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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

  • Fund Adviser Exemptions Primer– Redux I never find it boring to review the investment adviser exemptions for private fund managers.  Apparently, I am not the only one since this is a question we frequently field. Initially, private fund manager investment advisers, who are primarily regulated by the SEC, that is, large adviser firms with $100 million or more in assets under management (“AUM”), may claim federal exempt reporting status by relying on one of the statutory exemptions implemented under the Dodd-Frank Act of 2010 (“DFA”) amending... More
  • New SEC Division Undertakes 2021 Examination Priorities On December 17, 2020, SEC created the Division of Examinations by renaming the now defunct, Office of Compliance Inspections and Examinations, making it the SEC’s 6th Division joining Enforcement, Corporation Finance, Trading and Markets, Investment Management, and Economic and Risk Analysis (DERA). A couple of months later, the new Examinations  Division  announced its 2021 examination priorities, carrying on OCIE’s long standing tradition of annually publishing its examination priorities.  The publication of these priorities is supposed to provide a framework for those... More
  • Fox Rothschild’s Securities Industry Group’s New Interactive Survey of State Blue Sky Filing Requirements Facilitates Rule 506, Regulation A+ Securities Compliance Fox Rothschild’s Securities Industry Group is pleased to announce its publication of an interactive Survey of State Blue Sky Filing Requirements.   SI Group members, A. Binford Minter and Jennifer M. Vinciguerra, were instrumental in developing the site.  We encourage all of our readers to visit the site and see what it may be able to offer to you. Interactive Survey of State Blue Sky Filing Requirements Facilitates Rule 506, Regulation A+ Securities Compliance ... More
  • Leaving is the Hardest Part Especially if You Want to Re-Enter the Securities Industry We were recently reminded of how difficult it is to re-register for a position in the securities industry after being barred.  See https://www.sec.gov/litigation/admin/2021/ia-5682.pdf. On February 9, 2021, the United States Securities and Exchange Commission refused to let a former investment adviser re-register, claiming that the barred adviser had not demonstrated “extraordinary circumstances” to merit re-entry .  In particular, the Commission noted that the barred adviser had not paid his penalty, initially, imposed in 2011.  The Commission also rejected his arguments that,... More
  • FINRA’s New Guidance Report… the Name Did Not Change To Protect the Innocent In what has become a yearly occurrence, FINRA has notified its member firms about its intent regarding the member firms’ compliance programs.  See https://www.finra.org/rules-guidance/guidance/reports/2021-finras-examination-and-risk-monitoring-program. This year, FINRA combined its Report on Examination Findings and Observations (an analysis of prior examination results) and the Risk Monitoring and Examination Program Priorities Letter (planned areas of review) into “FINRA’s Risk Monitoring and Examination Activities Report.”  This new report is 46 pages long, and very dense.  It is meant to assist member firms on what... More
  • New Reg D Rule 506 Filing Rules for New York In December  2020, the New York State Attorney General altered its filing rules to align with those required by the SEC’s requirements for a Regulation D Rule 506 offering.  Now, for a Rule 506 offering in New York, the issuer must only file a  copy of the federal Form D with New York’s Investor Protection Bureau instead of the former pre-offer Form 99 within 15 days of the first sale within or from New York.   See https://ag.ny.gov/sites/default/files/13-nycrr-10-unofficial.pdf.   The... More
  • Patrick Egan Authors Insightful Piece on Death Penalty Moratoriums Our partner, Patrick Egan, authored an excellent opinion for the Philadelphia Inquirer on the death penalty and moratoriums.  See https://www.inquirer.com/opinion/commentary/death-penalty-moratorium-pennsylvania-governor-wolf-capital-punishment-20210201.html.... More
  • SEC Moves in a Very Different Direction on Finders In a stark 3-2 vote along political lines, the SEC announced today that it was proposing new rules relating to finders.  Essentially, if the proposed rules are, ultimately, approved, the SEC will sharply change the position it has maintained for over 8 decades, allowing unregistered finders to sell securities to the investing public while receiving transaction based compensation.  See https://www.sec.gov/news/press-release/2020-248.   If approved, the proposed rules would permit 2 categories of finders.  Both types of finders would be allowed to solicit... More
  • The Dark Side Strikes Again: No, Not the SEC, Hackers and Credential Stuffing Recently, the Office of Compliance Inspections and Examinations (“OCIE”) released an alert to broker-dealers and registered investment advisers regarding the risks associated with credential stuffing.  See https://www.sec.gov/files/Risk%20Alert%20-%20Credential%20Compromise.pdf. Credential stuffing is an automated attack on web-based user accounts and direct network login account credentials. Cyber attackers obtain lists of usernames, email addresses, and corresponding passwords from the “dark web,” and then use automated scripts to try to compromise user names and passwords on other websites. OCIE believes that credential stuffing is emerging... More
  • Uniform Money Transmitting Rules May Make It Easier for the Cryptocurrency Business Money service businesses received a reprieve last week that will make cryptocurrency firms very happy since they will be able to more easily expand across the United States. The Conference of State Bank Supervisors (“CSBS”) – 48 state regulators – agreed on a regulatory system for money services’ businesses, including a single set of supervisory rules and exam program conducted by state regulators. The new regime applies to nearly 80 large payment and cryptocurrency firms, doing business of over $1 trillion... More