Are your customer accounts in order? – SEC announces sweep of broker-dealers and implementation of the customer protection rule initiative

2017 ◽  
Vol 18 (1) ◽  
pp. 68-74
Author(s):  
Melissa Beck Mitchum ◽  
Bob Xiong
Keyword(s):  
Current Account ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Reporting Mechanism

Purpose To explain the Customer Protection Rule Initiative announced by the Securities and Exchange Commission (SEC) and offer practical guidance for complying with Rule 15c3-3 under the Securities Exchange Act of 1934. Design/methodology/approach This article discusses Rule 15c3-3 under the Securities Exchange Act of 1934, related interpretative guidance, and the Customer Protection Rule Initiative announced in June 2016 by the SEC. Findings This article concludes that broker-dealers should take advantage of the Customer Protection Rule Initiative’s self-reporting mechanism and use this time to review their current account arrangements with banks, existing internal policies and procedures, and account documentation. Originality/value This article contains valuable information about the SEC’s Customer Protection Rule Initiative and practical compliance guidance from experienced securities lawyers.

OCIE to investment advisers: focus on these five problem areas

2017 ◽  
Vol 18 (2) ◽  
pp. 16-18
Author(s):  
Brynn D. Peltz ◽  
Ilan S. Nissan ◽  
Evyn W. Rabinowitz
Keyword(s):  
Design Methodology ◽  
Code Of Ethics ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Policies And Procedures ◽  
Funds Management ◽  
Practical Guidance ◽  
Investment Advisers ◽  
Practical Implications

Purpose To explain a Risk Alert published on February 7, 2017 published by the Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) describing the five compliance topics most frequently identified in deficiency letters sent to investment advisers after the completion of an OCIE examination. Design/methodology/approach Discusses deficiencies noted by the OCIE relating to the Compliance Rule, required regulatory filings, the Custody Rule, the Code of Ethics Rule, and the Books and Records Rule. Findings The OCIE published the Risk Alert with its noted deficiencies only one month after releasing its exam priorities for the year. Practical implications All investment advisers should consider reviewing their compliance practices, policies and procedures in light of the deficiencies and weaknesses identified in the SEC Risk Alert. Originality/value Practical guidance from experienced lawyers specializing in asset and funds management.

SEC issues Staff Legal Bulletin after four-year comprehensive review of proxy system

2015 ◽  
Vol 16 (1) ◽  
pp. 63-65
Author(s):  
John E. Sorkin ◽  
Abigail Pickering Bomba ◽  
Steven Epstein ◽  
Jessica Forbes ◽  
Peter S. Golden ◽  
...  
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Third Parties ◽  
Comprehensive Review ◽  
Content Type ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Investment Advisers ◽  
Practical Implications

Purpose – To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system. Design/methodology/approach – Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC. Findings – The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations. Practical implications – The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.” Originality/value – Practical guidance from experienced M&A lawyers.

The SEC brings its first enforcement action under the identity theft red flags rule

2019 ◽  
Vol 20 (1) ◽  
pp. 31-35
Author(s):  
Vincente L. Martinez ◽  
Julia B. Jacobson ◽  
Nancy C. Iheanacho
Keyword(s):  
Design Methodology ◽  
Identity Theft ◽  
Securities And Exchange Commission ◽  
Red Flags ◽  
Content Type ◽  
Enforcement Action ◽  
Policies And Procedures ◽  
The Us ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the significance of the first enforcement action under the Identity Theft Red Flags Rule by the US Securities and Exchange Commission (SEC), which was announced on September 26, 2018. Design/methodology/approach Explains how the SEC’s order not only cites violations of the Safeguards Rule under Regulation S-P (a staple of SEC cybersecurity enforcement actions against broker-dealers and investment advisers) but also is the SEC’s first enforcement action for a violation of the Identity Theft Red Flags Rule under Regulation S-ID, which requires certain SEC registrants to create and implement policies to detect, prevent and mitigate identity theft. Findings Cybersecurity policies and procedures must match business risks and change as business risks change. Originality/value Practical guidance from experienced cybersecurity and privacy lawyers.

SEC offers relief to M&A brokers

2014 ◽  
Vol 15 (2) ◽  
pp. 18-21
Author(s):  
Russell D. Sacks ◽  
Thomas Donegan ◽  
Charles S. Gittleman
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Private Business ◽  
Private Companies ◽  
Business Combinations ◽  
Content Type ◽  
Policies And Procedures ◽  
The Usa ◽  
Practical Guidance

Purpose – To explain a No-Action letter recently issued by the USA Securities and Exchange Commission (SEC) permitting persons who qualify as “M&A Brokers” to facilitate the sale of private companies without registering with the SEC as broker-dealers, subject to a number of restrictions. Design/methodology/approach – Explains how persons engaged in merger and acquisition activity have historically been required to register with the SEC, summarizes the conditions to the relief for the newly defined M&A Broker, explains what an M&A Broker can and cannot do, lists 10 criteria an M&A Broker must meet to obtain relief from registration, recommends policies and procedures for companies planning on taking advantage of the exemption from registration, and explains comparable UK legislation that applies to financial advisers advising on investments or arranging deals for M&A transactions. Findings – While many questions and considerations remain, including how this guidance will play out in respect of various state law regimes, the M&A Broker designation has the potential to relieve some of the burdens of registration for advisors specializing in private business combinations. Originality/value – Practical guidance from experienced securities and financial services lawyers.

SEC flexes its muscle on accounting fraud and targets more individuals

2016 ◽  
Vol 17 (2) ◽  
pp. 50-53
Author(s):  
David Woodcock ◽  
Joan McKown
Keyword(s):  
Financial Reporting ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Internal Controls ◽  
Accounting Fraud ◽  
Department Of Justice ◽  
Content Type ◽  
Practical Guidance ◽  
A Priority

Purpose To note the increase in accounting and financial reporting matters at the Securities and Exchange Commission by highlighting a number of recent cases filed by the agency. Design/methodology/approach The SEC recently announced the settlement or filing of a number of significant accounting fraud cases. Coupled with recent statements by the SEC and the Department of Justice, it is clear that accounting fraud is a priority and that individuals are in the cross-hairs. This article discusses a few of the recent cases and the trend toward more financial reporting and issuer disclosure cases. Findings The number of financial reporting and issuer disclosure cases will likely continue to increase. Individuals will be targeted in more of those cases, internal controls will be a focus, whistleblowers will continue to be important in this area, and SOX 304 clawbacks will continue to be a weapon for the SEC. Originality/value Practical guidance from experienced securities and financial services lawyers.

SEC approves long-anticipated FINRA research rules

2016 ◽  
Vol 17 (1) ◽  
pp. 39-44 ◽  
Author(s):  
Amy Natterson Kroll ◽  
John Ayanian
Keyword(s):  
Design Methodology ◽  
Comprehensive Review ◽  
Content Type ◽  
Research Activities ◽  
Policies And Procedures ◽  
Equity Research ◽  
Practical Guidance ◽  
Research Analysts ◽  
Required Disclosures ◽  
Insight Into

Purpose To analyze the changes to the FINRA equity research rules and evaluate concerns that may be important to and have an impact on equity research activities following the effective date. Design/methodology/approach This article provides an overview of the changes reflected in FINRA Rule 2241 pertaining to equity research analysts and research reports, as well as changes to licensing requirements for equity research analysts. It highlights potential issues for firms and provides some commentary on how these issues should be considered in light of FINRA’s articulated position and assurances FINRA has given to the SEC. Findings This article concludes that firms should anticipate these changes and begin a comprehensive review of research policies and procedures, the personnel who prepare research reports and the scope of their research products so as to be compliant with Rule 2241 from its effective date. Firms should also begin an investigation of technologies used to gather, produce and disseminate research and required disclosures to ensure they meet the new requirements when they are effective. Originality/value This article provides insight into the new FINRA Rule 2241 and practical guidance from experienced securities lawyers.

A review of the SEC Participating Affiliate No-Action Letters’ relief from Investment Advisers Act of 1940 registration for foreign investment advisers

2017 ◽  
Vol 18 (4) ◽  
pp. 22-28 ◽  
Author(s):  
Wendy E. Cohen ◽  
David Y. Dickstein ◽  
Christian B. Hennion ◽  
Richard D. Marshall ◽  
Allison C. Yacker ◽  
...  
Keyword(s):  
Foreign Investment ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Information Update ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the US Securities and Exchange Commission (the “SEC”) staff’s (the “Staff”) participating affiliate exemption from investment adviser registration for foreign advisers set forth in a line of Staff no-action letters issued between 1992 and 2005 (the “Participating Affiliate Letters”) and to discuss recent guidance issued by the Staff in an information update published in March 2017 (the “Information Update”) with respect to complying with requirements of the Participating Affiliate Letters. Design/methodology/approach Reviews the development of the Staff’s approach regarding the non-registration of foreign advisers that rely on the Participating Affiliate Letters from prior to the issuance of those letters through the Information Update and sets forth recommendations for registered investment advisers and their participating affiliates. Findings While there are arguments that the Information Update goes beyond restating established standards and does not clearly explain whether submission of all listed documentation is required, the Information Update will likely standardize the information submitted to the SEC. Originality/value Practical guidance for advisers relying on the Participating Affiliate Letters from experienced securities and financial services lawyers.

MSRB publishes its first compliance advisory for broker-dealers

2016 ◽  
Vol 17 (3) ◽  
pp. 49-51
Author(s):  
Scott R. Anderson ◽  
Kate S. Poorbaugh
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Content Type ◽  
Compliance Programs ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Effective Compliance ◽  
Practical Implications

Purpose To summarize the Municipal Securities Rulemaking Board’s 2016 Compliance Advisory for brokers, dealers and municipal securities dealers. Design/methodology/approach Summarizes several Municipal Securities Rulemaking Board (MSRB) rules that the Compliance Advisory highlights as presenting key compliance risks for brokers, dealers and municipal securities dealers. Discusses the factors included in the Compliance Advisory that dealers should consider when evaluating compliance procedures and controls. Findings By highlighting some key compliance risks and providing considerations tailored to those risks, the Compliance Advisory can be used as a tool to aid dealers in developing and assessing effective compliance programs. Practical implications Dealers should consider reviewing their firms’ existing compliance policies and procedures in light of the considerations discussed in the Compliance Advisory. Originality/value Practical guidance from experienced securities and financial services regulatory lawyers.

Financial institutions and the new class action under Italian law: a compliance approach

2019 ◽  
Vol 20 (4) ◽  
pp. 9-14
Author(s):  
Francesco Falco
Keyword(s):  
Financial Institutions ◽  
Design Methodology ◽  
Case Law ◽  
Class Action ◽  
Content Type ◽  
New Class ◽  
Italian Law ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Practical Implications

Purpose To explain the impacts of the class action, as recently amended by the Italian Parliament, and help financial institutions to develop a compliance approach in order to avoid and/or mitigate the relevant risks. Design/methodology/approach This article provides an overview on the Italian class action, as recently amended by the Italian Law No. 31/2019, examines the relevant impact for financial institutions (taking into account some recent case law) and identifies possible compliance solutions to avoid/mitigate the relevant risks. Findings The recent amendments to the Italian class action may increase risks for financial institutions. Practical implications (Optional) Financial institutions should examine their relationships with stakeholders in the light of the new Italian class action in order to implement policies and procedures to prevent the relevant risks. Originality/value Practical guidance from an experienced lawyer in the litigation and compliance fields.

SEC approves amendment to FINRA IPO allocation rule 5131, easing compliance for fund investors

2014 ◽  
Vol 15 (1) ◽  
pp. 52-57 ◽  
Author(s):  
Charles S. Gittleman ◽  
Russell D. Sacks ◽  
Jennifer D. Morton
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Allocation Rule ◽  
Content Type ◽  
The Us ◽  
Practical Guidance

Purpose – The purpose of the paper is to describe the recent amendments to FINRA's IPO Allocation Rule that were approved by the US Securities and Exchange Commission. Design/methodology/approach – The paper provides a description of the IPO Allocation Rule and its operation, followed by a description of the IPO Allocation Rule amendments recently amended. Findings – On November 27, 2013, the Securities and Exchange Commission approved a change to FINRA's IPO allocation rule 5131 (the “amendment”). The amendment allows a fund of funds or other collective investment account that is investing in an IPO to rely on a written representation from an unaffiliated private fund investor that does not look through to its beneficial owners, provided that such unaffiliated private fund is managed by an investment adviser, has assets greater than $50 million, and meets certain other indicia of independence that are described. Originality/value – The paper provides practical guidance from experienced regulatory lawyers regarding an amendment to an important rule governing IPO sales and allocation practices.

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