Blog – Securities Compliance Sentinel

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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

  • So Who Wants To Lie On Their U-4   The SEC recently upheld a statutory disqualification that FINRA imposed where the representative filed a false U-4 and falsely answered compliance questionnaires. It appears as though the registered representative failed to disclose tax liens and a bankruptcy on his U-4. So is statutory disqualification the proper punishment for this misdeed. According to FINRA and the SEC, the answer is a resounding yes and, unfortunately for the registered representative, this makes sense. After all, the U-4 is the lynchpin of what must... More
  • So The SEC Is Now Focused On Retail Investors The SEC recently announced an enforcement initiative that will target retail investor harm. The agency’s task force will use data analytics to find widespread problems regarding fee disclosures and unsuitable investment recommendations. In addition to data analytics, the SEC will rely upon tips, complaints and referrals that come into the SEC. This heightened analysis of the retail investor market should be a wake-up call to firms who service the retail investor space. There are a few questions that you should be... More
  • FINRA Changes To Arbitration Procedure FINRA is considering a number of changes to its arbitration procedure.  For a good discussion on the subject, see this article.... More
  • So You Think You Have No Cybersecurity Issues Recent exams have shown that cybersecurity weaknesses are a real issue for the industry.  This article from the Investment News provides the detail.    ... More
  • 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
  • Cyber-Security and the SEC Alert   For a nice discussion on the SEC’s cyber-security alert, please see this link.... 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