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Category Archives: Dodd-Frank

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Is the SEC that good? SEC Wins Every Administrative Case

Posted in Dodd-Frank, SEC Enforcement, Securities Litigation

In what is sure to add more “fuel to the fire,” it was recently reported that the SEC has won every case brought in its administrative courts over the last year.  The SEC has not been so successful with its federal court cases, winning 61% of those cases over that same period. Of course, regular blog readers know that the… Continue Reading

The Uniform Fiduciary Duty Standard – It Seems Like Déjà vu All Over Again

Posted in Breach of Fiduciary Duty, Broker-Dealer Regulation, Dodd-Frank, FINRA Compliance, FINRA Enforcement

Although it has been many years since Yogi Berra uttered this famous line, it seems like he must have been thinking about the debate regarding the adoption of a uniform fiduciary duty standard.  All kidding aside, one SEC commissioner recently expressed his doubts regarding the SEC proposing such a rule for those who give retail… Continue Reading

Do You Need Another Reason To Take Cyber-Security Seriously

Posted in Cyber-Security, Dodd-Frank, Federal and State Criminal Activities, Financial Industry Trends

As we all know, the SEC and FINRA have made cyber-security an exam priority in 2014, but what does it mean when the audit of your regulator shows that it is susceptible to a data breach.  A recent audit of the SEC found that its cyber-security was far from perfect.  I am sure that there… Continue Reading

SEC and Other Regulators Seek Input on Diversity Proposal

Posted in Dodd-Frank

The SEC and three other regulators requested comment on a proposed policy statement that would establish joint standards for assessing the diversity policies and practices of the entities they regulate.  http://www.sec.gov/rules/policy/2013/34-70731.pdf. The diversity measures are required by Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  In a joint release, the agencies… Continue Reading

Should You Even Care About A Uniform Fiduciary Duty

Posted in Arbitration, Broker-Dealer Regulation, Compliance and Supervision, Dodd-Frank, FINRA Compliance, SEC Compliance, Uncategorized

In an Investment News article written by Mark Schoeff, he reported that the push for a uniform fiduciary standard for broker-dealers and investment advisors has become a bit stagnant. In fact, it was reported that the prospects for such a uniform rules have waned over the years notwithstanding the general consensus that there should be such a… Continue Reading

SEC Says Dodd-Frank’s Statute of Limitations Doesn’t Apply to It

Posted in Dodd-Frank, SEC Enforcement

According to the SEC, the Dodd-Frank Act does not require the SEC to bring an enforcement action within 180 days of issuing a Wells Notice.  See http://www.sec.gov/litigation/opinions/2014/ia-3829.pdf. Although the Dodd-Frank Act amended the Securities and Exchange Act of 1934 Section 4E(a)(1) to require the SEC to bring the action within 180 days, the SEC said it was… Continue Reading

Will There Be A Fiduciary Duty?

Posted in Broker-Dealer Regulation, Dodd-Frank

The Dodd-Frank Act directed the SEC to study whether broker-dealers should be held to a fiduciary duty standard rather than the lower “suitability” standard.  Advocates for the fiduciary standard claim that customers are often under the misconception that they are dealing with a professional obligated to put their interests first.  Many broker-dealers have argued that… Continue Reading

SEC Discourages Incentivizing Whistleblowers to Keep Complaints In-House

Posted in Compliance and Supervision, Dodd-Frank, SEC Compliance, SEC Enforcement

What’s good for the goose is apparently not so good for the gander, as the SEC warns in-house attorneys against whistleblower contracts.  The SEC has been financially incentivizing whistleblowers to bring securities fraud complaints to the agency’s attention for years, with increasing success.  The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 empowers… Continue Reading

THE FIDUCIARY STANDARD AND THE SEC-DOL TUG -OF -WAR

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends

The DOL is working to redefine the definition of the term “fiduciary” for retirement plan purposes, including individual retirement accounts.  The SEC’s recent request for data on a possible rulemaking effort to impose a fiduciary standard seems to fail to take into account the DOL’s ongoing reform efforts. The DOL project is broader while the… Continue Reading

RIAS NEED TO FOCUS ON FORM ADV AND ADVERTISING REVENUE

Posted in Dodd-Frank, Investment Adviser Regulation, SEC Compliance

The SEC Division of Investment Management, is reviewing the applications of private fund advisers, and focusing on two particular areas: advertising and the Form ADV. The Division’s review will be “informed” by the questions and concerns raised by private fund advisers regarding the Investment Advisers Act of 1940 application to their practices and business models…. Continue Reading

THE SEC IS REALLY WORKING ON DODD-FRANK

Posted in Dodd-Frank, SEC Organization, SEC Structure

The SEC has been routinely criticized for not completing its administrative work under the Dodd-Frank Act.  Despite this criticism, the SEC stated that it had only 4 remaining initiatives it must complete.  http://www.sec.gov/new/studies/2013/sec-organizatinal-reform-recommedations-043013.pdf and http://www.sec.gov/new/studies/2011/967study.pdf. The SEC must, now, reorganize the Offices of Administrative Services, Financial Management, and Human Resource, as well as create the… Continue Reading

SEC Looking At Insider Trading Rules For Commodities Markets

Posted in Dodd-Frank, SEC Enforcement

SEC Chairman Mary Jo White recently stated at a Senate Banking Committee hearing that the SEC was examining whether the insider trading rules should be expanded to include the commodities markets.  White’s statements were made in response to questioning about the role of several large banks in the commodities market.  Insider trading is enforced in… Continue Reading

So is it now really the beginning of the end of arbitration

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, Public Customer Arbitrations

The North American Securities Administrators Association on behalf of state securities regulators, following 37 members of Congress, recently asked the SEC to exercise its authority under Dodd-Frank and do away with mandatory arbitration agreements.  Consumer groups have also jumped into this fray. Does this signal the beginning of the end of arbitration clauses in customer… Continue Reading

So What Do You Need To Do With BrokerCheck

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, FINRA Compliance, Social Media

While many brokers breathed a sigh of relief when FINRA withdrew its proposal requiring members to include a “prominent description of and link to” BrokerCheck on their web sites and social media pages, this is probably not the end of this matter. Many firms complained about the proposal because it presented many administrative nightmares; such… Continue Reading

THE SEC AND CFTC WORKING TOGETHER

Posted in Dodd-Frank

Over the last several years, Congress and industry insiders have discussed whether it is time to merge the SEC and CFTC.  After some high-profile regulatory lapses by both agencies, Congressional studies indicated that the lapses were due, in part, to the lack of coordination and failure to share information between the agencies.  In late 2012,… Continue Reading

There is No Escape from Whistleblowers Overseas

Posted in Dodd-Frank, FCPA, International Securities Regulation, Sarbanes-Oxley

Alas, the Dodd-Frank whistleblower protections cover informants overseas. The United States Court of Appeals for the Fifth Circuit, recently, held that the Dodd-Frank whistleblower protections cover informants that report to the SEC information about FCPA violations.  The court, citing that the plain language of the act, indicated that such individuals were covered.  This is an intriguing… Continue Reading

You Can’t Be a Bad Actor Before the SEC Has Crowdfunding Rules

Posted in Capital Formation, Dodd-Frank, JOBS Act

The SEC’s Division of Corporation Finance will consider a bar on so-called “bad actors” from private offerings before announcing rules on crowdfunding under the JOBS Act.  However, we anticipate there will be an additional delay given the turnover at the SEC and the recent departure of its Corp Fin Director.  As you have undoubtedly heard, the SEC has… Continue Reading

You Can Blow the Whistle too According to the SEC

Posted in Dodd-Frank, SEC Enforcement, Whistleblowers

The SEC’s Division of Enforcement is performing well according to its departing director. The soon to be ex-Enforcement Director credits this strength to his re-organization of the Division based on expertise and the tips received from whistleblowers, among other things.  The Dodd-Frank Act was the impetus for the SEC’s whistleblower program, and the SEC received over 3,000… Continue Reading

Who Wants To Know How To Weed Out Rogue Stockbrokers

Posted in Compliance and Supervision, Dodd-Frank, FINRA Compliance, Registered Representatives, SEC Compliance

My partner, Ernest Badway, recently blogged about the dangers of a lawyer referring a client to a rogue stockbroker.  The question for the broker-dealer/investment advisors is how do you uncover rogue brokers or prevent them from infecting your firm. In all of the years that I have defended broker-dealers and investment advisors in cases involving… Continue Reading

One Thing An RIA Need Not Worry About.

Posted in Dodd-Frank, Financial Industry Trends, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

Ever since Dodd-Frank, there has been much concern in the RIA world regarding who would be its regulator.  At this point, RIAs can dispense with any concern that FINRA will be its regulator because FINRA pulled its hat out of the oversight ring, at least for now. Even thought FINRA spent nearly $2 million lobbying Congress… Continue Reading

“It’s Deja Vu All Over Again”; The Uniform Fiduciary Duty Standard

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, FINRA Compliance

One of the greatest philosophers of our time, Yogi Berra, must have had the debate over the uniform fiduciary duty standard when he penned this line.  Yes, believe it or not, the debate is about to resume. The SEC is yet again working on possible recommendations regarding a uniform fiduciary duty for investments advisors and… Continue Reading

Did You Hear That FINRA May Force BDs To Wear A Scarlet Letter?

Posted in Broker-Dealer Regulation, Compliance and Supervision, Dodd-Frank, FINRA Compliance, Registered Representatives, Social Media

Much like the character in the famous Nathaniel Hawthorne story, FINRA is looking force broker-dealers to wear a mark on all of their social media.  FINRA wants to amend Rule 2267, forcing member firms to have a link to BrokerCheck on the websites and all other forms of social media. The stated purpose of doing… Continue Reading

Is the IM Division Changing with the Times? New RIAs Force Looksy With the Advisor’s Act

Posted in Dodd-Frank, Financial Industry Trends, Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Compliance, SEC Organization, SEC Structure

The SEC’s Division of Investment Management has publicly stated that it will review the regulations relating to the Investment Advisers Act of 1940 given the large influx of new RIAs as a consequence of the registration of hedge and private equity fund managers. These new RIAs, now, account for roughly 40% of all RIAs.  IM is looking… Continue Reading