No more bullsh*t: securities opinions after Omnicare

2015 ◽  
Vol 16 (4) ◽  
pp. 6-13
Author(s):  
Aegis Frumento ◽  
Stephanie Korenman
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Pension Fund ◽  
Content Type ◽  
District Council ◽  
The Us ◽  
Practical Guidance ◽  
Securities Laws

Purpose – To review and analyze the implications for rendering opinions in connection with the sale of securities in the wake of the US Supreme Court’s decision in Omnicare, Inc. et al. v. Laborers District Council Constr. Ind. Pension Fund, et al. Design/methodology/approach – Analyzes the Omnicare holding and dissent in light of past practices and decisions and discusses how the case changes the risks of liability for rendering opinions in registration statements, and by necessary implication in other contexts where the securities laws proscribe either the statement of untrue “facts” or, by omissions, the making of misleading “statements.” Findings – Omnicare opens issuers and securities professionals to liability for rendering opinions that are not reasonably based in facts and rationality. Because the measure of such reasonableness depends on the reasonable investor, makers of opinions will need to take more matters into consideration in rendering opinions than they might have previously, when the only test of an opinion was whether it was genuinely believed by its maker. This creates a number of unresolved issues, but it also suggests that prudence will dictate more detailed disclosure and documentation of the bases of opinions than has been thought necessary until now. Originality/value – Practical guidance from experienced securities and financial services lawyers.

SEC charges “ICO Superstore” as unregistered broker-dealer

2019 ◽  
Vol 20 (1) ◽  
pp. 40-43
Author(s):  
John J. Sikora Jr. ◽  
Stephen P. Wink ◽  
Douglas K. Yatter ◽  
Naim Culhaci
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Recent Developments ◽  
Practical Guidance ◽  
Securities Laws ◽  
Enforcement Activity

Purpose To analyze the settled order of the US Securities and Exchange Commission (SEC) against TokenLot LLC (TokenLot), which was the SEC’s first action charging a seller of digital tokens as an unregistered broker-dealer. Design/methodology/approach Analyzes the SEC’s order within the context of other recent actions by the SEC on cryptocurrencies and digital tokens and discusses future implications of the order in this area. Findings The SEC’s order against TokenLot as an unregistered broker-dealer was a logical next step in its enforcement activity in the cryptocurrency and digital token space.The order demonstrates that the SEC expects firms in the cryptocurrency space to use the well-established constructs of federal securities laws to evaluate their business activities to ensure those activities are legally compliant. Originality/value Practical guidance from experienced securities and financial services lawyers analyzing recent developments in a nascent area of SEC enforcement.

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.

US Supreme Court clarifies liability standard under Section 11 of the Securities Act of 1933 for statements of opinion in registration statements

2015 ◽  
Vol 16 (3) ◽  
pp. 37-42
Author(s):  
Richard Parrino ◽  
Douglas Schwab ◽  
David Wertheimer
Keyword(s):  
Supreme Court ◽  
Financial Services ◽  
Design Methodology ◽  
Pension Fund ◽  
Securities And Exchange Commission ◽  
Federal Courts ◽  
Content Type ◽  
The Supreme Court ◽  
The Us ◽  
Us Supreme Court

Purpose – The purpose of this article is to examine the US Supreme Court’s much anticipated decision in Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund. In this 2015 case, the Supreme Court announced important principles for interpreting the application of the two bases for liability under Section 11 of the Securities Act of 1933 to statements of opinion expressed in registration statements filed with the Securities and Exchange Commission in connection with public securities offerings. Design/methodology/approach – The article examines the Supreme Court’s articulation of the standards federal courts must apply under Section 11 to determine if opinion statements were untrue statements of a material fact or misleading because they omitted material facts necessary to make the statements of opinion not misleading. The paper identifies a number of the complexities involved in the Supreme Court’s approach and emphasizes the nuanced assessment of the facts surrounding opinion statements courts will be required to undertake by Omnicare. Findings – The Omnicare decision has significant implications for the litigation of Section 11 claims challenging statements of opinion and for the preparation of registration statement disclosures. The Omnicare decision dramatically alters the standards for reviewing Section 11 claims premised on opinions long applied in a number of US federal appellate circuits. The decision is likely to result in more Section 11 claims based on supposedly misleading opinion statements, and potentially in a greater number of Section 11 claims that survive at least an initial motion to dismiss. Omnicare highlights the importance of including in registration statement disclosures meaningful cautionary statements identifying important facts that could cause actual outcomes to differ materially from views expressed in an opinion. Originality/value – Expert guidance from experienced financial services lawyers.

SEC publishes important guidance on the Custody Rule, participating affiliate arrangements, robo-advisers, Form PF and certain compliance topics

2017 ◽  
Vol 18 (3) ◽  
pp. 34-40
Author(s):  
Joyce E. Larson ◽  
Kara J. Brown ◽  
Ivet A. Bell
Keyword(s):  
Institutional Investors ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Practical Guidance ◽  
Investment Advisers ◽  
Regulatory Filing

Purpose To highlight guidance issued by the US Securities and Exchange Commission (SEC) for the benefit of investment advisers regarding certain obligations under the Investment Advisers Act of 1940 (Advisers Act) and the rules thereunder. Design/methodology/approach Summarizes recent guidance regarding issues related to several challenging Advisers Act requirements, including inadvertent custody and client account transfers under Advisers Act Rule 206(4)-2, the use of participating affiliate arrangements pursuant to the “Unibanco” no-action letters, unique considerations affecting automated advisers (i.e., “robo-advisers”), the top five most frequently identified compliance topics identified in examinations conducted by the SEC’s Office of Compliance Inspections and Examinations (OCIE), and recent guidance regarding the private fund regulatory filing Form PF. Findings This guidance may assist advisers in preparing for regulatory examinations and questions from institutional investors. While the recent guidance addresses important topics, the guidance also raises some practical questions. Originality/value Practical guidance from experienced securities and financial services lawyers.

FINRA revises and restructures registration and exam requirements

2018 ◽  
Vol 19 (1) ◽  
pp. 42-49
Author(s):  
Edward J. Johnsen ◽  
John H. Grady
Keyword(s):  
Financial Services ◽  
Regulatory Authority ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Financial Industry ◽  
Content Type ◽  
The Us ◽  
Securities Industry ◽  
Practical Guidance ◽  
Limited Period

Purpose To explain a new set of rules, detailed in FINRA Regulatory Notice 17-30, proposed by the Financial Industry Regulatory Authority (FINRA) and approved by the US Securities and Exchange Commission (SEC), that revise and streamline the number and types of proficiency exams broker-dealer personnel must take in order to become registered, as well as the categories of registration. Design/methodology/approach Discusses the background, including FINRA’s consolidation of National Association of Securities Dealers (NASD) rules; the new registration regime; conditions for waivers; criteria for “permissive” registration; firms’ requirement to designate “Principal Financial Officers” and “Principal Operations Officers”; new categories of principal registration; FINRA’s elimination of certain registration categories; research analyst, research principal and supervisory analyst exam requirements; the ability of a registered representative to function as a principal for a limited period; the prohibition of unregistered persons to accept orders from customers; and the Securities Industry Essentials (SIE) Examination Content Outline. Findings The new structure is intended to bring greater consistency and uniformity to the qualification process. Among other changes, it eliminates several registration categories that either have become outdated or have limited utility, permits persons not yet associated with a broker-dealer or employed in the securities industry to take a preliminary registration exam prior to entering the securities industry, and makes other changes intended to modernize the registration and examination regime for broker-dealer personnel. Originality/value Practical guidance from lawyers with broad stock brokerage, investment management and related financial services experience.

The SEC’s increased use of administrative proceedings in enforcement actions: background, controversies, and future outlook

2016 ◽  
Vol 17 (2) ◽  
pp. 17-22
Author(s):  
Alan Wolper ◽  
Heidi VonderHeide
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Selection Process ◽  
Federal Courts ◽  
Securities Litigation ◽  
Content Type ◽  
Future Developments ◽  
The Us ◽  
Practical Guidance ◽  
Administrative Proceedings

Purpose To explain the background, controversy and possible future developments related to the US Securities and Exchange Commission’s (SEC’s) increased use of administrative proceedings (APs), rather than court actions, in bringing enforcement matters. Design/methodology/approach Discusses the SEC’s historic forum selection process, the home court advantage APs may give to the SEC, changes the SEC has proposed to the Rules of Practice governing APs, arguments challenging the constitutionality of APs, a jurisdictional hurdle faced by respondents challenging APs before federal courts, and possible future developments. Findings Critics consider the SEC’s expanded use of APs to be procedurally biased, unconstitutional, and unfairly advantageous to the SEC. In response, the SEC has offered guidance explaining its forum selection process, proposed procedural changes, and its belief that its systems are fair. Originality/value Practical guidance from experienced financial services and securities litigation lawyers.

SEC focuses on initial coin offerings: tokens may be securities under federal securities laws

2018 ◽  
Vol 19 (1) ◽  
pp. 10-14
Author(s):  
Jeremy I. Senderowicz ◽  
K. Susan Grafton ◽  
Timothy Spangler ◽  
Kristopher D. Brown ◽  
Andrew J. Schaffer
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Recent Developments ◽  
Securities Laws ◽  
Initial Coin Offerings

Purpose To explain the recent determination by the US Securities and Exchange Commission (SEC) with respect to so-called “token sales” or “initial coin offerings” (ICOs) that some tokens may be securities under federal securities laws and to address other recent actions by the SEC with respect to ICOs. Design/methodology/approach Reviews the SEC’s determination that some tokens issued in an ICO may be securities under federal securities laws as outlined by the SEC’s Division of Enforcement in a “Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO.” Provides overview of SEC Investor Alert, Investor Bulletin, and recent comments and actions of the Staff regarding investment in ICOs and provides guidance to those interested in participating in an ICO as an investor or issuer. Findings These actions by the SEC make it clear that the SEC is closely monitoring the market for ICOs, and that it wants potential investors and issuers to be aware that it is watching and may take action if it believes the securities laws have been violated. Originality/value Practical overview of recent developments and guidance from experienced securities and financial services lawyers.

SEC permits all issuers to submit confidential draft registration statements

2017 ◽  
Vol 18 (4) ◽  
pp. 16-21
Author(s):  
Andrew Brady ◽  
Brian Breheny ◽  
Michelle Gasaway ◽  
Stacy Kanter ◽  
Michael Zeidel ◽  
...  
Keyword(s):  
Corporate Finance ◽  
Design Methodology ◽  
Review Process ◽  
Going Public ◽  
Content Type ◽  
Submission Process ◽  
The Us ◽  
Practical Guidance ◽  
Jobs Act ◽  
A Company

Purpose To explain the US Securities and Exchange Commission’s (SEC’s) June 29, 2017 announcement (as updated August 17, 2017) that the staff of its Division of Corporation Finance will accept draft registration statement submissions from all companies for nonpublic review, thereby expanding a popular benefit previously available only to emerging growth companies (ECGs) under the JOBS Act and, in limited circumstances, to certain foreign private issuers under historical Staff practices. Design/methodology/approach Explains the rationale and limitations of the new policy, the existing confidential submission process, the expanded class of issuers and transactions that now qualifies for the nonpublic review process, and content and staff processing details. Findings Recognizing that the confidential submission process for EGCs proved highly popular and quickly became standard practice for eligible companies seeking to conduct an IPO, the SEC has made the nonpublic review process available to an expanded class of issuers and transactions. The expanded confidential submission process for IPOs addresses some of the typical concerns associated with engaging in the IPO process by giving a company more time and flexibility to determine whether it actually will be able to achieve the benefits of going public before it incurs the burdens and expenses of doing so. Originality/value Practical guidance from experienced securities and corporate finance lawyers.

SEC targets investment adviser community

2014 ◽  
Vol 15 (1) ◽  
pp. 45-47
Author(s):  
Robert P. Bramnik ◽  
Mauro M. Wolfe
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Content Type ◽  
Practical Advice ◽  
Compliance Programs ◽  
The Us ◽  
Investment Advisers

Purpose – To draw attention to the US Securities and Exchange Commission's (SEC) disciplinary focus on the investment adviser community Design/methodology/approach – Describes six recent enforcement cases for disclosure, custody, supervisory, procedural, and other rule violations and compliance failures; explains changes in registered investment adviser (RIA) exemptions following enactment of the Dodd-Frank Act; discusses recent SEC announcements concerning inspections and examinations of RIAs. Findings – The SEC's recent announcements and enforcement actions signal that all advisers (both registered investment advisers and exempt reporting advisers) may want to pay particular attention to their compliance programs and supervisory procedures. Originality/value – Practical advice from experienced 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.

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