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Securities Compliance Sentinel blog

The highly regulated securities and financial industry has a host of complex problems—and financial institutions often find themselves on the receiving end of audits, investigations and other compliance issues.

In the Securities Compliance Sentinel blog, Ernest shares his knowledge and experience to address cutting edge issues in the firm’s Securities Compliance Sentinel Blog. Join this team of bloggers in their exploration of this increasingly complex area.

Scroll down to see Ernest's most recent blog posts.

Recent Blog Posts

  • SEC Still Has Lawyers in its Cross-Hairs It is almost axiomatic that the SEC “enjoys” bringing enforcement actions against lawyers.  The SEC believes that lawyers have a special duty to protect and police the securities markets, and, when a lawyer fails, the SEC is right there to pounce. In fact, the SEC fined and barred an attorney from practicing before the Commission because the attorney failed to conduct proper due diligence when acting as underwriter’s counsel in misleading municipal bond offerings.  See https://www.sec.gov/litigation/admin/2017/33-10335.pdf.  The SEC claimed that the lawyer prepared erroneous documents regarding on-going disclosure obligations.... More
  • Ernie Badway to Co-Host Webinar on New Developments in AML and Training Requirements Ernie Badway is scheduled to co-host a webinar discussion on new developments in AML and training requirements on Wednesday, September 13, 2017 at 1:00 p.m.  See http://mailchi.mp/e5dd1d2898b8/webinar-sample.  Details are below: New Developments in AML and Training Requirements New Developments in AML and Training Requirements  Date: Wednesday, September 13, 2017  Time: 1:00pm ET / 12:00pm CT / 11:00am MT / 10:00am PT / 9:00am AT Webinar Description:  With numerous high profile incidents reported on a regular basis, it is little wonder that FINRA, FinCEN and the SEC continue... More
  • Let’s Not Get Too Excited with FINRA’s Proposal on Re-Taking Exams Most brokers despise the fact that they need to re-take their examinations if they are not employed with a broker-dealer for 2 years or if they are not associated with a member firm.   Now, FINRA comes to the rescue with a new proposal to permit registered representatives to avoid re-taking their exams for up to 7 years so long as they fulfill continuing education requirements.  See http://www.finra.org/sites/default/files/rule_filing_file/SR-FINRA-2017-007.pdf. The proposal also allows a person associated with a member firm to obtain any qualification and registration permitted by... More
  • Brokers Have To Be Reminded To Avoid Using Personal Emails and Texts Despite numerous warnings, some people just do not get it.   The SEC barred a broker from the industry because the broker used personal email and text messages to obtain client investments.  See the Commission’s website. The SEC found these personal communications were never submitted to the firm for review.  As a result, the broker aided and abetted his firm’s books and records violations.  Further, the broker also made numerous other violations as well. This scenario demonstrates the critical requirement to only use firm... More
  • Cybersecurity Insights from the SEC   Over the last several months, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has been conducting a “sweep examination” of over 70 broker-dealers and investment advisers to assess their cybersecurity policies and procedures.  https://www.sec.gov/files/observations-from-cybersecurity-examinations.pdf.  In particular, OCIE looked at their preparedness regarding governance and risk assessment; access rights and controls; data loss prevention; vendor management; training; and incident response. For the most part, OCIE found policies and procedures in place, and these firms did, in fact, conduct penetration tests and vulnerability scans; used a system to prevent... More
  • Cyber Attacks Merit SEC Risk Assessment Intervention The recent cyberattacks across the globe have caused the  SEC’s Office of Compliance Inspections and Examinations (“OCIE”) to issue an alert and highlight certain best practices for firms to handle these ransomware attacks. The OCIE staff based this guidance on its review of various firms, concluding that these firms should perform a cyber-risk assessment; conduct penetration and vulnerability tests; and ensure software maintenance such as updates and software patches if applicable.  The OCIE staff found that many firms had deficiencies.  Further, according to the OCIE staff, firms should develop contingency plans... More
  • Fox’s Mark Silow, Joshua Horn and Cannabis Practice Profiled We strongly encourage you to read the article profiling our firm and partners, Mark Silow (also our firm Chairman) and Joshua Horn, on Fox’s  Cannabis Practice Group.  See https://bol.bna.com/why-fox-rothschild-is-still-banking-on-its-cannabis-practice/.  No, sorry, Fox does not offer free samples, but, if you are interested in this emerging area, Josh is available to discuss.... More
  • The SEC Reluctantly Vacates Collateral Bars After Court Loss One of the outstanding issues relating to the Dodd-Frank Act was the SEC’s use of statutory power to regulate conduct that occurred prior to its enactment in July 2010. The United States Court of Appeals for the District of Columbia recently decided that the SEC did not have the power to impose collateral bars on conduct pre-July 2010. Consequently, the SEC has now determined it will allow those respondents and/or defendants, who are subject to these collateral bars, to apply to... More
  • If You Want Trouble, Do Not Register as a Broker-Dealer At Fox Rothschild, we are constantly advising clients regarding the peril of engaging in the securities industry without the proper license. In fact, we have developed materials to provide our clients with information about the process. See http://www.foxrothschild.com/content/uploads/2016/10/e-book-Horn-Badway-McCoy-Broker-Dealers-Registered-Investment-Advisers-and-Commodities-Futures-Registered-Entities-October-2016.pdf. A recent case before the SEC has only confirmed this advice. The SEC barred a person from the securities industry, and required disgorgement in the amount of $400,000 because the person failed to register as a broker-dealer while selling private fund interests.... More
  • Here Come the States… In the Trump Era, the States May Be the New Top Securities Cops There is an old saying: “the more things change, the more they stay the same.”  It seems every few years (usually, the result of a political shift) we see the states become more involved in securities enforcement.  Our current time is now subject to this cyclical experience. The SEC and the North American Securities Administrators Association (“NASAA”), the state securities regulators, have signed a memorandum of understanding (“MOU”) to share information so as to assist each other in monitoring compliance over, among other things, the new... More