Posts from April 2015.
Earlier this week, the SEC approved a whistleblower award of between $1.4-1.6 million to a compliance officer. Ordinarily, the Commission will not consider information to be "derived from [a whistleblower's] independent knowledge or independent analysis" if the whistleblower "obtained the information because" the whistleblower was "[a]n employee whose principal duties involve compliance or internal audit responsibilities . . . ." 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The case fell within an exception to the compliance-officer exclusion, because the Commission ...
Posted in: SEC

The MSRB recently released a content outline for the new Series 50 Municipal Advisor Representative examination, which the SEC approved in principle earlier this year. See MSRB Reg. Notice 2015-06. The MSRB filed the Rule Proposal with the SEC on April 22 for immediate effectiveness. SR-MSRB-2015-04. The Series 50 exam will require MA Representative candidates to complete 100 multiple-choice questions within 3 hours on a range of topics, including:

  1. SEC and MSRB Rules on municipal advisor activities;
  2. Municipal Finance generally;
  3. Credit analysis and due diligence of municipal ...
Posted in: MSRB

Deutsche Bank, a German lender agreed to plead guilty and pay $2.5 billion to settle with regulators in the United States and the United Kingdom in connection with criminal charges that it rigged and manipulated the London interbank offered rate ("Libor"). Regulators announced the settlement Thursday, April 23, 2015. According to the regulators Libor is a benchmark for interest rates that apply to trillions of dollars of financial contracts. (Eyk Henning, "Deutsche Bank to Pay $2.5 billion to Settle Libor Investigation With U.S., U.K. Authorities," Wall Street Journal (April 23 ...

The "boomer bulge" in the US aging demographic, combined with a persistent low-interest-rate environment, leads regulators to renew their warnings about retail sales of complex investment products to older investors. SEC Commissioner Aguilar told an April 14 meeting of state securities regulators that the two agencies should work together to increase disclosure regulations and enforcement actions targeting retail sales of structured notes and other complex products. The structured notes market is a $45 Billion market, of which about 99% is sold to retail investors, said ...
Posted in: SEC

The MSRB filed its Municipal-Advisor conduct rule proposal with the SEC on April 15. The Rule G-42 proposal has been around the block twice, since the Board first floated it in January last year (Reg. Notice 2014-01). The Revised Draft was issued last July (Reg. Notice 2014-12). I discussed them in our July 30, 2014 and January 23, 2014 blogs. As proposed for adoption by the SEC, the Rule broadly imposes:

  • A fiduciary duty to Municipal Entities, but only of care to Obligated Persons;
  • An "engagement letter" disclosure regime requiring conflicts and disciplinary disclosures ...
Posted in: MSRB
We've all done it: Read the docket description in the notice of electronic filing ("NEF") and have your paralegal download the order and add it to the pleadings file. But you have to read the order: The clerk's mis-description in an NEF could cost your client its appeal. Three of the four post-verdict JMOLs in the patent litigation were confidential, so were filed with motions for leave to seal them. The fourth JMOL wasn't. The first three NEF's read "Order granting motion for leave to file sealed documents" (referring only to the Doc. No. of the motion to seal). Then the court docketed ...
FINRA recently issued Regulatory Notice 15-06 requesting comments on the proposal that would require the registration of associated persons involved in the design, development or modification of algorithmic trading strategies. As automation continues to evolve, firms are relying more on automated systems to trade securities. With the use of pre-programmed trading instructions, or algorithmic trading strategies, firms can input various variables in order to achieve the required trading activity. If an individual, as opposed to an automated system, performed the trade ...
Posted in: FINRA
Not April Fool's for one public-company registrant, as the SEC filed its first settled action today over corporate confidentiality provisions that run afoul of Dodd-Frank whistleblower protections. The clause in question was part of the company's standard internal-investigation script and required investigation interviewees to sign an acknowledgement that they couldn't discuss the investigation or its subject matter without prior approval of the Law Department. The company paid a $130,000 fine, changed its provision to allow whistleblower reporting to SEC and DOJ, and ...
Posted in: Dodd-Frank, SEC
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