Twenty-seven European markets are transitioning to a T + 2 settlement cycle today, October 6, 2014. Until today, those markets settled transactions three days after the transaction date; beginning today, securities settlements will occur two days after the transaction date. The move puts Europe ahead of the United States, as the US has a T + 3 settlement date for most of its securities transactions. By shortening the cycle, the European Commission seeks to standardize settlement procedures across all of the affected European markets and to shorten the time needed to observe and ...
On September 30th, the Financial Industry Regulatory Authority (FINRA) announced a proposed rule that would implement the controversial Comprehensive Automated Risk Data System (CARDS). Under the proposed rule, FINRA seeks to implement automated data gathering from clearing firms and brokerages in a two-phase approach. The proposal seeks to take advantage of "technological advances [that] can be leveraged to obtain, store, manage and access large quantities of data to identify and quickly respond to potentially fraudulent and abusive behavior." In the first phase, "CARDS ...
On September 30, the D.C. District Court rejected two GOP state committees' challenge to the SEC's regulation prohibiting pay-to-play among investment advisors. Bowing to "curious" precedent in which words don't mean what they say and produce inconsistent results, the Court held the challenge must be filed in the U.S. Court of Appeals, not the District Court. The New York and Tennessee GOP Committees sought declaratory and injunctive relief to prevent the SEC from enforcing its four-year-old investment adviser pay-to-play prohibitions. 17 C.F.R. § 275.206(4)-5. The Court ...
Ruling in a case of first impression, the Sixth Circuit rejected an implied cause of action under Section 36(a) of the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq. Although the Circuits remain split, recent decisions (after 2001) agree on the point. Two pension funds sued an exchange-traded fund (ETF), its investment advisor (IA) and its trust-company-affiliate (BTC), claiming BTC's Lending Agent fee "' 35% of all net revenue on the ETF's securities-lending activity - was excessive. The Court affirmed dismissal of the express Section 36(b) claim for breach of fiduciary ...
In my last blog post on interpleader actions, we explored the benefits a financial services firm can obtain from filing an interpleader action. An interpleader action protects the holder of assets (such as a bank account, brokerage account or life insurance policy proceeds) when there is a dispute between two or more parties claiming ownership. The holder, or stakeholder, can file an interpleader action to deposit the assets (the "res") into court to allow the competing claimants to litigate over the ownership of the property, allowing the stakeholder to be discharged from further ...
On August 21, 2014, the United States Department of Justice announced a record 16.65 billion dollar agreement to resolve civil claims alleged against Bank of America for improperly concealing the risks of mortgage-related securities when it sold them to large institutional investors before and after the 2008 financial meltdown. Separate governmental entities announced unrelated settlements with Goldman Sachs and Standard Chartered Bank, while the Justice Department announced a 13 billion dollar settlement with JP Morgan Chase and a 7 billion dollar settlement with ...
The Second Circuit stayed its mandate last week to allow public-pension litigants to file cert petitions seeking review of its August holding that a subsequent account-agreement forum-selection clause requiring federal-court litigation trumps FINRA's rules requiring all member firms to arbitrate on a customer's request. Goldman, Sachs & Co., v. Golden Empire Schools Financing Auth., Nos. 13-797-cv, 13-2247-cv (2nd Cir. Aug. 21, 2014), here. We discussed the opinion here. The public-pension litigants argued three grounds for the stay. First, they wrote the Second Circuit's ...
FINRA celebrated its 75th Anniversary this September 18. It is the "largest independent regulator for all securities firms doing business in the United States," with a notionally voluntary membership of over 4,100 securities firms. Its mission is protecting investors, and FINRA is the primary cop on the beat, policing over 634,000 registered securities representatives. FINRA employs 3,400 people in 20 offices. It monitors 6 billion share trades a day and fined Wall Street over $74 million last year. Read the release here. FINRA is a voluntary membership organization you have to ...
The Financial Industry Regulatory Authority (FINRA) announced on Wednesday that it intends to discuss potential rule-making initiatives that would seek to increase the transparency of Alternative Trading Systems, including "dark pool" trading among brokers. FINRA will discuss the proposed rules on September 19th. Alternative Trading Systems, or ATS, consist of regulated fora for matching buyers and sellers for trades that do not occur within an exchange. The name "dark pool" derives from the non-public nature of some of these systems, whereby certain trades occur with little ...
The SEC's Office of Compliance Inspections and Examinations ("OCIE") announced August 19 a two-year, three-phase examination initiative targeting newly-registered municipal advisors. SEC Press Rel. 2014-170 (Aug. 19, 2014). The MA Examination Initiative hopes to engage a significant portion of newly-registered MA's. In the first phase, Engagement, OCIE will engage in nationwide outreach to inform MA's of their obligations under Dodd-Frank, the SEC's new MA Rule and related implementing Rules by MSRB and others. The second phase, Examination, will review identified ...
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