Posts from February 2021.

Acting SEC Chair Allison Herren Lee issued a February 24 statement directing the Commission Staff to review public-company climate-change-related disclosures.  The Staff will assess current disclosures in light of the SEC’s prior 2010 guidance and “update” that guidance.

The prior guidance did not mandate specific climate disclosures, but instead focused on how climate-change issues might affect existing disclosure obligations regarding, for example, material legal compliance or litigation issues, material risks, and the effect of known trends, developments or a ...

The Deposit Trust & Clearing Corp. (“DTCC”) released a February 24 roadmap for shortening the settlement cycle for US equities by half over the next two years.  The proposal anticipates DTCC’s completion of its “Project ION” using distributed ledger technology (“DLT”) to integrate and speed clearing and settlement processes.  Moving to a shorter settlement cycle would reduce industry costs, market risk, and lower margin requirements.

The clearing and settlement process was front and center at the House Financial Services Committee’s February 18, 2021 hearing ...

Posted in: SEC

The U.S. Climate Finance Working Group released its February 18, 2021 policy statement, “Financing a U.S. Transition to a Sustainable Low-Carbon Economy.”  The Working Group comprises eleven of America’s leading financial-services industry associations, broadly representing “Wall Street.”

With climate-change initiatives among the top priorities announced by the new Biden administration, the Working Group

“seeks to engage with incoming leaders and members of Congress on a bipartisan basis to help establish a shared vision for U.S. climate policy. By so doing ...

The Securities Industry and Financial Markets Association (“SIFMA”) recently proposed sweeping modernization of industry self-regulatory rules to reflect firms’ successful pivot to remote operations over the past year.  SIFMA suggests significant remote work likely will continue, even after the COVID-19 “pilot program.”

SIFMA proposed a “location agnostic” overhaul of the Rules in its February 16 comment letter in response to FINRA’s call for “lessons learned” during the COVID-19 pandemic.  See FINRA Reg. Notice 20-42 (Dec. 16, 2020).

Firms’ ...

Posted in: COVID-19

Republican-appointee Commissioners Roisman and Peirce issued a statement on February 12 publicly disagreeing with Acting Chair Lee’s recent fiat discontinuing the Enforcement Division’s practice of proposing settlements that are contingent upon the Commission’s approval of waivers for collateral disqualifications arising from the settlement.

The Commission’s actions on enforcement settlements and waiver requests were separate processes until 2019, when the Commission changed its policy to allow them to be considered together.  That made sense, because they ...

On February 11, SEC Acting Chair Lee announced that the Commission no longer would permit settlements in enforcement actions to include, or be contingent on the grant of, waivers of statutory disqualifications that flow from certain securities offenses.

Various securities offenses statutorily disqualify Respondents from certain regulated activities, for example, participating in a Reg. D private offering or acting in some capacities for an investment company.  Those statutes, however, also vest the Commission with the discretion to waive those disqualifications, often ...

The Wall Street Journal reports traders on Reddit’s WallStreetBets forum – the same social medium that helped fuel the GameStop short squeeze – have started bidding up cannabis stocks.  Mentions on the forum jumping from near zero to over 8,000 in just a few days.  WallStreetBets Traders Set Cannabis Stocks Alight (Wall St. J., Feb. 11, 2021), is here.

Perhaps not coincidentally, the day before, FINRA issued a Special Alert reminding firms of their regulatory obligations regarding low-priced, often volatile, stocks.  The Alert is to

“help FINRA member firms that engage in ...

Posted in: FINRA

On February 9, Acting SEC Chair Lee announced she was restoring the delegated authority of Enforcement Division senior officials to issue subpoenas to compel document production and sworn testimony without the need of a Formal Order of Investigation by the full Commission.

Until 2009, the SEC could only issue compulsory processes (for document production and testimony) under a Formal Order of Investigation issued by the Commission.  In 2009, however, then-Chair Mary Shapiro delegated that authority to the Director of Enforcement for a trial period of one year.  The Final Order, No ...

Posted in: SEC

During the height of the GameStop (NYSE: GME) mania, Slate author Jordan Weissman explained that

“[A]t a moment that the markets are being overrun, for better or worse, by posters who’ve basically dedicated themselves to shredding the idea that markets are efficient, rational mechanisms for allocating capital and discovering value, tweeting about stonks seems far more appropriate than discussing something as reasonable and comprehensible as stocks. It’s an emotional onomatopoeia for talking about people throwing their money at the market when, lol, nothing ...

Posted in: FINRA

On Thursday, January 28, trading-app broker-dealer Robinhood – a self-styled disrupter democratizing trading – suspended its users’ ability to buy Gamestop stock or options (along with other stocks).  After playing a prominent role in the crowd-sourced short-squeeze on the meme stock, abruptly shutting the “buy” door prompted swift and fierce reactions.  NY Rep. Alexandria Ocasio Cortez tweeted that Robinhood’s freeze on Gamestop buys was “unacceptable” and called for Congressional hearings. Texas Sen. Ted Cruz quickly agreed (eliciting a snarky ...

Posted in: FINRA

On February 1, 2021, the Financial Industry Regulatory Authority (“FINRA”) released its “Report on FINRA’s Risk Monitoring and Examination Activities.”  The Report combines two of FINRA’s long-standing reports:  (a) the retrospective Report of Examination Findings from the prior year; with (b) its forward-looking Examination Priorities Letter.

The new format is more user-friendly for supervision and compliance professionals than the prior reports, setting out for each topic:

  • Regulatory Obligation with citation to relevant rules;
  • Related Considerations
Posted in: FINRA
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