Posts from March 2014.
In back-to-back keynote addresses Monday to the Securities & Financial Markets Association's annual Compliance & Legal meeting, SEC-Chair Mary Jo White and Southern District of New York US Attorney Preet Bharara renewed the federal government's emphasis on securities enforcement actions. White emphasized the complimentary effect of the SEC's civil-enforcement abilities in parallel proceedings with Department of Justice criminal prosecutions, noting that parallel proceedings and criminal referrals have doubled over the past few years. The Commission continues to ...
Posted in: SEC

Effective July 5, 2014, the Municipal Securities Rulemaking Board ("MSRB") implements a consolidation and re-write of its prior fail-dealing Rules and Guidance for municipal securities dealers. On March 7, the SEC approved: - Revisions to Rule G-19 on suitability. The revisions harmonize the Rule with FINRA's suitability Rule 2111, including its "reasonable-basis," "customer-specific" - including investment profile, "quantitative" (f/k/a churning), "investment strategies" (including explicit hold recommendations), with accompanying technical changes ...

Posted in: FINRA, SMMP
Tags: finra, MSRB, SMMP
This past February, FINRA issued an acceptance, waiver and consent ("AWC") against a firm and its global anti-money laundering ("AML") Compliance Officer ("CO") for failures in AML compliance regarding brokerage and custodial DVP transactions in penny stocks and unregistered securities through omnibus bank-customer accounts in "known bank-secrecy havens, such as Switzerland, Guernsey and Jersey." FINRA censured the firm and fined it $8 million, and issued an individual one-month suspension and $25,000 fine to its AML CO. The firm is exiting its equity brokerage ...
Posted in: AML, AWC, FINRA, SEC
Tags: AML, AWC, finra, SEC
A camel (so the saying goes) is a horse designed by committee. It seems the Supreme Court may think the same of the whistleblower provisions in § 806 of the Sarbanes-Oxley Act of 2002. Section 806 prohibits retaliatory employment action against a whistleblower by any public company, "or any …contractor [or] subcontractor … of such company…." 18 U.S.C. § 1514A(a). The Act also provides an EEOC-like private administrative action administered by Labor's OSHA and its administrative review board. Recall that Sarbanes-Oxley was a response to the notorious Enron experience in ...
Posted in: SEC
The familiar "in connection with the purchase or sale" securities-litigation requirement may not be unlimited in its breadth, after all. On February 26, the US Supreme Court pulled up short defendants in litigation by investors in the bank CDs at the heart of Allen Stanford's Ponzi scheme. In four separate class actions (two in USDC-NDTX and two removed from Louisiana state court, but consolidated by the JPMDL) investors brought state-law securities and related claims - apparently hoping to avoid stricter Federal-law pleading requirements, and limits on private ...

The Securities and Exchange Commission last Thursday, February 27, approved a new consolidated set of registration forms and requirements for municipal market participants, MSRB Rule A-12. SEC Rel. 34-71616; MSRB Reg. Notice 2014-05. Municipal registrants will have until August 10, 2014 to update their registration information with the MSRB, using the new forms. For more information on securities litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

Posted in: MSRB, SEC

On February 25, the Municipal Securities Rulemaking Board ("MSRB") proposed new Rule G-44 imposing a supervision and compliance requirements for Municipal Advisors ("MA's"). The Dodd-Frank Act imposed a new regulatory regime for MA's. New Rule G-44 imposes requirements familiar from broker-dealer regulation, including:

  • A supervisory system reasonably designed to assure compliance with applicable laws and regulations;
  • Written supervisory procedures ("WSP's") tailored to a registrant's business;
  • Registered principals in supervisory roles; and,
  • A Chief ...
Posted in: Dodd-Frank, FINRA, MSRB
As an investor, you should perform due diligence prior to having an out-of-state attorney represent you in a securities dispute. In an era where social media provides multiple channels for the advertising of an attorney's skill sets, an investor should take heed before making the decision to engage out-of-state counsel to represent them. For example, out-of-state attorneys must either hire local counsel or satisfy several requirements before appearing at the arbitration, or even at any mediation, of securities related matters in the following states: California, Florida ...
Posted in: FINRA
Tags: finra
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