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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

  • Business Interruption Insurance Redux A few weeks ago as this crisis began to take shape, we indicated it would be a good idea to dust off the old business interruption policies.  In response to some queries, we wanted to add to our discussion. Regardless of anyone’s (including your insurance broker) belief, you should still make the claim on the policy.  There are a number of factors at play, including, but not definitively, some form of government intervention to cover these losses.  It would be critical... More
  • Business Interruption Insurance Applies to Securities Firms: Start By Calling Counsel With the chaos of the past week– and it is going to get worse before better– firms should check on their insurance coverage. Most firms should check to see if there business interruption coverage is up to date.   This is a critical component of their business operations.  If things get worse and there are widespread shutdowns, most firms will need to look to these policies for coverage.   Keep in mind that it may apply if you cannot get into your offices... More
  • Coronavirus Reaches Pandemic Status: You Better Pull Out the Old Business Continuity Plan Let’s be honest, the only people usually concerned about business continuity plans (“BCP”) are compliance folks and the lawyers.  In fact, many probably have not looked at their BCP since Hurricane Sandy.  Well, you better dust it off (or dry it off, more accurately). FINRA has already provided notice regarding traders working at home.  https://www.bloomberg.com/news/articles/2020-03-09/finra-concedes-virus-may-impact-wall-street-oversight-of-traders.  Further, nearly everyone, who works at the SEC headquarters in Washington, D.C., has been sent home because a staff member tested positive for the coronavirus.   However,... More
  • The Market Crashing = Litigation Explosion! Alas, the market crashes (nearly, 8% of its value today) and your 401k plan is devastated, but could it get worse?  Of course, it could.  Brokers and investment advisers as well as their employers should expect to see numerous arbitrations and lawsuits as a result of the market crash and volatility. As a result, brokers and investment advisers should take precautions now.  Customer client files should be in order.  That means, you have to make sure the files have been properly... More
  • YOU SHOULD ALWAYS USE YOUR FRIENDLY NEIGHBORHOOD BROKER-DEALER! Recently, a REIT sought to avoid using a broker-dealer in a distribution.  Woe, onto those who seek to avoid the broker-dealer, especially when it leads to a SEC investigation and enforcement action.  The REIT charged a 3% commission as part of its sales process, and used its website, social media, and radio ads.  These commissions and marketing tactics violated Exchange Act Rule 3a4-1, and, as a result, the REIT was operating as a broker-dealer in violation of Section 15(a) of the Securities Exchange Act of... More
  • Ernie Badway Quoted in FundFire Ernie Badway was quoted in FundFire regarding a recent lawsuit brought against the SEC concerning a FOIA request.  https://www.fundfire.com/c/2532863/301753.    The FOIA request had sought emails from the former SEC Enforcement Director and his correspondence with various news organizations.... More
  • Interesting Guidance from FINRA on Expungements FINRA has distributed a recording from a neutral workshop on expungement.  It was enlightening and only reinforced the fact that it is very difficult for anyone to obtain an expungement.  You can find the workshop at https://www.finra.org/arbitration-mediation/neutral-workshop-audio-and-video-files.... More
  • Ernest Badway to Speak at NSCP National Conference on Regulation BI Ernie Badway, the Chair of Fox Rothschild’s Securities Industry Group, will be speaking at the National Conference of the  National Society of Compliance Professionals.  Registration information may be found at: https://www.foxrothschild.com/ernest-e-badway/events/the-secs-challenging-new-guidance-on-the-solely-incidental-broker-exemption/... More
  • SEC Wants Comments on Private Offering Rule Changes Recently, the SEC issued a concept release to obtain input on possible changes to the offering rules.  The SEC may change Regulation D private placements, Regulation Crowdfunding, secondary trading rules, the accredited investor definition and the use of private funds to raise capital, among other things. The SEC may consider changes to the definition of accredited investor, by re-evaluating the financial qualifications’ thresholds; making separate categories of investors based upon experience, profession, or an exam; and/or measuring accreditation through investments.  Similarly, the SEC wants to make changes to private... More
  • Fox Partner Kristen Howell Quoted on Security Tokens Fox Partner Kristen Howell was, recently, quoted in a Law360 article on security tokens following the ICO collapse.  https://www.law360.com/assetmanagement/articles/1162154/-security-tokens-slow-to-take-off-following-ico-collapse?nl_pk=5882ca7d-b76e-42a1-a1fe-eb96fcbcf60f&utm_source=newsletter&utm_medium=email&utm_campaign=assetmanagement.... More