Daniel A. Nathan

Daniel A. Nathan

Morrison & Foerster LLP

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Lying to Examiners Can Lead Quickly to Criminal Charges

Hell hath no fury like a regulator (allegedly) lied to. This week, the SEC brought civil charges, and the U.S. Attorney for the Southern District of New York brought criminal charges, against a broker-dealer and its founder...more

8/14/2014 - Books & Records Broker-Dealer Criminal Prosecution Falsified Documents Lying SEC

FINRA Announces and Publishes Its Sweep of Order Routing Practices

FINRA announced this week that it is conducting a review of its member firms’ order-routing processes and procedures and the execution quality of customer orders in exchange-listed stocks. We previously reported in this...more

7/10/2014 - Brokers FINRA SEC Securities Stock Trades

Investment Management Legal + Regulatory Update -- June 2014

In This Issue: - Regulation ..SEC Begins to Scrutinize Registrants’ Cybersecurity Practices ..SEC Staff Sets Boundaries for Adviser Testimonials in Social Media ..Chair White: SEC to Tackle High-Frequency...more

6/16/2014 - Broker-Dealer Cybersecurity Dark Pool FINRA High Frequency Trading Investment Adviser Issuers JOBS Act Legislative Agendas Marijuana New Legislation Private Equity Funds SEC SEC Commissioner SIFIs Transaction Fees

SEC Decision Regarding TIC Advertisements Offers Broader Lessons About Providing Fair and Balanced Disclosures

Earlier this year, the SEC found that CapWest Securities, Inc., a defunct broker-dealer, had failed to comply with advertising rules in promoting investments that use Section 1031 of the Internal Revenue Code (“1031...more

6/11/2014 - Advertising Disclosure Requirements Enforcement Enforcement Actions FINRA SEC Section 1031

SEC Approves Amendments to FINRA’s Corporate Financing Rule

Broader Availability of Termination Fees and Rights of First Refusal - Elimination of Filing for Certain ETFs: In May 2014, the SEC approved FINRA’s proposed amendments to Rule 5110, commonly called the...more

5/21/2014 - Compliance Corporate Financing Corporate Financing Rule ETFs FINRA SEC

Securities Regulators Are Inspired by an Academic Article to Seek Information Regarding Order Routing

Apparently attempting to understand how broker-dealers provide best execution in the face of incentives to trade at certain exchanges, the SEC and FINRA are asking broker-dealers for extensive transaction information...more

4/29/2014 - Broker-Dealer FINRA Rebates SEC Section 17(a) Stock Trades Transaction Fees

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

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

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

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

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

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

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

Broker-Dealer Registration Issues Associated with Development Projects under the EB-5 Program

The EB-5 Immigrant Investor Program (the “EB-5 Program”) administered by the U.S. Citizenship and Immigration Service (USCIS) has been a significant source of capital for various real estate and other development projects...more

11/7/2013 - Broker-Dealer Compliance EB-5 Enforcement Limited Partnerships SEC USCIS

Halloween Shivers: Frightening Times Ahead for RIAs?

Two Halloween announcements by securities regulators may frighten investment advisers. The October 31 statements from the SEC and the North American Securities Administrators Association (NASAA) suggest that federal and...more

11/5/2013 - Compliance Dodd-Frank NASAA OCIE SEC

Financial Fraud Law Report: October 2013 - Insider Trading in Mutual Funds: Do Traditional Theories Apply?

A federal court of appeals recently held out the possibility that insider trading prohibitions — at least under the classic theory — do not apply to mutual fund redemptions. The U.S. Court of Appeals for the Seventh...more

10/25/2013 - Chief Compliance Officers Compliance Fraud Insider Trading Mutual Funds Rule 10b-5 SEC Securities Exchange Act White Collar Crimes

When Legal or Compliance Personnel May Be Subject to Failure to Supervise Liability Under the Securities Laws

The SEC has provided some much-needed clarity on the issue of when broker-dealer compliance or legal personnel may be considered to be supervisors. On September 30, 2013, the Division of Trading and Markets (the “Division”)...more

10/11/2013 - Broker-Dealer Chief Compliance Officers Compliance Corporate Counsel SEC Securities Exchange Act Supervisors

The SEC Will Focus on Fixing “Broken Windows” it Finds in the Securities Industry

In a speech presented to the second annual Securities Enforcement Forum on October 9, 2013, SEC Chair Mary Jo White described a broad expansion of the SEC’s enforcement program to reflect her desire “to see that the SEC’s...more

10/11/2013 - Enforcement Investors Mary Jo White SEC

Renewed Focus on an Old Rule: SEC Steps Up Rule 105 Enforcement Efforts

On September 17, 2013, the Securities and Exchange Commission (SEC or “Commission”) announced settled enforcement actions against 23 firms for short selling in violation of Rule 105 of Regulation M, which limits the ability...more

9/19/2013 - Compliance Enforcement Actions NEP Policy Violations Regulation M SEC

The Impact of the SEC’s Final Rules on General Solicitation and Bad Actor Disqualification for Broker-Dealers and Investment...

The SEC recently finalized amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act relaxing prohibitions against general solicitation in certain private offerings of securities implementing Section...more

9/12/2013 - Bad Actors Broker-Dealer Dodd-Frank FINRA General Solicitation Investment Adviser JOBS Act SEC

Hurricane Sandy Redux: Agencies Recommend Business Continuity Planning

As hurricane season approaches, the securities and commodities industries’ principal regulators are effectively encouraging firms to do the equivalent of putting up storm shutters, stocking up on batteries and bottled water,...more

8/22/2013 - CFTC FINRA Hurricane Sandy Natural Disasters Risk Management SEC

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