On March 12, 2025, the staff of the Division of Corporation Finance at the Securities and Exchange Commission (SEC) issued a no-action letter (NAL) recognizing the reasonableness of one method by which issuers relying on Rule...more
This amendment builds on FINRA’s recent willingness to relax the prohibition on the use of projections and targeted returns in the marketing materials broker-dealers deliver to institutional investors and qualified...more
2/29/2024
/ Affiliates ,
Broker-Dealer ,
Comment Period ,
Financial Industry Regulatory Authority (FINRA) ,
Institutional Investors ,
Internal Rate of Return (IRR) ,
Investment Company Act of 1940 ,
Investment Funds ,
Offering Statements ,
Past Performance ,
Policies and Procedures ,
Private Offerings ,
Private Placements ,
Proposed Rules ,
Regulation Best Interest ,
Retail Investors ,
Securities and Exchange Commission (SEC)
On January 23, 2024, FINRA announced the addition of new Supplementary Material .18 to FINRA Rule 3110 (Supervision) to adopt a voluntary, three-year remote inspections pilot program (Pilot Program) to allow eligible members...more
Firms will be able to treat private residences from which certain supervisory activity is conducted as non-branch offices instead of OSJs. The adoption comes after nearly two years of FINRA efforts to align its supervisory...more
High-frequency traders, private funds, decentralized exchange automated market makers, and even state pension plans should consider whether the expanded dealer definition triggers the need to register as a securities dealer...more
2/12/2024
/ Cryptoassets ,
Dealers ,
Financial Industry Regulatory Authority (FINRA) ,
Government Securities ,
Liquidity ,
Market Participants ,
Municipal Bonds ,
New Rules ,
Private Investment Funds ,
Registration Requirement ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Traders
On January 9, 2024, FINRA published its 2024 Annual Regulatory Oversight Report (the “Report”). FINRA publishes the Report as a way to provide its broker-dealer members with insight into findings from FINRA’s Member...more
1/26/2024
/ Annual Reports ,
Artificial Intelligence ,
Broker-Dealer ,
Cryptoassets ,
Cybersecurity ,
Electronic Communications ,
Financial Crimes ,
Financial Industry Regulatory Authority (FINRA) ,
Form CRS ,
Regulation BI ,
Regulation SHO ,
Securities and Exchange Commission (SEC)
FINRA has offered a gift to member firms and fund managers just in time for the holiday season — but like a new puppy, the gift comes with a lot of responsibility. FINRA filed a proposed rule change to amend FINRA Rule 2210...more
The SEC is continuing its campaign to overhaul cybersecurity, cyber incident reporting, and privacy controls and requirements for financial services industry registrants, their service providers, and corporate America...more
The proposal would codify for the first time the federal-level best execution standard for brokers and related obligations. New Regulation Best Execution would result in a pivot from what has been a principles-based approach...more
The risk alert highlights deficiencies the staff identified during examinations and provides examples of weak practices observed at firms. EXAMS staff intends for the alert to assist broker-dealers in reviewing and enhancing...more
On January 10, 2023, FINRA published the 2023 Report on FINRA’s Examination and Risk Monitoring Program. The Report serves as a resource for firms to use to bolster their compliance programs and provides a roadmap of FINRA’s...more
On December 29, 2022, President Biden signed H.R.2617, codifying a federal exemption from SEC registration for small business M&A brokers as new Exchange Act Section 15(b)(13). Limitations exist, as does the requirement to...more
The SEC Division of Examinations recently published a Risk Alert on quarterly reports required under Exchange Act Rule 606, which are published by broker-dealers to provide customers with insight into factors influencing...more
12/13/2022
/ Best Execution ,
Broker-Dealer ,
Disclosure Requirements ,
Information Reports ,
Public Comment ,
Public Meetings ,
Quarterly Report ,
Reporting Requirements ,
Risk Alert ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
FINRA recently published Regulatory Notice 22-23, providing guidance regarding firm and representative succession planning, including relevant FINRA rules and administrative processes and questions firms can consider when...more
The SEC recently adopted new recordkeeping requirements for broker-dealers and “SBS entities” (security-based swap dealers and major security based swap participants). Most notably, the SEC will no longer require...more
FINRA recently hosted a conference call with its smaller members covering Regulation Best Interest and Form CRS compliance. FINRA’s resounding message was that there is “no one-size-fits all” approach to Reg. BI...more
10/13/2022
/ Broker-Dealer ,
Compliance ,
Conflicts of Interest ,
Disclosure Requirements ,
Financial Industry Regulatory Authority (FINRA) ,
Form CRS ,
Investment Adviser ,
Investment Management ,
Regulation Best Interest ,
Regulation BI ,
Securities and Exchange Commission (SEC)
The SEC and CFTC recently charged 11 large financial institutions and their affiliates for failing to collect, monitor, and preserve communications over WhatsApp and other messaging services. These settlements follow a...more
10/7/2022
/ Affiliates ,
CFTC ,
Civil Monetary Penalty ,
Enforcement Actions ,
Financial Institutions ,
Government Investigations ,
Instant Messaging Apps ,
Investment Adviser ,
Recordkeeping Requirements ,
Securities and Exchange Commission (SEC) ,
Settlement ,
Social Media ,
WhatsApp
This article focuses on how the new Rule 206(4)-1 (the “Marketing Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”) affects the relationships between investment advisers registered with the U.S. Securities...more
10/4/2022
/ Advertising ,
Broker-Dealer ,
Compliance ,
Disclosure Requirements ,
Endorsements ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Marketing ,
New Rules ,
Policies and Procedures ,
Private Funds ,
Registered Investment Advisors ,
Risk Alert ,
Securities and Exchange Commission (SEC) ,
Testimonial Statements
On September 14, 2022, the SEC announced a settled administrative order, also dated September 14 (“Order”), imposing penalties, including a $100,000 fine, on a registered broker (the “Broker”) for failing to (1)...more
SEC staff recently served up a juicy staff bulletin covering the standards of conduct for broker-dealer and investment adviser conflicts of interest. The staff bulletin includes 13 Q&As categorized into five different...more
The U.S. Securities and Exchange Commission recently charged a broker-dealer and five of its registered representatives with violating Regulation Best Interest (“Reg. BI”) related to recommendations and sales of an unrated,...more
U.S. Securities and Exchange Commission staff recently published a bulletin reiterating the standards of conduct applicable to broker-dealers and investment advisers when making account recommendations to retail investors....more
4/15/2022
/ Broker-Dealer ,
Conflicts of Interest ,
Fiduciary Duty ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
IRA Rollovers ,
Regulation Best Interest ,
Retail Investors ,
Retirement Plan ,
Securities and Exchange Commission (SEC) ,
Standard of Conduct
This is the first in a series of alerts discussing topics covered by FINRA in its 2022 Examination and Risk Monitoring Program Report (the “Report”). Here we take a look at Regulation Best Interest (“Reg. BI”) and Form CRS,...more
2/25/2022
/ Broker-Dealer ,
Conflicts of Interest ,
Disclosure Requirements ,
Filing Requirements ,
Financial Industry Regulatory Authority (FINRA) ,
Form CRS ,
Investment Adviser ,
Policies and Procedures ,
Regulation Best Interest ,
Retail Investors ,
Securities and Exchange Commission (SEC) ,
Training
On November 18, 2021, the U.S. Securities and Exchange Commission proposed new Rule 10c-1, which, if adopted, would create a new reporting and disclosure framework for the securities lending market. Rule 10c-1 would require...more
On November 18, 2021, the U.S. Securities and Exchange Commission (“SEC”) proposed amendments to Rules 17a-4 and 18a-6 under the Securities Exchange Act of 1934 related to recordkeeping requirements for broker-dealers and...more