Broker-Dealer

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The Financial Report - Volume 3, No. 16 • August 21, 2014 (Global)

Discussion and Analysis - Recently, we’ve been thinking a lot about crowds. Most sources define the term “crowds” as a large group of people gathered closely together or with something in common. The Merriam-Webster...more

SEC Settles with Dually Registered Adviser Over Best Execution, Disclosure and Principal Transactions

The SEC settled administrative proceedings against an investment adviser, Dominick & Dominick LLC, a firm registered with the SEC both as an investment adviser and a broker-dealer (the “Adviser” or “D&D”), and Robert X....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

FinCEN Customer Due Diligence Rule Proposal

On July 30, 2014, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued proposed rules (the “Proposed Rules”) to clarify and strengthen customer due diligence requirements for banks, securities...more

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

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

Second Circuit Draws a Bright-line Rule to Determine Who Is a Customer Under Rule 12200

The decision in Citigroup Global Markets Inc. v. Abbar, Docket No. 13–2172 (August 1, 2014), by the U.S. Court of Appeals for the Second Circuit, has important implications for broker-dealers, particularly those dealing with...more

Corporate and Financial Weekly Digest - Volume IX, Issue 30

In this issue: - Amendments to FINRA Rule 2210 Regarding Communications With the Public - Smith & Wesson Pays $2 Million to Resolve SEC Charges - Former Chief Operating Officer Settles SEC Fraud...more

SIFMA Provides Guidance on Verification of Accredited Investor Status by Broker-Dealers and Investment Advisers

The Securities Industry and Financial Markets Association (SIFMA) issued a memorandum (the “Memorandum”) with guidance for registered broker-dealers and investment advisers on various non-exclusive means of verifying an...more

Additional Fees on Securities Transactions – FINRA Sees No Justification

In an area of broker-dealer practices with relatively little guidance—the appropriate level of commissions or mark ups on securities trades—FINRA recently brought another in a series of cases that provides insight into the...more

SEC Efforts To Compel SIPIC Coverage For Stanford Victims Rejected

The D.C. Circuit rejected efforts by the SEC to compel the Securities Investor Protection Corporation to liquidate a broker-dealer that was part of the Stanford Ponzi scheme empire. The investors had purchased CDs from an...more

New FINRA Supervision Rules May Require Immediate Action

The SEC approved FINRA’s major reworking of its rules governing broker-dealers firms’ supervision of their offices and associated persons. Firms must comply with the new rules by December 1, 2014. This may require some firms...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

Swimming in the Deep End: A Primer on Dark Pools

“Dark pools of liquidity” have recently become the focus of increased regulatory scrutiny, including a number of high-profile enforcement actions related to these alternative trading systems. This increased scrutiny follows...more

PCAOB Issues Guidance to Auditors of Broker-Dealers

On June 24, 2014, the Public Company Accounting Oversight Board (PCAOB) released staff guidance to help auditors of brokers and dealers registered with the Securities and Exchange Commission (SEC) plan and perform audits in...more

FINRA Targets Broker-Dealer Order Routing and Execution Quality of Customer Orders

The Financial Industry Regulatory Authority (“FINRA”) has initiated a potentially impactful examination of broker-dealer order routing and execution. FINRA recently issued a targeted examination letter ("Order Routing and...more

Reverse Churning: Don't Fall Asleep at the Wheel

It is obvious that broker-dealers and their registered representatives, and investment advisors, must be careful in making recommendations to clients. But the recent increase in regulatory interest relating to inaction in a...more

STOA Schemes Face Increased Regulatory Scrutiny

Increased SEC and Justice Department prosecution is bad news for stranger-originated annuity (STOA) schemes. The SEC recently announced that enforcement actions were taken against brokers Michael A. Horowitz of California and...more

Certain Merger and Acquisition Brokers Escape SEC Registration

The SEC recently issued a no-action letter that allows private company M&A brokers who satisfy specific criteria to avoid registering as broker-dealers with the SEC. Historically, an intermediary in a private M&A transaction...more

SIFMA Issues Guidance on Rule 506(c) Verification

On June 23, 2014, the Securities Industry and Financial Markets Association (“SIFMA”) issued a memorandum (the “Memorandum”) containing guidance for broker-dealers and investment advisers with respect to verifying the status...more

Reverse Churning

It is obvious that broker-dealers and their registered representatives, as well as investment advisors, must be careful in making recommendations to their clients. But the rise of claims related to inaction in a client...more

Paying for Playing: SEC Brings First Pay-to-Play Action against an Investment Adviser

The SEC has brought the first action under the “pay-to-play” rule adopted under the Investment Advisers Act. Andrew Ceresney, director of the SEC Enforcement Division, served notice that the SEC “will hold investment advisers...more

A Compilation of Enforcement and Non-Enforcement Actions

As reported in the May 2014 edition of Legal News: Investment Management Update, the SEC has made cybersecurity readiness a high-priority item to review when it conducts examinations of registered broker-dealers and...more

Verifying Accredited Investors in Public Rule 506 Offerings: SIFMA Guidance

On June 23, 2014, the Securities Industry and Financial Markets Association (SIFMA) published a memo outlining several specific methods for verifying accredited investor status that SIFMA believes would satisfy the...more

SIFMA Guidance on Investor Verification

SIFMA has issued a Memorandum intended to provide broker-dealers and advisers with guidance regarding procedures for investor verification in connection with offerings made pursuant to Rule 506(c)....more

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