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Category Archives: Securities Legislation

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REVERSE TRIANGULAR MERGERS ARE NOT ASSIGNMENTS

Posted in Corporate Financing, Corporate Governance, Securities Legislation

A reverse triangular merger was not an assignment by operation of law.  See Meso Scale Diagnostics LLC v. Roche Diagostics GMBH, Del. Ch., C.A. No. 5589-VCP, 2/22/13, http://www.bloomberglaw.com/public/document/CONF_ORD_Meso_Scale_Diagnostics_LLC_vs_Roche_Diagnostics_GmbH_Do.  The court explained that a company entered into a series of contemporaneously executed agreements that granted it a new non-exclusive license. However, before the transaction was complete… Continue Reading

If Your Client Does Not Understand Your Recommendation, You Need To Do More

Posted in Arbitration, Broker-Dealer Regulation, Dodd-Frank, FINRA Compliance, Intra-Industry Arbitrations, Securities Legislation

The SEC recently completed the Dodd-Frank mandated study on financial literacy for retail investors and it revealed, not shockingly, an absence of basic financial literacy.  The study also found that it was important for retail customers to have a better appreciation of the costs associated with their investments, as well as conflicts of interest related… Continue Reading

Recent Legislative Initiatives. . . Yes, We Have Reached the Silly Season

Posted in SEC Organization, SEC Structure, Securities Legislation

Despite the fact people are still unemployed, the drought rages and farmers suffer, and the deficit continues to grow, Congress seems to float absurd legislation across the partisan divide to regulate the regulators and the market. In particular, the House passed a bill that would tighten the cost-benefit analysis for both the SEC and CFTC… Continue Reading

Broker Routing Decisions; Are There Conflicts Of Interest

Posted in Broker-Dealer Regulation, SEC Compliance, SEC Enforcement, SEC Organization, Securities Legislation

As a result of conclusions from a recent study by Woodbine Associates, Senator Charles Schumer wrote to SEC Chairman Schapiro requesting that the SEC take action to ensure that brokerages disclose rebates and incentive payments they receive from national exchanges and other trading venues that they receive for routing securities transactions to those entities.  According to Schumer, the… Continue Reading

PRIVATE GROUP SEEKS TO BAN ACCOUNTS FROM DUAL REGISTRANTS

Posted in Arbitration, Broker-Dealer Regulation, Compliance and Supervision, Dodd-Frank, FINRA Compliance, FINRA Enforcement, Intra-Industry Arbitrations, Investment Adviser Regulation, Public Customer Arbitrations, Registered Representatives, SEC Enforcement, Securities Legislation

Recently, an investor advocacy group petitioned the SEC to prohibit brokerage firms, who offer wraparound accounts, to also provide investment advice through both a duly registered BD and investment adviser.  This group claims that terminating this practice would resolve a very troubling regulatory issue.  The group also petitioned the SEC to ban mandatory arbitration accounts… Continue Reading

IS IT POSSIBLE TO FIND CAPITAL FORMATION SUCCESS OVERSEAS?

Posted in Corporate Governance, Dodd-Frank, Financial Industry Trends, SEC Organization, Securities Legislation, Securities Registration

In its never ending quest to find suitable ways to address capital formation issues in the United States, the SEC’s Division of Corporation Finance is looking to see if foreign jurisdictions handle some of these issues better and if it could be applied in the United States.  For example, the SEC is looking to see if other… Continue Reading

A Bill Is Pending That Backs An SRO for RIAs, Which May Be FINRA.

Posted in Compliance and Supervision, Dodd-Frank, Financial Industry Trends, Investment Adviser Regulation, SEC Compliance, SEC Organization, SEC Structure, Securities Legislation

Congressman Bachus (R-Ala.) introduced a bill that would shift the oversight of registered investment advisers from the SEC to a self-regulatory organization that would report to the SEC.  This development represents the crystallization of one of the fears emanating out of Dodd-Frank, which mandated that the SEC study how to tighten oversight over RIAs. Advisers fear that an… Continue Reading

The SEC Is To Employ Cost-Benefit Analysis For Its Rule-Making

Posted in Dodd-Frank, SEC Compliance, SEC Enforcement, SEC Organization, SEC Structure, Securities Legislation

According to an internal SEC guidance report, the SEC is taking to heart the criticism that it does not employ enough of an economic analysis in its rule-making process.  The guidance directed the SEC to take a cost-benefit approach to all rule-making, regardless if the rules are discretionary or mandated by Congress. This guidance report… Continue Reading

Could the Department of Labor’s Fiduciary Duty Standard be the Next to Go?

Posted in Financial Industry Trends, Securities Legislation

The Department of Labor has a rule pending that would impose a fiduciary duty standard for investment advice pertaining to retirement plans.  Like the resistance faced by the SEC in its attempt to create a uniform fiduciary duty for retail investment advice, the DOL has faced similar resistance, with calls for a cost-benefit analysis before imposition… Continue Reading

SEC AND CFTC LAUNCH AN ANTI MONEY LAUNDERING GROUP

Posted in CFTC Compliance, CFTC Enforcement, JOBS Act, Money Laundering, SEC Compliance, SEC Enforcement, Securities Legislation

The SEC and CFTC launched a working group to discuss and identify money laundering vulnerabilities.  These issues have lingered for awhile.  Both agencies believe that there is an opportunity to clarify their positions relating to money laundering and if their programs could potentially uncover such events.  This group will also include representatives from the Treasury… Continue Reading

Condo Rental Programs Are Not Investment Contracts

Posted in JOBS Act, Securities Class Actions, Securities Legislation, Securities Registration

In an intriguing case out of the United States District Court for the Western District of Missouri, a plaintiff’s purchase of condominium units with an option to participate in the rental program did not involve an investment contract under either the federal or Missouri securities laws.  The court, thus, dismissed the plaintiff’s securities claims.  The… Continue Reading

CAYMAN ISLANDS FUND REGISTRATION REQUIREMENTS

Posted in Financial Industry Trends, Hedge and Private Equity Funds, Investment Adviser Regulation, JOBS Act, Securities Legislation, Securities Registration

The Cayman Islands will amend a 2011 law to clarify that master funds will now have to register if they have even one Cayman regulated feeder fund.  This registration will have to take place with the Cayman Islands Monetary Authority.  Previously, the Neutral Funds Law that was effective in December 2011, stated that, if there… Continue Reading

Jim Gets Interviewed by LXBN TV, Looks Oddly Angry

Posted in Financial Industry Trends, JOBS Act, Registered Representatives, Securities Legislation, Securities Registration

Colin O’Keefe at LXBN TV recently asked me a few questions about crowdfunding, the hype around it and what it might really look like.  At first glance, I look kind of pissed off – do I always scowl like that? – and more interested in something happening on the table.  But – despite appearances – I honestly enjoyed myself… Continue Reading

Dodd-Frank; Is It Doomed To Fail?

Posted in Broker-Dealer Regulation, CFTC Enforcement, Compliance and Supervision, Dodd-Frank, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, Registered Representatives, SEC Compliance, SEC Enforcement, SEC Organization, Securities Legislation

Much has happened in nearly one since since the Dodd-Frank Act became effective, and much more remains.  According to the recent thoughts of one commentator, Kyle Colona of Compliance EX, Dodd-Frank may be doomed to fail as it faces it first year of existence. Colona noted five factors working against the full implementation of the… Continue Reading

NEW EFFORTS TO ASSIST IN CAPITAL RAISING

Posted in Corporate Governance, Dodd-Frank, JOBS Act, Securities Legislation, Securities Registration

Recently, the SEC’s Division of Corporation Finance Director indicated that the SEC was reviewing certain issues in an attempt to assist small businesses with capital formation.  The SEC is assessing a number of initiatives, including, but not limited to, if the number of shareholders, currently 500, triggering reporting requirements could be increased.  Some have suggested… Continue Reading

Cutting Through the Crowdfunding Hype

Posted in Compliance and Supervision, Financial Industry Trends, JOBS Act, Registered Representatives, Securities Legislation, Securities Registration

Like many others, my interest in the JOBS Act really started with crowdfunding.  This is probably because securities law is an imposing tangle of archaic acts, byzantine regulations and repetitive rules.  (Securities lawyers commonly say things like “…Rule 506 under Regulation D, promulgated pursuant to Section 4(2) of the ’33 Act…” and expect you to… Continue Reading

Emerging Growth Companies – A Bigger Deal Than You Might Think

Posted in Corporate Governance, Dodd-Frank, JOBS Act, Sarbanes-Oxley, Securities Legislation, Securities Registration

Today’s post is the penultimate of this series covering the recently signed JOBS Act, and covers the Act’s Title I – Reopening American Capital Markets to Emerging Growth Companies.  Check back later this week for more on Crowdfunding and a recap on who the JOBS Act really helps and who needs to be watch out. Or, instead of… Continue Reading

It’s Official! The JOBS Act of 2012 and Changes to Reg A and Reg D

Posted in Corporate Governance, Dodd-Frank, JOBS Act, SEC Compliance, Securities Legislation, Securities Registration

This post is a continuance of a series reviewing the JOBS Act.  For more on the registration requirement threshold shift from 500 to 2000 investors, click here.  For Jim’s initial analysis of Crowdfunding, click here.  Check back later for a flushed-out analysis of Title I of the Jobs Act, which creates the “Emerging Growth Company” classification.   … Continue Reading

The JOBS Act – Will Obama’s Signature Be An Execution Order for IPOs?

Posted in Compliance and Supervision, Dodd-Frank, Financial Industry Trends, JOBS Act, SEC Compliance, Securities Legislation, Securities Registration

Last week, I wrote about the Crowdfunding portion of the JOBS (Jumpstart Our Business Startups) Act, which was.  This week, I will try to review the rest of the Act in a series of posts.  Today: an overview and Title V (Private Company Flexibility and Growth).  Tomorrow, I’ll cover Titles II and IV, which give… Continue Reading

Jobs Act Backlash

Posted in Compliance and Supervision, Dodd-Frank, JOBS Act, Sarbanes-Oxley, Securities Legislation, Securities Registration

Gail Collins weighed in on the JOBS Act today in a column glibly titled “The Senate Overachieves”.  Normally, I love her work – everything she does is glib, and I honestly feel there is a glib shortage in America – but this time I believe her winking nonchalance has descended into full-on flippancy.  Worse than… Continue Reading

Is The SEC Really Cheaper Than an Investment Adviser SRO?

Posted in Investment Adviser Regulation, SEC Compliance, Securities Legislation

A recent study funded by various industry groups concluded that the SEC’s examination program, properly funded, would be cheaper than creating a new SRO for investment advisers.  This study indicated that a new SRO would cost the investment adviser industry over $600 million a year, while a SEC program would cost over $240 million and a… Continue Reading

You knew It Was Coming SEC Looks to Enhance Its Enforcement Program

Posted in SEC Compliance, SEC Enforcement, SEC Organization, SEC Structure, Securities Legislation

In a letter to certain senators, SEC Chairman Mary Schapiro has requested new statutory power to enhance the SEC’s Enforcement program’s effectiveness. In particular, the SEC is seeking statutory upgrades in five areas. The first new power would be to increase the SEC’s ability to impose fines on individuals and entities up to $1 million… Continue Reading