Posts from March 2015.
The Securities and Exchange Commission announced on March 25, 2015 a proposal to amend Rule 15b9-1 under the Exchange Act to require broker-dealers who trade in off-exchange venues to become members of a national securities association. According to the SEC's press release, "the amendments would enhance regulatory oversight of active proprietary trading firms, such as high frequency traders." Under this proposal, such broker-dealers would be regulated not only by the SEC, but also the industry's self-regulatory agency, the Financial Industry Regulatory Authority ...
Posted in: FINRA, SEC
After seeking comments last fall, the Securities and Exchange Commission ("SEC") recently approved the Financial Industry Regulatory Authority's ("FINRA") proposed rule governing member firms' verification and investigation of associated persons applying for registration with a member firm. Specifically, the Rule, which is based largely on NASD Rule 3010(e), requires member firms to investigate the qualifications and experience of its applicants as well as adopt written procedures designed to verify the accuracy of the disclosures contained in an applicant's ...
Posted in: FINRA, SEC
SEC Chair Mary Jo White said yesterday that the SEC needs to move forward on a uniform fiduciary standard for the financial industry, including brokers. Addressing the annual meeting of the Securities Industry and Financial Markets Association, White said it's high time to act since the agency has studied the issue for years, "decades really." And while she welcomes input from the Department of Labor, the SEC is the agency to adopt the rule, because it is the primary regulator with the greatest depth of knowledge about the industry - a sentiment echoed Monday by FINRA Chairman Rick ...
Posted in: SEC
Addressing the annual meeting of the Compliance & Legal Division of the Securities Industry and Financial Markets Association, Manhattan U.S. Attorney Preet Bharara stressed the importance of industry compliance and legal personnel as gatekeepers in risk avoidance and loss prevention. Bharara started with a nod to the "necessity and importance" of corporate prosecutions as drivers of change for persistent and systemic problems. Noting the CommerzBank deferred prosecution agreement among other recent cases, he repeated his now-annual refrain that corporate ...

On February 20, 2015, the Alabama Supreme Court affirmed the order of the Circuit Court of Jefferson County, Alabama dismissing claims asserted by Walter Energy, Inc. against investor Julian A. Treger, his firm Audley Capital Advisors, LLP and other associated investment entities related to a purported "pump and dump" scheme executed by the Audley defendants related to Walter Energy stock. In late 2010, Walter Energy purchased Western Coal Corporation. Walter Energy alleged in the trial court that the Audley defendants initiated a "pump and dump" scheme on July 17, 2011, when ...

Posted in: Supreme Court

The Financial Industry Regulatory Authority ("FINRA") recently issued an Investor Alert (the "Alert") to warn investors about the most prevalent types of investment fraud and provide guidance on how to avoid being defrauded. According to the Alert, the five (5) most common fraudulent investment schemes tend to fall into the following general categories:

Pyramid Scheme: A fraudulent ploy in which a small investment is promised to yield large profits within a short period in time, but, in reality, investors only make money if they successfully recruit new investors into the ...

Posted in: FINRA
On February 26, 2015, the Securities and Exchange Commission ("SEC") approved a rule proposed by the Financial Industry Regulatory Authority, Inc. ("FINRA"). The rule, originally proposed by FINRA on June 17, 2014, amends FINRA Rule 12100(p) of the Code of Arbitration Procedure for Customer Disputes and FINRA Rule 13100(p) of the Code of Arbitration Procedure for Industry Disputes defining the term "non-public arbitrator" and FINRA Rule 12100(u) of the Customer Code and FINRA Rule 13100(u) of the Industry Code defining the term "public arbitrator." The proposed rule change was ...
Posted in: FINRA, SEC

On February 20, 2015, Chairwoman of the United States Securities and Exchange Commission ("SEC"), Mary Jo White, spoke at the 2015 SEC Speaks Conference in Washington, D.C. During her speech, Chairwoman White addressed a number of topics in providing an overview of the SEC's activities and initiatives during 2014.

In particular, Chairwoman White commented on reforms made with respect to U.S. money market funds via the promulgation of new SEC rules in July 2014. Under these new rules, institutional prime money market funds will be required to maintain a floating net asset value ...

The Wall Street Journal reported Thursday that the SEC is in the midst of a sweep to crack down on companies' use of NDAs or employment agreements that might impede whistleblower reporting in violation of Dodd-Frank amendments. Wall St. J. at C1 (Feb. 26, 2015). We reported last November on a letter from eight House Democrats asking the SEC to examine the issue, here. SEC Chair White's January 5 response is here. SEC Rules prohibit using agreements to restrict or prevent whistleblower reporting. 17 C.F.R. § 240.21F-17(a). And the SEC's broadened administrative jurisdiction now gives ...

Posted in: Dodd-Frank, FINRA, SEC
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