capital raising and corporate restructuring, … Continue reading SEC Approves FINRA’s Capital Acquisition Broker (CAB) Rules

SEC Exam Priorities for 2017 Released

The Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”) has released the SEC Exam Priorities for 2017 (the “SEC Exam Priorities”).  In general, the SEC Exam Priorities reflect certain practices, products, and services that OCIE perceives to present potentially heightened risk to investors and/or the integrity of the U.S. … Continue reading SEC Exam Priorities for 2017 Released

Quarterly FOCUS and SSOI Filing (Quarter ending 12/31/2016)

In accordance with SEC Rule 17a-5(a)(2)(iii), each broker/dealer registered pursuant to section 15 of the Act who does not carry nor clear transactions nor carry customer accounts shall file Part IIA of Form X-17 A-5 within 17 business days after the end of each calendar quarter. http://taft.law.uc.edu/CCL/34ActRls/rule17a-5.html

Net Capital Computation (Month ending 10/31/2016)

In accordance with SEC Rule 15c3-1, each broker/dealer registered pursuant to Section 15 of the Act must have evidence of the computation of net capital monthly. That computation should be completed and approved by the FINOP within 17 business days after the end of each month.

Quarterly FOCUS and SSOI Filing (Quarter ending 09/30/2016)

In accordance with SEC Rule 17a-5(a)(2)(iii), each broker/dealer registered pursuant to section 15 of the Act who does not carry nor clear transactions nor carry customer accounts shall file Part IIA of Form X-17 A-5 within 17 business days after the end of each calendar quarter. http://taft.law.uc.edu/CCL/34ActRls/rule17a-5.html

Investment Advisers Face Enhanced Information Reporting

The Securities and Exchange Commission (SEC) has recently adopted amendments to several Investment Advisers Act rules, including the investment adviser registration data collection and reporting forms to enhance the reporting and disclosure of information by Investment Advisers.  These amendments are intended to improve the quality of information that investment advisers provide to investors and the … Continue reading Investment Advisers Face Enhanced Information Reporting

SEC Approves OATS Amendments to Require Identification of Non-FINRA Member Broker-Dealers

Beginning August 1, 2016, firms that report information to OATS will be required to include on their reports the identity of U.S.-registered broker-dealers that are not FINRA members and broker-dealers that are not registered in the U.S. but have received an SRO-assigned identifier. The identities may be reported using either the broker-dealer’s Central Registration Depository … Continue reading SEC Approves OATS Amendments to Require Identification of Non-FINRA Member Broker-Dealers

SEC Requests Comments on Communications Rules

The SEC requests comment on FINRA’s proposal to amend FINRA Rules 2210 (Communications with the Public), 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings) and 2214 (Requirements for the Use of Investment Analysis Tools). In furtherance of the recommendations arising from FINRA’s retrospective review of its communications with the public rules, the … Continue reading SEC Requests Comments on Communications Rules

Three Whistleblower Awards Issued By SEC

The U.S. Securities and Exchange Commission (“SEC”) has recently announced whistleblower awards to four individuals who provided the SEC with information in three ongoing investigations. The SEC announced on May 13, 2016 that it had awarded $3.5 million dollars to a  company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing that strengthened the … Continue reading Three Whistleblower Awards Issued By SEC

Crowdfunding Guidance Released by SEC

The Securities and Exchange Commission (“SEC”) has issued Compliance and Disclosure Interpretations (C&DIs) providing interpretive guidance on Regulation Crowdfunding, which became effective May 16. The C&DIs answer a number of questions relating to the crowdfunding exemption and its requirements, including disclosure requirements, advertising and promoter compensation in a crowdfunded offering. The SEC guidance clarifies that, … Continue reading Crowdfunding Guidance Released by SEC

Changes in Accredited Investor Definition on Horizon

The Securities and Exchange Commission’s (“SEC”) Advisory Committee on Small and Emerging Companies met on May 18 and focused primarily on the proposed changes in the definition of an accredited investor. During the meeting, the committee discussed the recent SEC staff report (“Report”) on the accredited investor definition and the various recommendations that were set out in the Report, … Continue reading Changes in Accredited Investor Definition on Horizon

Comment Period Ends May 6, 2016 on the Proposed Capital Acquisition Broker Rules

The Financial Industry Regulatory Authority (“FINRA”) has proposed the creation of a separate rule set that would apply to firms that meet the definition of a ‘‘capital acquisition broker’’ (“CAB”) and elect to be governed under that rule set.  To address the rule making process with respect to the proposal, the Securities and Exchange Commission (“SEC”) … Continue reading Comment Period Ends May 6, 2016 on the Proposed Capital Acquisition Broker Rules

Effective Date: Amendments to FINRA Rule 2340 Regarding DPP and Unlisted REIT Securities

The SEC amendments to NASD Rule 2340 (Customer Account Statements) become effective on April 11, 2016.  The amendments modify the requirements relating to the inclusion of per share  estimated values for direct participation program (DPP) and unlisted real  estate investment trust (REIT) securities on account statements, and to FINRA  Rule 2310 (Direct Participation Programs) to make corresponding … Continue reading Effective Date: Amendments to FINRA Rule 2340 Regarding DPP and Unlisted REIT Securities

Comment Period Ends on Proposed FINRA Rules Amendments Related to Conversaion T+2 Settlement Cycle

Financial Industry Regulatory Authority (“FINRA”)  issued Regulatory Notice  16-09, in which FINRA is seeking comments on proposed amendments to FINRA rules relating to the settlement cycle.  FINRA proposes to adopt necessary rule changes in a manner and timeline that is consistent with the SEC and other self-regulatory organizations SROs in an effort to provide the … Continue reading Comment Period Ends on Proposed FINRA Rules Amendments Related to Conversaion T+2 Settlement Cycle

The Pressure to Shorten the Settlement Cycle From T+3 to T+2 Has Increased

Since early last year, the Securities Industry and Financial Markets Association(“SIFMA”) and the Investment Company Institute (“ICI”) have publicly supported the shortening of the settlement cycle from trade date plus three business days (“T+3”) to trade date plus two business days (“T+2”) for U.S. secondary market transactions in equities, corporate and municipal bonds, unit investment trusts, … Continue reading The Pressure to Shorten the Settlement Cycle From T+3 to T+2 Has Increased

Upshot of SEC’s 2016 Goals – Active Year for Regulatory Rulemaking

In her opening remarks at the annual “SEC Speaks” conference held in Washington, D.C., the U.S. Securities and Exchange Commission (“SEC”), SEC Chairman Mary Jo White cautioned that the SEC should not be considered a mere “disclosure agency,” in that she noted that the SEC would use all of the tools at the SEC’s disposal … Continue reading Upshot of SEC’s 2016 Goals – Active Year for Regulatory Rulemaking

SEC Announces its Fee Rate Advisory for Fiscal Year 2016

The Securities and Exchange Commission announced that starting on Feb. 16, 2016, the fee rates applicable to most securities transactions will be set at $21.80 per million dollars. Consequently, each SRO will continue to pay the Commission a rate of $18.40 per million for covered sales occurring on charge dates through Feb. 15, 2016, and … Continue reading SEC Announces its Fee Rate Advisory for Fiscal Year 2016

FINRA Proposes New Registration Category for Corporate Financing Brokers

The Financial Industry Regulatory Authority (“FINRA”) has announced a proposed new set of rules that address the needs of FINRA member firms that are solely corporate financing firms that advise companies on mergers and acquisitions, advise issuers on raising debt and equity capital in private placements with institutional investors, or provide advisory services on a … Continue reading FINRA Proposes New Registration Category for Corporate Financing Brokers

FINRA Proposes “Pay-To-Play” Rules

The Financial Industry Regulatory Authority, Inc. (“FINRA”) has filed a proposed rule change to adopt FINRA Rules 2030 (Engaging in Distribution and Solicitation Activities with Government Entities) and 4580 (Books and Records Requirements for Government Distribution and Solicitation Activities) with the Securities and Exchange Commission (“SEC”) to establish “pay-to-play” and related rules that would regulate … Continue reading FINRA Proposes “Pay-To-Play” Rules

Disclosure of Order Routing Practices (SEC Rule 606) (Q4 2015)

SEC Rule 606 requires broker/dealers that route orders on behalf of customers to prepare quarterly reports that disclose the identity of the venues to which it routed orders for execution. The reports also will disclose the nature of the broker-dealers relationship with those venues, including the existence of any internalization or payment for order flow … Continue reading Disclosure of Order Routing Practices (SEC Rule 606) (Q4 2015)

SEC Releases the 2016 Examination Priorities

The Securities and Exchange Commission released its Office of Compliance Inspections and Examinations’ (OCIE) 2016 exam priorities. New areas of focus include liquidity controls, public pension advisers, product promotion, and two popular investment products, exchange-traded funds and variable annuities.  The priorities also reflect a continuing focus on protecting investors in ongoing risk areas such as cybersecurity, microcap fraud, fee … Continue reading SEC Releases the 2016 Examination Priorities

FINRA Rule 2210 Amended to Require BrokerCheck Website Hyperlink

The Financial Industry Regulatory Authority (FINRA) announced in Regulatory Notice 15-50 that the Securities and Exchange commission approved amendments to FINRA Rule 2210 (Communications with the Public) that become effective June 6, 2016.  The amendments require that each FINRA member firm’s website to include a readily apparent reference and hyperlink to BrokerCheck on: the initial … Continue reading FINRA Rule 2210 Amended to Require BrokerCheck Website Hyperlink

Lawyers Tagged by SEC for Offering EB-5 Investments as Unregistered Brokers

The Securities and Exchange Commission (SEC) announced a series of enforcement actions against lawyers across the country charged with offering EB-5 investments while not registered to act as brokers. In one case, the lawyer and his firm are charged with defrauding foreign investors in the government’s EB-5 Immigrant Investor Program, through which they seek a path … Continue reading Lawyers Tagged by SEC for Offering EB-5 Investments as Unregistered Brokers

Effective Date: Amendments to Require Firms to Report Transactions in TRACE-Eligible Securities As Soon As Practicable

The SEC approved amendments to the Trade Reporting and Compliance Engine (TRACE) rules to codify that firms are required to report transactions in TRACE-eligible securities that are subject to dissemination as soon as practicable following the time of execution of the transaction. The amendment will become effective on November 30, 2015.The amended rule text is available in the online FINRA Manual.

Comment Period Ends: FINRA’s Funding Portal Rules

The SEC requested comment on FINRA’s proposal to adopt Funding Portal Rules 100, 110, 200, 300, 800, 900 and 1200 (collectively, the “Funding Portal Rules”) and related forms that would apply to SEC-registered funding portals that become FINRA members pursuant to the JOBS Act and the SEC’s Regulation Crowdfunding. The proposal would also adopt new FINRA Rule 4518 (Notification to FINRA in Connection with the JOBS ACT) in the FINRA rulebook. The comment period expires November 18, 2015.

SEC Charges Investment Adviser With Improperly Using Mutual Fund Assets to Pay Distribution Fees

The Securities and Exchange Commission (SEC) charged a New York-based investment adviser and its affiliated distributor with improperly using mutual fund assets to pay for the marketing and distribution of fund shares.  This is the first enforcement action brought as a result of the Distribution-in-Guise Initiative of the SEC, which was a joint undertaking by … Continue reading SEC Charges Investment Adviser With Improperly Using Mutual Fund Assets to Pay Distribution Fees

FDIC Approval of Margin Rules Triggers SEC Parallel Rule

Two agencies approved a final rule that will govern how much money financial firms must set aside in derivatives deals.  A key change from recent draft versions of the rule — and the focus of months of debate among regulators — cut in half what the companies must post in transactions between their own divisions. … Continue reading FDIC Approval of Margin Rules Triggers SEC Parallel Rule

Final Crowdfunding Rules Adopted by the SEC

The Securities and Exchange Commission (SEC) has adopted final rules to permit companies to offer and sell securities through crowdfunding.  Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects.  Title III of the JOBS Act created a federal exemption under the … Continue reading Final Crowdfunding Rules Adopted by the SEC

SEC Enforcement Activities in Fiscal 2015 Appear Aggressive

The Securities and Exchange Commission announced that in fiscal year 2015, it continued to build a strong record of first-of-their-kind cases that spanned the spectrum of the securities industry. The SEC’s increase in enforcement actions is significant.  The SEC’s independent enforcement actions have increased substantially since 2013, up to 507 actions from 341. This has resulted … Continue reading SEC Enforcement Activities in Fiscal 2015 Appear Aggressive

Comments Period Ends: Proposal to Merge FINRA Dispute Resolution Subsidiaries

The SEC comment period ends November 3, 2015 on FINRA’s proposal to merge its dispute resolution subsidiaries, FINRA Dispute Resolution, Inc. into and with its regulatory subsidiary, FINRA Regulation, Inc. FINRA’s existing dispute resolution program would continue to operate as a separate department within FINRA Regulation, and would be referred to as the Office of Dispute Resolution.

SEC Publishes Private Funds Statistics Report

The Securities and Exchange Commission (“SEC”)   recently published the Private Funds Statistics Report for Fourth Quarter 2014.  The  report provides private fund industry statistics and trends, reflecting aggregated data reported by private fund advisers on Form ADV and Form PF.  The report also includes statistics about the distribution of borrowings, an analysis of hedge fund … Continue reading SEC Publishes Private Funds Statistics Report

Amendments to Trace Reports Require Firms to Identify Transactions with Non-Member Affiliates in TRACE Trade Reports – Effective Date

Amendments to the TRACE reporting rules were approved by the SEC to the to permit FINRA to implement a new contra-party type for use by firms in identifying transactions with non-member affiliates. The amendment also requires firms to separately identify transactions with non-member affiliates that occur within the same day, at the same price and … Continue reading Amendments to Trace Reports Require Firms to Identify Transactions with Non-Member Affiliates in TRACE Trade Reports – Effective Date

SEC Sanctions Underwriting Firms for Fraudulent Municipal Bond Offerings

The Securities and Exchange Commission announced enforcement actions against 22 municipal underwriting firms for violations in municipal bond offerings.  The actions are the second round of filings against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative , a voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents. In the actions, the … Continue reading SEC Sanctions Underwriting Firms for Fraudulent Municipal Bond Offerings

SEC Sanctions Investment Adviser $75,000 for Cyberattack

The Securities and Exchange Commission (SEC) announced that R.T. Jones Capital Equities Management, a St. Louis-based investment adviser, has agreed to settle charges that it failed to establish cybersecurity policies and procedures in advance of a breach that compromised the personally identifiable information (PII) of approximately 100,000 individuals, including thousands of the firm’s clients.  Without … Continue reading SEC Sanctions Investment Adviser $75,000 for Cyberattack

SEC Exam Program Doubles Up Focus on Cybersecurity

The Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) has issued an additional Risk Alert regarding the Targeted Industry Reviews and Examinations Initiative for the second round of cybersecurity examinations. This current initiative follows the (i) SEC sponsored Cybersecurity Roundtable where SEC Commissioners and staff, along with industry representatives, underscored the importance of cybersecurity in March … Continue reading SEC Exam Program Doubles Up Focus on Cybersecurity

SEC to Broker-Dealers: Better Supervise Sales of Risky Products

The Securities and Exchange Commission is warning brokerages to better monitor the sales of risky complex investments to their retail clients.  In a recently issued National Exam Program Risk Alert, the SEC  said that in an analysis of 26,600 transactions totaling $1.25 billion of structured securities products, the SEC observed in a significant number of … Continue reading SEC to Broker-Dealers: Better Supervise Sales of Risky Products

Comment Period Ends: FINRA Rule 3210 replacing NASD 3050

The SEC requests comment on a proposal to adopt FINRA Rule 3210 (Accounts At Other Broker-Dealers and Financial Institutions) into the Consolidated FINRA Rulebook and to delete NASD Rule 3050, Incorporated NYSE Rules 407 and 407A and Incorporated NYSE Rule Interpretations 407/01 and 407/02. The proposed rule addresses accounts opened or established by associated persons … Continue reading Comment Period Ends: FINRA Rule 3210 replacing NASD 3050

Effective Date of FINRA Rule 2040 – Payment to Unregistered Persons

FINRA Rule 2040 (“Rule”) governs the payment of transaction-based compensation by member firms to unregistered persons.  The new amendment to the Rule is effective August 24, 2015. The amended It expressly aligns the rule with Section 15(a) of the Securities Exchange Act of 1934 (SEA or Exchange Act) and its related guidance to determine whether … Continue reading Effective Date of FINRA Rule 2040 – Payment to Unregistered Persons

Guggenheim Partners Sanctioned for Failure to Disclose Conflict to Clients

Guggenheim Partners Investment Management LLC agreed to pay a $20 million penalty to settle charges brought by the  Securities and Exchange Commission (SEC)  that it breached its fiduciary duty by failing to disclose a $50 million loan that one of its senior executives received from an advisory client. According to the SEC’s order instituting a … Continue reading Guggenheim Partners Sanctioned for Failure to Disclose Conflict to Clients

SEC Adopts Rule for Pay Ratio Disclosure

The Securities and Exchange Commission has finally adopted the final rule t requiring public companies to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The new rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides companies with flexibility in calculating this … Continue reading SEC Adopts Rule for Pay Ratio Disclosure

Substantive Pre-Existing Relationships Possible in On-Line Private Placements

On August 6, 2015, the Securities and Exchange Commission (SEC) issued a No Action Letter to Citizen VC, Inc. (CVC) that appears to have further loosened the prior No Action Letter guidance provided by the SEC related to the ban on general solicitation and the creation of substantive pre-existing relationships in private placements. Counsel for … Continue reading Substantive Pre-Existing Relationships Possible in On-Line Private Placements

SEC Approves New FINRA Debt Research Analysts & Report Rules

The Securities and Exchange Commission (“SEC”), has approved the  adoption of new FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports) to address conflicts of interest relating to the publication and distribution of debt research reports. FINRA Rule 2242 (“Debt Research Rules”) represents a tiered approach that, in general, would provide retail debt research recipients with … Continue reading SEC Approves New FINRA Debt Research Analysts & Report Rules

FINRA Proposes Change to Rule 2210 (Communications with the Public)

The Financial Industry Regulatory Authority, Inc. (“FINRA”) has filed a proposed rule change to amend FINRA Rule 2210 (Communications with the Public) with the Securities and Exchange Commission (“SEC”).  The proposed rule amendment would require each FINRA member’s websites to include a readily apparent reference and hyperlink to BrokerCheck on: (i) the initial webpage that the … Continue reading FINRA Proposes Change to Rule 2210 (Communications with the Public)

SEC Awards Whistleblower Over $3 Million Award

The Securities and Exchange Commission (“SEC”)  announced a whistleblower award of more than $3 million to a company insider whose information helped the SEC crack a complex fraud.  The multi-million dollar payout is the third highest award to date under the SEC’s whistleblower program. The SEC noted that the whistleblower’s specific and detailed information comprehensively … Continue reading SEC Awards Whistleblower Over $3 Million Award

SEC Chair May Jo White Participates in Military Consumer Protection Day

Securities and Exchange Commission Chair Mary Jo White led a multi-agency event on July 15 to support the Military Consumer Protection Day 2015, highlighting how service members can best protect themselves and their finances from fraud and identity theft. Service members and their families are frequent targets for financial fraud and identity theft.  Military Consumer … Continue reading SEC Chair May Jo White Participates in Military Consumer Protection Day

SEC Chair Mary Jo White Sets the Tone at the Top

 In her opening remarks at the 2015 National Compliance Outreach Program for Broker-Dealers SEC Chair Mary Jo White set the tone for the program, and addressed a number of issues.  Most significant was her attempt to calm the growing concern of compliance officers that the targets on their back are going to result  in enforcement actions against them for failures … Continue reading SEC Chair Mary Jo White Sets the Tone at the Top

Military Consumer Protection Day 2015

Securities and Exchange Commission Chair Mary Jo White is leading a  multi-agency event to support Military Consumer Protection Day 2015, highlighting how service members can best protect themselves and their finances from fraud and identity theft.  Other federal agencies participating include the  the U.S. Postal Inspection Service, the Department of Justice’s Service Members and Veterans … Continue reading Military Consumer Protection Day 2015

SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers

WASHINGTON — The Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for their 2015 National Compliance Outreach Program for Broker-Dealers. The program is intended to provide an open forum for regulators and industry professionals to discuss compliance practices and exchange ideas on effective compliance structures. The … Continue reading SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers

Bill Introduced to Significantly Increase SEC Penalties

Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) introduced bipartisan legislation in the Senate to give the Securities and Exchange Commission (SEC) another tool to crack down on violations of securities laws by increasing penalties fines by almost 10 times.  In the Press Release,  Senator Reed, a senior member of the Senate Banking Committee was quoted stating “This bipartisan bill gives … Continue reading Bill Introduced to Significantly Increase SEC Penalties

SEC Launches Retirement Targeted Exam Initiative

The SEC Office of Compliance Inspections and Examinations (OCIE) recently issued a Risk Alert regarding the Targeted Industry Reviews and Examinations Initiative related to retirement accounts. The Risk Alert noted that the 2015 Examination Priorities issued earlier this year by OCIE noted that the examination of broker-dealers and investment advisers would include a focus on “examining matters … Continue reading SEC Launches Retirement Targeted Exam Initiative

Effective Date of consolidated FINRA Rule 3110(e)

The SEC approved FINRA’s proposed rule change to adopt NASD Rule 3010(e) (Qualifications Investigated) relating to background checks on registration applicants as FINRA Rule 3110(e).  FINRA Rule 3110(e) becomes effective on July 1, 2015. 3110(e) is based in part on substantially similar provisions in NASD Rule 3010 (e) and includes new provisions relating to the … Continue reading Effective Date of consolidated FINRA Rule 3110(e)

Financial Industry Cybersecurity Standards Not Modeled After Government Agencies, Thankfully …

The last 18 months has found the financial industry in the spotlight for cybersecurity breaches, and as a result, the SEC and FINRA are ramping up their expectations regarding cybersecurity  for the financial industry.  This is based in large part on both the importance of the financial markets to the United States economy and the negative impact … Continue reading Financial Industry Cybersecurity Standards Not Modeled After Government Agencies, Thankfully …

SEC Requests Comments on Exchange-Traded Products

The SEC is asking for comments on how new and novel exchange-traded products should be listed, marketed and traded, as part of an effort to potentially write new rules for the sector. The Securities and Exchange Commission cited an ever-increasing number of requests by funds to launch new kinds of complex products and investment strategies. “Exchange-traded … Continue reading SEC Requests Comments on Exchange-Traded Products

Comment Period Ends: SEC Request for Public Feedback to Inform Policy for Exchange-Traded Products

U.S. securities regulators are asking the public to weigh in on how new and novel exchange-traded products should be listed, marketed and traded, as part of an effort to potentially write new rules for the sector. The Securities and Exchange Commission cited an ever-increasing number of requests by funds to launch new kinds of complex … Continue reading Comment Period Ends: SEC Request for Public Feedback to Inform Policy for Exchange-Traded Products

Effective Date for Amendments to TRACE rules

The SEC approved amendments to the Trade Reporting and Compliance Engine (TRACE) rules and dissemination protocols to provide for dissemination of transactions in an additional group of asset-backed securities and to reduce the time frame for reporting such transactions, other than Fixed or List Price and Takedown Transactions. Transactions in asset-backed securities effected pursuant to … Continue reading Effective Date for Amendments to TRACE rules

SIFMA Testifies on Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens

Chairman and CEO of Stifel and member of the SIFMA Board of Directors, testified on behalf of SIFMA this week before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Kruszewski noted the proposals under discussion are important and appropriate work to promote capital formation. They build upon the success of the … Continue reading SIFMA Testifies on Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens

Amendment to FINRA Rule 8311 Approved

FINRA Notice to Member 15-07 noted that the amendments to FINRA Rule 8311 will be effective August 24, 2015.  In general, while the amendments to FINRA Rule 8311 eliminate duplicative provisions in NASD IM-2420-2, the most significant impact is that it clarified  the scope of the rule on payments by member firms to persons subject … Continue reading Amendment to FINRA Rule 8311 Approved

SEC Approves Amendments to Equity Trade Reporting and OATS Rules

Regulatory Notice 14-21 Effective Dates: OATS: April 7, 2014; ORF: September 15, 2014; ADF and TRFs: (millisecond reporting): September 29, 2014; ADF and TRFs (remaining amendments): First Quarter 2015 Executive Summary The Securities and Exchange Commission (SEC) has approved amendments to FINRA rules governing the reporting of (i) over-the-counter (OTC) transactions in equity securities to … Continue reading SEC Approves Amendments to Equity Trade Reporting and OATS Rules

SEC Approves Amendments to Equity Trade Reporting and OATS Rules

Regulatory Notice 14-21 SEC Approves Amendments to Equity Trade Reporting and OATS Rules Effective Dates: OATS: April 7, 2014; ORF: September 15, 2014; ADF and TRFs: (millisecond reporting): September 29, 2014; ADF and TRFs (remaining amendments): First Quarter 2015   Executive Summary The Securities and Exchange Commission (SEC) has approved amendments to FINRA rules governing … Continue reading SEC Approves Amendments to Equity Trade Reporting and OATS Rules

SEC Enforcement Agenda Looks to Minor Rule Violations

Historically, the enforcement actions brought by the Securities and Exchange Commission (“SEC”) have focused more on fraud and misrepresentation, than books and records violations and not on compliance professionals. It appears this is changing. Mary Jo White, Chairperson of the SEC appears to be expanding the enforcement focus of the SEC, which potentially will significantly impact the … Continue reading SEC Enforcement Agenda Looks to Minor Rule Violations

New Regulatory Guidance Challenges: Business Continuity Planning for the Financial Industry

Based upon the wide spread devastation caused by Hurricane Sandy, and the numerous other natural disasters such as tornadoes, flooding and wildfires that have occurred in the last few years, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the Commodity Futures Trading Commission’s Division … Continue reading New Regulatory Guidance Challenges: Business Continuity Planning for the Financial Industry

Amendments to Financial Responsibility Rules for Broker-Dealers Impact Net Capital Rules

Implementation On July 31, 2013, the Securities and Exchange Commission (SEC) announced amendments to Financial Responsibility Rules for Broker-Dealers (Release No. 34-70072; File No. S7-08-07). The amendments impact the net capital rule, customer protection, books and records, and notification rules for broker-dealers. In the 300 plus page release, the SEC stated that the amendments were … Continue reading Amendments to Financial Responsibility Rules for Broker-Dealers Impact Net Capital Rules

SEC Comment Letter – JOBS Act – Crowdfunding

SEC Comment Letter – JOBS Act – Crowdfunding Set forth below are our comments related to Title III of the JOBS Act. The JOBS Act focused on increasing American job creation and economic growth, relying in part on provisions relating to securities offered or sold through “crowdfunding.” As a primary focus of The LeGaye Law … Continue reading SEC Comment Letter – JOBS Act – Crowdfunding

Compliance Date for Form ADV Part 2B Extended by SEC

Compliance Date for Delivery to Clients of the New Form ADV Part 2B Supplements Extended by SEC As a result of the efforts of the Securities Industry and Financial Markets Association (SIFMA), the Securities and Exchange Commission (SEC) has extended the compliance date out four months with respect to the delivery of the brochure supplement … Continue reading Compliance Date for Form ADV Part 2B Extended by SEC

SEC Further Limts Use of Finders Fees

The Securities and Exchange Commission’s (SEC) position on the payment of finder’s fees to non-registered broker-dealers has been further clarified in a request for a  No-Action Letter, which was denied by the SEC. That clarification bodes poorly for those who are looking for a more expansive interpretation of the finder exemption from broker-dealer registration. Historically, in determining … Continue reading SEC Further Limts Use of Finders Fees

Form ADV Amendments Approved by the SEC

After years of speculation regarding when the proposed changes to the Form ADV Part II would be implemented, the Securities and Exchange Commission (SEC) unanimously adopted the proposed changes on July 21, 2010. The changes will raise the bar on how disclosures will be made to investment advisory clients and will result in all investment … Continue reading Form ADV Amendments Approved by the SEC

SECs Expanded Enforcement Tool Box

In response to the difficulties faced by the Securities and Exchange Commission (SEC) in 2009 related to the market crisis, the Ponzi schemes perpetrated by Bernard Madoff and Stanford Financial, the SEC’s Inspector General reports that criticize both the staff and process utilized, as well as the numerous Congressional proposals to restructure or abolish the … Continue reading SECs Expanded Enforcement Tool Box