Broker- Dealer Law Corner

Broker- Dealer Law Corner

Tag Archives: SEC

Updates: Two Losers + One Positive Note = A Bad Week For Broker-Dealers

Posted in Administrative Proceedings, appeal, Disciplinary Process, Enforcement, FINRA, Research analyst, Rule 2242, Rule 2711, SEC
There have been some developments this week in a few matters on which I have previously offered my views. To help you stay on the cutting edge of financial world current events as you mingle at your upcoming Cinco de Mayo fiestas, here are three updates.  Two, not surprisingly, represent wins for the regulators.  The… Continue Reading

Not So Naked And Not So Afraid: FINRA’s New Compensation Rule Does Not Require Brokers To Bare All (Financially) When Changing Firms

Posted in Compensation, Compliance, Disclosure, FINRA, Hiring practices, Rule 2272
Two years ago, FINRA first proposed to the SEC a rule that would require brokers to disclose to clients not only when they receive compensation (including signing bonuses and other payments) to switch from one broker-dealer to another, but, worse, the amount of that compensation. The industry was seriously not pleased with the rule.  FINRA,… Continue Reading

Highlights from Day Two of SIFMA-CL Conference

Posted in AML, CCO, CCO liability, Compliance, Culture, FINRA, Senior Investors, SIFMA
The Rick Ketchum Show. Today’s sessions opened with what was likely the highlight of the entire conference, Rick Ketchum’s swan song “conversation” with Ira Hammerman, GC of SIFMA, before he toddles off into retirement. Granted, these interviews never remotely approach Sixty Minutes intensity, but this year’s featured even more coddling than ever: What would you… Continue Reading

Highlights from Day One of SIFMA-CL Conference

Posted in Best execution, CCO liability, Culture, Fiduciary duty, Fiduciary Standard, FINRA, municipal securities, SEC, SIFMA, Supervision
Opening Session/Firm Culture/CCO Liability. If you are reading this blog, then you, like me, have been probably eagerly waiting for the start of SIFMA’s annual Compliance and Legal conference not just for the jumbo shrimp at the reception, but also to learn some insights from the regulators about their concerns and intentions. If you attended… Continue Reading

The First Circuit Makes The Case Against Cherry-Picking Instances Of Alleged Misrepresentations By Focusing, Instead, On “Context”

Posted in 17(a)(3), Administrative Proceedings, appeal, Defenses, Enforcement, FINRA, SEC
Years ago, I handled the defense of a FINRA Enforcement case that still galls me.  The client sent a series of emails, over many months, about a particular security to customers who already owned the stock.  The point of the emails was largely to provide updates, and, from time-to-time, to suggest that the customers consider… Continue Reading

What To Expect When You’re Expecting (An SEC Exam)

Posted in Annual Report, Examination, SEC
Tis the season for announcing the year’s top examination priorities. This week, the SEC released its own examination priorities. Top priorities include: liquidity controls; public pension advisers; product promotion; exchange-traded funds; and variable annuities. Thematically, the SEC’s priorities adhere to its larger objectives: protecting retail investors (especially retirement savings); assessing market-wide risks; and utilizing data analytics… Continue Reading

SEC Offers Guidance On Compliance: Don’t Forget The Basics

Posted in Compliance, Conflict of Interest, Examination, FINRA, Supervision
I posted several blogs this summer about our victory over the SEC in the Robare case (which, naturally, has been appealed by the SEC’s unhappy Division of Enforcement). One of the key elements in our ability to prevail in that matter was my client’s extensive use of outside securities consultants to assist in the preparation and… Continue Reading

The SEC’s Proposal To Improve The Fairness Of Administrative Proceedings: Not Nearly Enough To Impact Its Winning Percentage, But Enough To Make It Seem It Cares

Posted in Administrative Proceedings, appeal, SEC
In what many will likely consider to be an effort to quiet the increasing chorus of criticism over the SEC’s increased use of administrative proceedings over the last few years, today, the SEC announced a proposal to amend several of the rules governing those proceedings. While the SEC did not expressly acknowledge that the amendments… Continue Reading

Compliance Officer Liability: Findings Without Sanctions? The Plot Thickens

Posted in Administrative Proceedings, appeal, Compliance, Enforcement, RIA, Sanctions, SEC, Supervision
We have previously posted on the issue of CCO liability, a very sensitive subject, to say the least, for many readers of this blog.  If this is a subject that interests you, then there was a very intriguing development this past week in this area that merits your attention. It came in the form of… Continue Reading

If You’re a Respondent, Time is NOT on Your Side

Posted in Arbitration, Defenses, Disciplinary Process, Enforcement, FINRA, Registered Representative, SEC
There was a decision this week from the D.C. Circuit Court of Appeals on an appeal of a decision by a respondent who – stop the presses! – lost an SEC administrative proceeding, and then lost his appeal to the SEC. Montford and Company, Inc. v. SEC, No. 14-1126 (July 10, 2015). One of the… Continue Reading

Actions Speak Louder Than Words: The Regulation of Chief Compliance Officer (CCO) Conduct

Posted in Compliance, Disciplinary Process, Enforcement, SEC, Supervision
Yesterday, the SEC held its 2015 “National Compliance Outreach Program for Broker-Dealers.” The program was designed to “provide[] an open forum for regulators and industry professionals to share strong compliance practices and promote the exchange of ideas to develop an effective compliance structure.” In the spirit of this cooperation, SEC Chairwoman White opened the conference… Continue Reading

David Slays Goliath…And Goliath Is Pissed

Posted in Administrative Proceedings, appeal, Disciplinary Process, Enforcement, Sanctions, SEC
I reported a few weeks ago on the victory that my clients, Mark Robare and Jack Jones, achieved in the administrative proceeding that the SEC initiated against them last year. Against all odds, they convinced Judge Grimes that not only had they not committed the fraud claimed by the SEC, but, in Judge Grimes’ words,… Continue Reading

David Slays Goliath: Texas Investment Advisor Beats SEC In Administrative Proceeding

Posted in Disciplinary Process, SEC, Uncategorized
If you have been a regular reader of this Blog, or even if you just browse the Wall Street Journal on occasion, you have undoubtedly noticed the attention being given over the last few weeks to the SEC’s decision increasingly to bring its Enforcement cases before Administrative Law Judges, rather than in federal court. While… Continue Reading

SEC Publishes Memo Explaining Its Forum Selection Considerations, But Questions Remain

Posted in Administrative Proceedings, SEC
The SEC has faced mounting criticism recently for its increasing use of administrative proceedings in enforcement matters. Numerous lawsuits have been filed against the agency, challenging its forum selection. Judge Jed Rakoff of the U.S. District for the Southern District of New York has made it very clear he has serious fairness and constitutionality concerns… Continue Reading

Why are Senior Investors so Special? (Part 1)

Posted in Enforcement, FINRA, Rule 2111, SEC, Suitability
Over the last few months and years, securities regulators have repeatedly emphasized the special care and attention senior investors[1] should be afforded by broker-dealers and their associated persons. As part of that focus, on April 15, 2015, FINRA and the SEC Staff published their National Senior Investor Initiative Report. The report highlighted recent industry trends… Continue Reading

May I Go Out of Business, Please?

Posted in BDW, CMA, FINRA, Rule 1017
It may be the ultimate example of the heavy price that a BD pays for being subject to FINRA regulation, and it happens all the time. Broker-dealer A decides to cease operations, for whatever reason, so it files a Form BDW (which, technically speaking, is a request by the BD to withdraw its FINRA membership… Continue Reading

SEC Supports Creating a Uniform Fiduciary Standard; But is FINRA Already Enforcing It?

Posted in Fiduciary Standard, FINRA, SEC
SEC Chairwoman Mary Jo White recently announced her support of a uniform fiduciary standard for broker-dealers and investment advisers, ending any remaining speculation as to her views on the subject. The announcement kicked of a whirlwind of speculation in the industry – What would the new standard look like? When would we see it? Will… Continue Reading
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