Blog – Securities Compliance Sentinel

https://securitiescompliancesentinel.foxrothschild.com/

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. Our team of seasoned securities attorneys share their knowledge and experience to address cutting edge industry issues. Join them in their exploration of this increasingly complex area.

Recent Blog Posts

  • 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
  • So You Want To Invest In A Cannabis Business… Many people see the green of cannabis as a way to the pot of gold at the end of the rainbow. If you are going to invest in a legal (at a state level) cannabis business, you need to make sure that you know what you purchase. Copyright: lightwise / 123RF Stock Photo The SEC recently charged a company and its founder with promoting “record” revenue numbers to investors and touting itself as a leader in the cannabis industry, all the while... More
  • What Should You Take Away From The SEC’s Investor Bulletin The SEC recently published its latest investor bulletin. The SEC publishes these from time to time to bring awareness to the investing public on certain issues. The current bulletin notes that the investor.gov web page provides a number of resources for the investing public, which include: The ability to check on an investment professional. Self-education about various products. To learn about online tools to make investing a simpler process. To learn how to avoid investment fraud. To stay current with SEC resources. To start researching public companies. To... More
  • SEC Proposes to Increase Municipal Securities Disclosures Last week, the Securities and Exchange Commission proposed Rule Amendments to Improve Municipal Securities Disclosures.  According to the SEC, these rule amendments are intended to “improve investor protection and enhance transparency in the municipal securities market”.  Rule 15c2-12 would be amended to add two new event notices: – Incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or... More
  • FINRA, A/K/A the Fine Machine According to a recent report of the Eversheds Sutherland firm, 2016 was a banner year for FINRA-assessed fines. FINRA collected a record $176 million in 2016. So what gives? The increase in fines was attributable to two things. First, a significant number of fines in the $1 million plus range. Second, of those fines, a fair number were in excess of $5 million. Copyright: denikin / 123RF Stock Photo Of particular note, the report shows that FINRA is seeking and obtaining very large... 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
  • What Do The SEC and Robo-Advisors Have In Common The SEC recently issued regulatory guidance for robo-advisors. This guidance focuses on what robo-advisors must do to meet their disclosure obligations. Among other things, the SEC has recommended robust disclosures in the following areas: The use of algorithms, overrides, third parties, fees and client information. The limits on use of the robo-advisor model to ensure adequate disclosures. Adequate and clear investment questionnaires to ensure suitability of investments. Robo-advisors are a growing trend. Thus, it is only logical that the SEC would provide such guidance. Now... More
  • Ed Raleigh Publishes Mail and Wire Fraud Article Our colleague Ed Raleigh in our DC office has published an insightful article on Mail and Wire Fraud in the ABA’s Criminal Justice Magazine.  We invite you to read it.  ... More
  • SEC’s Exam Deficiencies The SEC recently released its findings relating to exams of investment advisers.  https://www.sec.gov/ocie/Article/risk-alert-5-most-frequent-ia-compliance-topics.pdf. In particular, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) found weak compliance programs; insufficient or late filings; custody rule violations; Code of Ethics problems; and the often used books and records issues. OCIE, in fact, criticized the use of non-particularized, “off-the-shelf” manuals, nearly non-existent annual reviews, and plain and simple failure to implement or follow procedures.  Form ADV and Form PF filings also included inaccurate information or were late.  Investment advisers were also found... More