Daniel A. Nathan

Daniel A. Nathan

Morrison & Foerster LLP

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Cybersecurity: SEC Is Starting to Scrutinize Registrants’ Practices

The SEC plans to examine the cybersecurity practices of over 50 registered broker-dealers and investment advisers. The SEC announced its plan in an April 15, 2014 Risk Alert, which closely follows the March 26 Cybersecurity...more

4/23/2014 - Cybersecurity Data Protection Investigations SEC

A Blast from the Past: The SEC Fines Investment Adviser/Broker-Dealer for Breakpoint Violations

In a case reminiscent of the “breakpoint” enforcement actions brought 10 years ago by securities regulators, the SEC recently found that a registered investment adviser and broker-dealer overcharged clients because it...more

4/11/2014 - Broker-Dealer Enforcement Actions Fees Investment Adviser SEC

The Volcker Rule’s Trojan Horse for Smaller Banking Entities

The final rules recently enacted to implement the Volcker Rule (‘‘the Final Rules’’) impose on the largest banking entities a highly detailed and complex compliance regime. As to those so-called ‘‘less active banking...more

4/10/2014 - Banks Collateralized Debt Obligations Compliance Proprietary Trading Trust Preferred Securities Volcker Rule

Ketchum Shares Bon Mots with BD Industry at SIFMA Meeting

At this week’s Annual SIFMA Law and Compliance meeting, FINRA CEO Rick Ketchum provided a number of candid and pointed comments in a wide-ranging and no-holds-barred interview conducted by long-time senior compliance official...more

4/8/2014 - ACLU Chief Compliance Officers Compliance FINRA SIFMA

FINRA Provides a Detailed Analysis of a Broker-Dealer’s Failure to Adequately Supervise Alternative Investment Sales

In March 2014, the Financial Industry Regulatory Authority (FINRA) fined a broker-dealer $950,000 for supervisory deficiencies related to its failure to adequately supervise the sale of “alternative investments.” These...more

3/28/2014 - Business Development Business Development Companies FINRA Oil & Gas REITS

FINRA Protects Seniors by Disciplining Inadequate Supervision of VA Sales

As baby boomers continue to age, securities regulators focus on protecting the growing population of seniors and retirees. For example, the regulators are seeking to ensure that broker-dealers’ systems and procedures for...more

3/7/2014 - Elder Issues FINRA IRA Retirement Variable Annuities

FINRA Announces a Sweep to Assess BDs’ Cybersecurity

After announcing that cybersecurity will be one of its 2014 examination priorities, FINRA wasted no time before commencing a sweep. FINRA announced a Targeted Examination Letter to conduct an assessment of firms’ approaches...more

2/10/2014 - Cybersecurity Data Breach Data Protection FINRA

FINRA Focuses AML Enforcement on a BD Doing Business in Mexico

The Financial Industry Regulatory Authority (FINRA) recently took formal disciplinary action against a New York-based broker-dealer that is affiliated with a Mexican broker-dealer and a Mexican bank for inadequate anti-money...more

2/7/2014 - Anti-Money Laundering Broker-Dealer FINRA Foreign Banks Mexico

Private Company M&A Brokers Don’t Need to Register With the SEC as Broker-Dealers

On January 31, 2014, the SEC issued a ground-breaking no-action letter, taking the position that a financial intermediary that limits its business activity to advising privately held companies in M&A transactions need not...more

2/7/2014 - Broker-Dealer No-Action Letters Registration SEC

SEC Examiners to Take a Close Look at Firms’ Cyber Security

A high-level SEC official told an industry group yesterday that the National Examination Program (NEP) will be reviewing asset managers’ policies and procedures for preventing cyber attacks. In particular, the SEC is looking...more

2/3/2014 - Compliance Cyber Attacks Cybersecurity Data Protection NEP SEC

New FINRA Supervision Rules Impact Broker-Dealers’ Insider Trading Procedures and Supervisory Controls

Financial Industry Regulatory Authority (FINRA) rules require member firms to establish and maintain a system of written procedures to supervise the activities of its members. On December 23, 2013, the SEC approved new FINRA...more

1/30/2014 - Broker-Dealer Compliance FINRA Insider Trading SEC Stocks

CFTC Again Charges Civil Perjury – This Time for Statements Made in an Off-the-Record Interview

On January 2, 2014, the US Commodity Futures Trading Commission (CFTC) ordered a Russian foreign national to pay a $250,000 civil penalty for making false and misleading statements to CFTC staff in an interview during an...more

1/14/2014 - CFTC Commodities Exchange Act Dodd-Frank False Statements Off-the-Record Perjury

Broker-Dealer Cybersecurity: Protect Yourself or Pay the Price

In its recently issued 2014 Regulatory and Examination Priorities Letter, FINRA stated that cybersecurity remains a priority given the ongoing cybersecurity issues reported across the financial services industry, including...more

1/13/2014 - Broker-Dealer Critical Infrastructure Sectors Cybersecurity Data Protection FINRA Regulation S-P

Structured Thoughts: News for the financial services community, Volume 5, Issue 1 -- January 7, 2014

In This Issue: “Structured Products, Meet the Volcker Rule”: The New Limitations on Proprietary Trading; SEC and FINRA Personnel Speak at Structured Products Conference; FINRA’s Annual Regulatory and Examination...more

1/8/2014 - Banks Enforcement FINRA IOSCO Proprietary Trading SEC Structured Financial Products Volcker Rule

A Must Read: FINRA’s 2014 Exam Priorities

FINRA did not wait for any dust (or snow) to settle on the New Year before alerting the brokerage industry and the public about its regulatory and examination priorities for 2014. This year’s letter, issued earlier than ever...more

1/6/2014 - Algorithmic Trading Anti-Money Laundering Broker-Dealer Compliance Conflicts of Interest Crowdfunding Employer Liability Issues Enforcement FINRA High Frequency Trading Qualified Benefit Plans Recidivism

Retirement Funds Rollovers: FINRA Ends 2013 By Identifying Its First 2014 Priority

It is the end of the year, and many people are thinking about the status of their retirement accounts and planning any changes to their investments. FINRA also has retirement accounts on the brain. It is thinking about the...more

1/2/2014 - 401k Broker-Dealer FINRA IRA Retirement

SEC Intensifies Scrutiny of Fee-Based Accounts and Reverse Churning

The SEC is crunching a lot of data these days, and it apparently intends to use some of that data to identify “reverse churning.” Reverse churning is the practice of placing a client who trades infrequently in a fee-based,...more

12/23/2013 - Broker-Dealer Brokers Chief Compliance Officers Churning Compliance FINRA SEC

FINRA Continues its Crackdown on Companies that Fail to Respond to Red Flags

FINRA continues to discipline broker-dealers that fail to detect and investigate so-called “red flags” of suspicious account activity. Yesterday, FINRA announced a $1 million fine against COR Clearing LLC (the “Firm”) –...more

12/19/2013 - Anti-Money Laundering Compliance Enforcement Actions FINRA

Is Exercising Employee Stock Options Illegal Insider Trading? Maybe

Amidst the flurry of Securities and Exchange Commission (SEC) cases involving improper employee stock option backdating several years ago, many commentators opined on the potential insider trading implications of companies'...more

12/9/2013 - Compliance Insider Trading SEC Stock Options

FINRA Reiterates Its Concern about Unsuitable Sales of Non-Traditional ETFs

FINRA recently announced a disciplinary proceeding that underscores its continuing concerns about unsuitable retail sales of structured products. In a recently settled formal disciplinary proceeding, FINRA censured a...more

12/6/2013 - Broker-Dealer ETFs FINRA Sales

A View of EB-5 Program Issues from a Top SEC Enforcement Official

As participation in the U.S. Citizen and Immigration Services (USCIS) Immigrant Investor Program or “EB-5 program” grows, regulatory interest is showing a commensurate uptick. On November 20, 2013, Associate Director Stephen...more

12/3/2013 - Compliance EB-5 Enforcement Enforcement Actions Immigrants SEC USCIS Visas

FINRA gives member firms a thumbs up on suitability rule compliance

Abstract: Purpose – The purpose of this paper is to interpret Financial Industry Regulatory Authority (FINRA) Regulatory Notice 13-31, which provides practical advice to member firms about how FINRA will be...more

11/26/2013 - Customer Funds Protection Due Diligence FINRA Risk Management Suitability Rule

CFTC Proposes Speculative Position Limits – Again

On November 5, 2013, the Commodity Futures Trading Commission (“CFTC” or “Commission”) proposed new speculative position limits. The proposal (“New Proposal”) would establish spot-month and non-spot-month limits for 28 core...more

11/20/2013 - CFTC Compliance Dodd-Frank Futures Position Limits

SEC Chair Says Commission Is Prepared to Try More Cases on Heels of Change to Settlement Policy

Last Thursday, SEC Chair Mary Jo White told a crowd of white collar lawyers and judges in Washington, D.C., that the Commission is prepared to try more cases in the wake of its recent policy change requiring certain...more

11/18/2013 - Mary Jo White SEC Settlement

SEC Commissioner Draws Some Clean Enforcement Lines

The SEC should put more of its efforts into pursuing regulatory violations, such as failure to supervise, instead of trying to pursue fraud theories on weak facts, according to an SEC Commissioner....more

11/11/2013 - Enforcement FINRA Fraud Scienter SEC Supervisors

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