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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

  • A FINRA Arb Panel’s Ingenious Method for Resolving CRD Marks Securities attorneys routinely are asked by people in the securities industry a form of this question: “how do I get rid of the marks on my license.”  Typically, registered representatives are talking about the fact of life in the securities industry where every time some customer makes a claim, regardless of how baseless it may be, it will end up on the person’s CRD record.  Once there, it is nearly impossible to expunge. Nonetheless, FINRA has developed over the years a process whereby a registered representative may bring an... More
  • Changes to CRD Coming Soon FINRA, recently, announced a major overhaul of its Central Registration Depository (“CRD”).  The first step will be a new WebCRD interface, effective June 30, 2018.  More changes will come over time with FINRA claiming all changes will be made sometime in 2021. The CRD is the central licensing and registration system that the SEC, FINRA, and the states use to monitor securities firms.  Securities firms use the CRD system to register, make form filings, and maintain records for associated persons, among other things.  It... More
  • A Big “Uh-Oh” for the SEC’s ALJs and Administrative Courts Today, the United States Supreme Court sent shock waves through the securities industry as well as the United States Securities and Exchange Commission’s (“SEC”) enforcement program when it held that SEC administrative law judges (“ALJ”) are “inferior officers,” and must be chosen pursuant to the appointments clause of the United States Constitution.  That is, the President with the advise and consent of the United States Senate may appoint “all other Officers of the United States, whose Appointments are not herein otherwise provided for, and... More
  • Fox’s Kristen Howell at the Forefront of Bitcoin Developments Recently, the SEC’s Director of Corporation Finance provided long overdue insight on cryptocurrencies.  In particular, he indicated that Bitcoins, Etherium, and other such coins functioning on certain decentralized platforms are not securities.  Our partner, Kristen Howell, authored a fascinating and informative alert on this topic.  See https://www.foxrothschild.com/publications/sec-bitcoin-is-not-governed-by-securities-laws/.  We commend it to anyone interested in this area. Essentially, the SEC Staff has taken the position that, various cryptocurrencies operating from a central control group, who target passive investors, will be engaging in a securities offering while less centralization focusing... More
  • Matt Lee Authors Excellent Post on the DOJ’s New Corporate Resolution Policy For those interested in a description of the DOJ’s new corporate resolution policy, we strongly urge you to review our partner, Matt Lee’s, recent posting on this topic.  See https://www.foxrothschild.com/white-collar-compliance-defense/publications/the-justice-departments-new-corporate-resolution-policy-an-end-to-piling-on/.... More
  • The SEC’s Scare Tactics May Work on Advisers In rapid succession, the SEC has issued warnings and announced sanctions against registered investment advisers for fee and expense practices, false statements regarding assets under management, and misleading performance data.  No one should be surprised that the SEC is actively seeking to uncover transgressions in the RIA field. Initially, the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert outlining a variety of RIA failures concerning the proper calculation and disclosure of fees and expenses.   See https://www.sec.gov/ocie/announcement/risk-alert-advisory-fee-expense-compliance.  In particular, the alert detailed... More
  • Josh Horn Appears on TV Regarding Medical Marijuana in Arkansas Although not a securities topic per se (however, a number of companies are popping up and offering securities in this field), our very own Josh Horn was featured on TV regarding medical marijuana.  View the clip here.... More
  • SEC Expands Cryptocurrency Market Worries Not one for making people feel at ease, the SEC’s Division of Investment Management has indicated that it is not comfortable with investment companies investing in cryptocurrencies and similar products. In a letter sent to industry groups, the SEC’s IM Director indicated that the Staff had numerous concerns over funds investing in these instruments.  The concerns boiled down to 5 categories:  valuation, liquidity, custody, arbitrage, potential manipulation and other risks. The SEC Staff is concerned that funds will not be able to properly value... More
  • Uh Oh!! Bitcoins and ICOs Are the Latest Front in the SEC’s War on Lawyers In a recent speech, new SEC Chairman Jay Clayton warned lawyers, who advice clients on bitcoins and initial coin offerings (“ICOs”), to be aware the SEC is lurking out there waiting to pounce.  Of course, he did not say it exactly like that, but he might as well have used those exact words. Clayton stated that the SEC Staff is monitoring (he called it being on “high alert”) lawyers, who advice clients on these transactions.  Apparently, the SEC believes that certain lawyers may... 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