Rule 606: EXAMS – the Division of Examinations – published a Risk Alert on November 10, 2022, providing its Observations Related to Regulation NMS Rule 606 Disclosures. That Rule requires broker-dealers to provide enhanced...more
The Commission’s rule writing calendar may be about to have a meltdown. The agency is considering a number of significant rule writing-proposals covering important areas. A number of those proposals are controversial,...more
6/17/2022
/ Best Execution ,
Broker-Dealer ,
Capital Markets ,
Climate Change ,
Corporate Governance ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
Equity Markets ,
Financial Industry Regulatory Authority (FINRA) ,
MSRB ,
Publicly-Traded Companies ,
Retail Investors ,
Securities and Exchange Commission (SEC) ,
Technology ,
Transparency
Tracking the key areas of concern to SEC enforcement can be beneficial for issuers, investment advisers and others that may be subject to scrutiny by the Commission. For example, identifying key areas of focus by determining...more
Money laundering compliance is a critical area for banks, broker-dealers and others in the financial world. The importance of this area was recently highlighted by the passage of the Corporate Transparency Act or CTA to...more
The fourth quarter of calendar year 2020 continued trends evidenced in the third quarter of the year, although far fewer cases were initiated. There were actions brought in a number of key areas such as offering fraud cases,...more
The Commission periodically has filed enforcement actions against broker-dealers for failing to file SARs - suspicious activity reports - typically centered on a failure to file reports regarding microcap issuers. Those...more
12/18/2020
/ Administrative Procedure Act ,
Anti-Money Laundering ,
Bank Secrecy Act ,
Broker-Dealer ,
Chevron Deference ,
Compliance ,
Corporate Governance ,
Financial Institutions ,
FinCEN ,
Notice and Comment ,
Patriot Act ,
Reporting Requirements ,
Securities and Exchange Commission (SEC) ,
Suspicious Activity Reports (SARs) ,
U.S. Treasury
Regulation Best Interest, born of a long debate over the appropriate standard to govern recommendations by broker-dealers, is now the subject of an OCIE Risk Alert. The staff is preparing to launch its first inspection for...more
Inspections for compliance with Form CRS and its rules will begin after the June 30, 2020 filing date, according to an OCIE Risk Alert dated April 7, 2020. The Alert identifies key areas the staff will be examining regarding...more
The Exam Priorities of the SEC’s Office of Inspections and Compliance or OCIE, announced on January 7, 2020 (the “Exam Priorities”), should be a key area of focus for every investment advisor and investment company. The Exam...more
1/15/2020
/ Bank Secrecy Act ,
Broker-Dealer ,
Compliance ,
Customer Due Diligence (CDD) ,
Cybersecurity ,
Data Protection ,
Financial Industry Regulatory Authority (FINRA) ,
FinTech ,
Investment Adviser ,
Libor ,
MSRB ,
Municipal Advisers ,
OCIE ,
Registered Investment Advisors ,
Retail Investors ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Suspicious Activity Reports (SARs)
Earlier this year the SEC’s Enforcement Division published its annual report, reviewing FY 2019 which ended on September 30, 2019. As in the past, the Report reviewed not just the statistics from the year but also the entire...more
The remedy of choice for the SEC Enforcement Division has always been the statutory injunction. For many years the only remedy available to the Division was the obey-the-law statutory injunction....more
10/16/2019
/ Appeals ,
Broker-Dealer ,
Disgorgement ,
Enforcement Actions ,
Enforcement Authority ,
Injunctions ,
Kokesh v SEC ,
Penny Stocks ,
Pump and Dump ,
Remand ,
Remedies ,
Reversal ,
Securities and Exchange Commission (SEC) ,
Statute of Limitations
The SEC’s Division of Enforcement announced a new cooperation initiative addressed to investment advisers who have failed to disclose conflicts arising from the receipt of 12b-1 fees from mutual funds. In essence, the...more
2/14/2018
/ 12b-1 plan ,
Broker-Dealer ,
Disclosure Requirements ,
Enforcement Actions ,
Examination Priorities ,
Financial Institutions ,
Investment Adviser ,
Mutual Funds ,
Policies and Procedures ,
Securities and Exchange Commission (SEC) ,
Self-Reporting ,
Share Classes
The Commission brought another in a series of actions centered on ConvergEx Execution Solutions LLC and its affiliates. As with the prior actions, this one centered on secretly adding substantial commissions to transactions...more
The SEC’s examination staff has, in recent years, become very aggressive. Some claim it is the front edge of enforcement. Regardless of your view, it is typically beneficial to follow their suggestions. ...more
Municipal bond offerings have become a key focus of SEC Enforcement. The agency has brought a series of actions in addition to an initiative that encourages the self-reporting of underwriters in return for reduced sanctions....more
3/9/2016
/ Broker-Dealer ,
Commercial Bankruptcy ,
Enforcement Actions ,
Liquidation ,
Municipal Bonds ,
Municipal Securities Issuers ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Self-Reporting ,
Underwriting ,
Wells Fargo
Ponzi scheme cases have, of course, become a staple of SEC enforcement since the discovery of Madoff’s unprecedented scheme. While there seems to be a virtually endless number of these cases centered on the preverbal “to good...more
Crowdfunding is a popular and controversial form of selling securities using the internet. Prior to the passage of the JOBS Act, which was designed to facilitate capital formation for small companies, such sales generally...more
Rochdale Securities LLC, at one time a small Commission registered broker-dealer based in Stamford, Connecticut, is perhaps best known as the firm where a registered representative and his customer placed orders for over 1.6...more
The SEC prevailed on two summary judgment motions. One centered on a manipulation action. The other was against an attorney who facilitated a prime bank fraud.
The Commission also filed: An action against UBS tied to its...more
10/16/2015
/ Administrative Proceedings ,
Australia ,
Bank Fraud ,
Board of Directors ,
Broker-Dealer ,
Cease and Desist Orders ,
Corporate Governance ,
Crisis Management ,
Disclosure Requirements ,
Disgorgement ,
Enforcement Actions ,
Fraud ,
Hong Kong ,
Insider Trading ,
Investment Advisers Act of 1940 ,
Investment Funds ,
Market Manipulation ,
Misappropriation ,
Misrepresentation ,
PCAOB ,
Penalties ,
Permanent Injunctions ,
Pump and Dump ,
Registered Investment Advisors ,
Risk Management ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Fraud ,
Securities Litigation ,
Serious Fraud Office (SFO) ,
Shareholders ,
UK
The SEC announced another new initiative. It is known as the “Distribution-in-Guise Initiative.” This initiative focuses on preserving the assets of mutual funds for its shareholders, apparently by ensuring that fund managers...more
A recurrent theme in today’s enforcement environment is parallel and often overlapping proceedings. That is the case with a District of Columbia based broker that drew sanctions from the SEC, FINRA and DC. In the Matter of...more
8/17/2015
/ Broker-Dealer ,
Cease and Desist ,
Civil Monetary Penalty ,
Department of Insurance ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Misrepresentation ,
Promissory Notes ,
Restitution ,
Sanctions ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
Dark pools are one of the issues which have been debated at least since Michael Lewis published Flash Boys and Scott Patterson put out Dark Pools. To date the SEC has brought two actions involving the trading venues. One was...more
8/13/2015
/ Algorithmic Trading ,
Alternative Trading System (ATS) ,
Broker-Dealer ,
Civil Monetary Penalty ,
Confidential Information ,
Dark Pool ,
Enforcement Actions ,
Prejudgment Interest ,
Proprietary Information ,
Proprietary Trading ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC)
The SEC filed three actions following-up on its settled proceeding against Oppenheimer for selling millions of shares of unregistered penny stocks. Each individual settled with the agency. In addition, the Commission brought...more
7/24/2015
/ Administrative Hearings ,
Auditors ,
Australia ,
Bribery ,
Broker-Dealer ,
CFTC ,
Construction Contracts ,
Deferred Prosecution Agreements ,
Enforcement Actions ,
FOIA ,
Foreign Corrupt Practices Act (FCPA) ,
Hong Kong ,
Oppenheimer & Co. ,
PCAOB ,
Penny Stocks ,
Price Manipulation ,
Pump and Dump ,
Pyramid Schemes ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Tax Returns ,
Whistleblowers
The question of forum selection by the SEC was a key issue this week. While to date suits challenging the SEC’s right to bring an action as an administrative proceeding rather than in federal court have had little success –...more
6/13/2015
/ Administrative Hearings ,
Administrative Law Judge (ALJ) ,
Appointments Clause ,
Article II ,
Australia ,
Australian Securities and Investments Commission ,
Broker-Dealer ,
Brokers ,
CFTC ,
Delegation Doctrine ,
Department of Justice (DOJ) ,
Derivatives ,
Enforcement Actions ,
False Statements ,
Forum Selection ,
Injunctions ,
Insider Trading ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Investment Funds ,
Investment Management ,
Rule 105 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Settlement ,
Seventh Amendment
The SEC brought another case tied to Chinese reverse mergers. This one differs from many earlier actions which focused on the company and or the executives. This action names as defendants one broker-dealer and two of its...more