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News & Analysis as of

The Road to Hell is Paved with Good Intentions

One of my favorite sayings is that “the road to hell is paved with good intentions.” To me, it means that good intentions could have some bad results. A big part of my practice has been helping advisors and brokers get...more

Financial Services Weekly News Roundup - December 2014

The SEC’s Semiannual Regulatory Agenda. The Federal Office of Information and Regulatory Affairs posted the SEC’s most recent Semiannual Regulatory Agenda which, in compliance with the Regulatory Flexibility Act, identifies...more

Is a Licensed Securities Dealer a “Professional” Under Alabama Law Prohibiting Enforcement of Nonsolicitation Agreements Against...

The Alabama Court of Civil Appeals released a slip opinion on May 16, 2014 addressing enforcement of a nonsolicitation agreement against a licensed securities broker. See G.L.S. & Associates, Inc., and G.L. Smith &...more

Indecent Exposure: FTC Obtains Injunctions Against Debt Brokers for Improperly Published Consumer Information

On November 12, 2014, the Federal Trade Commission announced that the District Court for the District of Columbia had entered preliminary injunctions against two debt sellers which, together, had improperly posted personal...more

Three Principals of Adviser Settle SEC Charges Over Undisclosed Conflicts

The Commission filed another settled action based on undisclosed conflicts involving an investment adviser. In this proceeding Respondents, principals of the adviser, failed to disclose a fee splitting arrangement with an...more

Digital Currency Corner - What FinCEN’s Denial of Payment Processing Exemption for Virtual Currency-Related Businesses Means for...

Why it matters - The rapid evolution of virtual and digital currencies has spawned significant activity in several federal agencies with implications potentially for traditional entities in certain cases. In addition...more

The Regulators Are Coming! The Regulators Are Coming!

Regulators, in-house lawyers and compliance officers told a serious cautionary tale at the recent Practicing Law Institute Broker-Dealer Regulation and Enforcement seminar. Representatives of the Securities and Exchange...more

FTC Settles With Debt Broker That Posted Consumer Financial Information

The Federal Trade Commission (“FTC”) has settled a complaint against consumer debt broker Bayview Solutions, LLC, as well as its principal, Aron Tomko, based on allegations that they had publicly disclosed the personal...more

An Instant Message from the CFTC: Preserve Communications – Enforcement Is Up!

The U.S. Commodity Futures Trading Commission (“CFTC”) released its annual enforcement review for 2014. The results—an impressive list of enforcement action success coupled with record fines. There were over $3.27 billion in...more

NFA Changes Public Display of FCM Financial Information on BASIC

Beginning November 25, the National Futures Association (NFA) will display additional information on each futures commission merchant’s (FCM’s) BASIC page, including the amount of customer funds held at clearing organizations...more

Insurance Brokers to be the gatekeepers for unauthorised foreign insurers in North Queensland

The announcement last week of the establishment of an aggregator website for North Queensland strata, home building and home contents insurance coupled with a proposal to allow unauthorised foreign insurers (UFI) into the...more

Connecticut Broadens Exemptions to Law Limiting Credit Checks

Connecticut has added mortgage brokers, lenders, and servicing companies to the list of “financial institutions” exempted under the state’s existing law limiting credit checks for purposes of employment. The amendment, which...more

No “Harmony,” No Arbitration

When AmeriPlan terminated contracts with numerous “independent business owners” (“IBOs”), four IBOs—who had achieved the rank of Sales Director and earned “lifetime residual income” through commissions from their own...more

Broker-Dealer Beat - September 2014

The SEC recently settled an enforcement action against brokerage firm Monness, Crespi, Hardt & Co. ("MCH") for deficient insider trading procedures. This case is an important reminder of some key elements of effective insider...more

Weeding Out Bad Actors: The Rule 506 Bad Actor Provisions and Capital Markets Practice – One Year Later

As we approach the anniversary of the effectiveness of the Rule 506 bad actor provisions (if you don’t happen to have it marked on your calendar, the new rules went into effect on September 23, 2013), it is a good time to...more

This Week In Securities Litigation

The Commission prevailed on summary judgment in an action against a broker which alleged he misappropriated client funds. The agency also filed actions centered on: an audit failure; the EB-5 immigration program; undisclosed...more

DOL Requests Information Regarding Use of Brokerage Windows and Similar Arrangements in Participant-Directed Defined Contribution...

The U.S. Department of Labor (“DOL”) published a request for information (the “RFI”) regarding the use of brokerage windows, self-directed brokerage accounts, and similar arrangements (collectively referred to in this article...more

Unregistered Brokers: Watch out for Shortcuts

One of the things I’ve learned since returning to private practice three years ago is that people like to raise money for profitable enterprises when they can. And why not? It can be lucrative. And if the people raising...more

Securities Litigation Update

The summer may feel like a more leisurely time of year, but not in securities litigation news. Here are some of the more significant headlines...more

Foreign Brokers Doing Business in the United States

Foreign brokers that engage in securities transactions with U.S. investors based in the United States must be registered with the Securities and Exchange Commission (SEC). There are two major exceptions to this rule. The...more

FinCEN Proposes Customer Due Diligence Rule

On July 30, FinCEN released a proposed rule that would amend BSA regulations to clarify and add customer due diligence (CDD) obligations for banks and other financial institutions, including brokers or dealers in securities,...more

Fourth Circuit Limits Liability under Maryland Finder’s Fee Act

In two recent opinions, the U.S. Court of Appeals for the Fourth Circuit substantially limited the potential scope of liability under the Maryland Finder’s Fee Act. Applying the plain language of the statute, the Fourth...more

VA Switches: FINRA Disciplinary Action Reminds Firms About the Need for Adequate Supervisory Procedures

In a case involving unsuitable variable annuity (VA) transactions, FINRA found that having good procedures and discovering improper conduct are not enough. A member firm must also ensure that it has adequate supervisory...more

U.S. Brokers Doing Business Overseas

Recently, regulators have made inquiries about the lawfulness of U.S. brokerage firms soliciting foreign clients. The regulators want to know under what exemptions or rules U.S. firms can do business overseas. This is a new...more

FINRA Targets Brokers’ Routing Of Orders

On July 8, FINRA released a targeted examination letter it sent to 10 firms to assess their compliance with requirements related to order routing and execution quality of customer orders in exchange listed stocks during the...more

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