The Tenth Circuit recently held that the SEC’s in-house judges are “inferior officers” hired in violation of Article II’s Appointment Clauses, creating a split with the D.C. Circuit over the issue.
The Tenth Circuit held...more
The Sixth Circuit this week declined the SEC’s request to dismiss a Constitutional challenge to the new MSRB pay-to-play rules. Instead, the Court ordered the case to a merits panel for consideration. The Republican parties...more
A unanimous Supreme Court reaffirmed the “gifting” theory of insider trading under Dirks and rejected Newman “to the extent” it required more.
The Court’s long-standing rule in Dirks v. SEC, 463 U.S. 646, 664 (1983)...more
12/7/2016
/ Confidential Information ,
Dirks v SEC ,
Financial Markets ,
Illegal Tipping ,
Insider Trading ,
Non-Public Information ,
Personal Benefit ,
SCOTUS ,
Securities Violations ,
Tippees ,
Tippers ,
US v Newman ,
US v Salman
In late October, FINRA issued a sweep exam, commanding firms to produce 15 categories of documents about firm’s cross-selling programs over a 5-year span. The sweep seeks information on cross-selling, including incentives...more
The Public Investors Arbitration Bar Association (PIABA) renewed its criticism of FINRA’s Broker-Check® system in a report issued in late October. PIABA was especially critical of the system’s:
Lack of synchronization...more
The Sixth Circuit this week declined the SEC’s request to dismiss a Constitutional challenge to the new MSRB pay-to-play rules. Instead, the Court ordered the case to a merits panel for consideration. The Republican parties...more
10/10/2016
/ Administrative Merits Determinations ,
Broker-Dealer ,
Financial Institutions ,
Financial Markets ,
Investment Adviser ,
Motion to Dismiss ,
MSRB ,
Municipal Advisers ,
Pay-To-Play ,
Securities ,
Securities and Exchange Commission (SEC)
Having lost her initial suit (and appeal) to enjoin an SEC administrative enforcement action against her, the so-called “diva of distressed,” Lynn Tilton recently filed another lawsuit trying to halt her upcoming October 24...more
The Securities Division of Tennessee’s Department of Commerce and Industry has increased its enforcement activity during 2016. The recent actions include:
Final Administrative Orders:
Clifton Alexander and HugeROI.com...more
The SEC has fined an Atlanta company $265,000 for using various severance agreements restricting whistleblower activities.
The Dodd-Frank Act added ’34 Act § 21F encouraging whistleblower programs. The SEC adopted Rule...more
9/12/2016
/ BlueLinx Holdings ,
Confidential Information ,
Dodd-Frank ,
Employer Liability Issues ,
Government Agencies ,
Government Investigations ,
Hiring & Firing ,
Popular ,
Securities and Exchange Commission (SEC) ,
Severance Agreements ,
Whistleblower Protection Policies ,
Whistleblowers
The SEC announced August 25 that it approved FINRA’s pay-to-play rules governing placement-agent or solicitor broker-dealers and was “prepared” to approve the extension of MSRB Rule G-37 to municipal advisors as well....more
9/8/2016
/ Broker-Dealer ,
Dodd-Frank ,
Financial Industry Regulatory Authority (FINRA) ,
Financial Markets ,
Investment Adviser ,
MSRB ,
Municipal Advisers ,
Pay-To-Play ,
Rule 206(4)-5 ,
Rule G-37 ,
Securities ,
Securities and Exchange Commission (SEC)
On August 24, the SEC announced settled administrative actions against 71 state and local issuers arising from $3.7 trillion in municipal securities offerings. The Commission alleged the issuers made false statements...more
9/6/2016
/ Administrative Proceedings ,
Cease and Desist Orders ,
Disclosure Requirements ,
Enforcement Actions ,
False Statements ,
Financial Markets ,
MCDC ,
Municipal Bonds ,
Municipal Securities Issuers ,
Municipal Securities Market ,
Sanctions ,
Securities and Exchange Commission (SEC)
Within weeks, the Second and Third Circuits reached opposite conclusions over federal jurisdiction to confirm, modify or vacate arbitration awards. The Second Circuit now allows courts to look through the face of the...more
The SEC announced its second enforcement action in a week against a company using severance or confidentiality agreements requiring employees to waive whistleblower bounties or their right to bring a qui tam action....more
8/18/2016
/ Confidential Information ,
Corporate Counsel ,
Dodd-Frank ,
Enforcement Actions ,
Fines ,
Health Net ,
Qui Tam ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Severance Agreements ,
Whistleblower Awards ,
Whistleblowers
The SEC has fined an Atlanta company $265,000 for using various severance agreements restricting whistleblower activities.
The Dodd-Frank Act added ’34 Act § 21F encouraging whistleblower programs....more
8/15/2016
/ Civil Monetary Penalty ,
Confidential Information ,
Dodd-Frank ,
Employment Contract ,
Rule 21F ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Securities Violations ,
Severance Agreements ,
Unfair Labor Practices ,
Waivers ,
Whistleblower Awards ,
Whistleblower Protection Policies ,
Whistleblowers
The D.C. Circuit has affirmed that SEC ALJs are not constitutional Officers subject to the Appointments Clause, rejecting perhaps the strongest of the constitutional challenges to the Commission’s administrative forum. The...more
In a July 22 Notice, FINRA took umbrage at a growing line of Court decisions suggesting that a later or more-specific forum selection clause in an agreement between the parties may override a prior customer arbitration...more
This SRO gamesmanship is making a mockery of governing.
The latest is the SEC’s position that it didn’t take any action on the new MSRB Rules extending pay-to-play prohibitions to municipal advisors, so it can’t be sued...more
8/2/2016
/ Bonds ,
Dodd-Frank ,
MSRB ,
Municipal Advisers ,
Municipal Bonds ,
Pay-To-Play ,
Regulatory Oversight ,
Rule G-37 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
SRO
Last month, the 6th Circuit joined the majority view recognizing the “materialization of the risk” theory of loss-causation as an alternative to “corrective-disclosure” in securities litigation under Rule 10b-5....more
8/1/2016
/ Corrective Actions ,
Disclosure Requirements ,
Financial Markets ,
Loss Causation ,
Material Misrepresentation ,
PSLRA ,
Rule 10b-5 ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Litigation ,
Twombly/Iqbal Pleading Standard
The Eleventh Circuit Friday joined three others in concluding that Congress intended Respondents must wait until appeal from the Commission to have a Court consider their challenges to the Constitutionality of the SEC’s...more
For years, self-regulatory agencies (like FINRA or the Exchanges) have wielded the statutory authority granted them by Congress – and backed by the SEC – exercising governmental power to compel testimony, impose fines and...more
The Second Circuit has affirmed dismissal of “diva of distressed” Lynn Tilton’s constitutional challenge to the SEC’s administrative forum, holding that issue isn’t reviewable by the courts until an appeal after two levels of...more
Last week, the 11th Circuit held that the limitations period of 28 U.S.C. § 2462 bars disgorgement or declarative relief for acts having occurred five years before the SEC files an action.
The Court drew a distinction...more
Chancellor Carol McCoy allowed a Tennessee state retirement fund’s securities suit over decades-old RMBS purchases to continue last week, holding that time doesn’t run against the king – even on statutes of repose....more
In a recent new release, the Tennessee Securities Division urged investors to ask tough questions of their investment advisors, and about their compensation, account arrangements and educational / regulatory history. The May...more
Congress voted this week to de-rail the Department of Labor’s sweeping fiduciary-duty suite of rule-making, but doesn’t have the votes to override the President’s threatened veto....more