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Category Archives: State Enforcement

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Securities Employees’ Social Media Access Cannot be Touched by their California Employers

Posted in Social Media, State Enforcement

On January 1, 2013, California joined Maryland and Illinois in restricting securities employers’ access to their employees’ and job applicants’ social media accounts.  This new law was announced on Twitter, and provides that an employer cannot require or request an employee or applicant to: disclose a user name or password for the purpose of accessing personal… Continue Reading

What Brokers Need to Know to Make States Happy

Posted in State Enforcement

The North American Securities Administrators Association is exceedingly active, coordinating many broker-dealer examinations by a variety of state regulators.  NASAA has found that the greatest number of violations involved books and records, and supervision.  NASAA’s report recommended 10 best practices so that broker-dealers may develop appropriate compliance practices and procedures.  In particular, NASAA recommended developing compliance procedures in,… Continue Reading

You Need to Be Concerned About Analyst Communications under the JOBS Act

Posted in Compliance and Supervision, JOBS Act, Research Analysts, SEC Compliance, State Enforcement

The SEC’s Division of Trading and Markets released guidance on the JOBS Act’s elimination of restrictions on analyst communication and research reports concerning initial public offerings of emerging growth companies. The real quandary that the guidance addressed was related to the Elliot Spitzer settlement between regulators and major investment banks announced in 2003.  This settlement required strict firewalls… Continue Reading

You Have to Make Sure Your Private Equity Firm Has D&O Coverage When Responding to Subpoenas

Posted in Compliance and Supervision, Federal and State Criminal Activities, Hedge and Private Equity Funds, SEC Enforcement, Securities Litigation, State Enforcement

Private equity companies have recently been hit with a barrage of regulatory subpoenas. Responding to these subpoenas may cost the private equity firms to expend millions of dollars.  These entities should have D&O liability insurance.  Initially, the entity must make sure that responding to such a subpoena falls within the definition of a claim.  Some policies may… Continue Reading

Like a Good Neighbor Hedge Fund Insurance Coverage Will Be There, No, Not Unless You Make Sure

Posted in Federal and State Criminal Activities, Hedge and Private Equity Funds, SEC Enforcement, State Enforcement

This blog entry about hedge fund insurance coverage almost sounds like a car insurance commercial.  Sadly, both are critical in today’s modern society. Given the current regulatory environment, volatile market conditions, and the public perception of the industry, hedge funds face enormous risk in doing business.  Hedge funds should carry both D&O and E&O Liability Insurance to protect directors, officers, managers and the… Continue Reading

Investment Advisers Wary of State Civil and (Gulp!) Criminal Action

Posted in Federal and State Criminal Activities, Investment Adviser Regulation, State Enforcement

State securities regulators are going after investment adviser firms with a vengeance, including, but not limited to, seeking prison time for those who violate the their securities laws. A recent NASAA report indicated that investment adviser actions nearly doubled from the previous year.  In fact, these actions comprised approximately 15% of all state securities enforcement actions.  Criminal actions also rose… Continue Reading

ABA Seventh Annual National Institute on Securities Fraud

Posted in Dodd-Frank, Federal and State Criminal Activities, SEC Enforcement, State Enforcement

With the east coast in the midst of Hurrican Sandy, I am sure we are all thinking about a nicer place right now.  Apparently, the Seventh Annual National Institute on Securities Fraud is November 15-16, 2012 in New Orleans. For more information and to register, call 800-285-2221 or log on to:  http://www.ambar.org/sfr2012.

Hooray for New Jersey!!! More RIAs mean more work for Regulators

Posted in Dodd-Frank, Investment Adviser Regulation, State Enforcement

For those who believe that the Garden State’s greatest contribution to the securities industry is that Snooki of Jersey Shore fame does not practice in the field, think again. In the past, we have blogged that the Dodd-Frank Act would require the shifting of numerous registered investment advisors from SEC oversight to state oversight.  The results are… Continue Reading

Lawyer Full Employment Act – Insider Trading, Hedge Funds and the FCPA

Posted in Broker-Dealer Regulation, Compliance and Supervision, Federal and State Criminal Activities, Financial Industry Trends, Hedge and Private Equity Funds, JOBS Act, SEC Enforcement, Securities Registration, State Enforcement

Recently, the Department of Justice and the Federal Bureau of Investigation indicated that they are working on enough insider trading cases regarding the hedge fund industry to take them five years or more to complete.  This clearly indicates that the DOJ and FBI are going to continue to find insider trading actions with hedge funds. … Continue Reading

MSRB Rules Changes Allow For Risk-Based Exams

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, PCAOB Enforcement, Registered Representatives, SEC Compliance, SEC Enforcement, State Enforcement

The SEC approved a number of rule changes promulgated by the MSRB to facilitate risk-based examinations for participants in the municipal securities industry.  These municipal securities industry participants are, generally, FINRA members.  In particular, the new rules, G-9 and G-16, relate to record preservation and periodic examinations, respectively.  It is believed that these new rules will… Continue Reading

PSST!!! Want to Save Money on Your Legal Bills? Read on. . .

Posted in CFTC Enforcement, Federal and State Criminal Activities, FINRA Compliance, FINRA Enforcement, Intra-Industry Arbitrations, NFA Enforcement, PCAOB Enforcement, Public Customer Arbitrations, SEC Compliance, SEC Enforcement, Securities Class Actions, State Enforcement

Late last week, one of my colleagues sent me an e-mail where he copied 8 other people, half of them I could not identify if my life depended upon it.  I then heard about the person who had a Twitter account with over 17,000 follwers, and was now being sued by his former employer over ownership of the account–… Continue Reading

Investment Advisors and Broker-Dealers Use of Social Media – Beware!!

Posted in Broker-Dealer Regulation, CFTC Compliance, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement, State Enforcement

Although the use of social media has been embraced by many industries, it is of particular concern for investment advisors and broker-dealers. In many situations, the use of these outlets touch upon several areas.  For investment advisors and broker-dealers, the advertising requirements under the Investment Advisors Act of 1940 and certain Securities Exchange Act of… Continue Reading

SIFMA Tells its Membership Be Careful with Expert Networks

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Hedge and Private Equity Funds, SEC Compliance, SEC Enforcement, State Enforcement

The Securities Industry and Financial Market Association (“SIFMA”) indicated to its membership that those who engage expert networks – entities referring paid industry professionals to third parties for fees – should have in place policies, procedures, and training for their employees or others who engaged those services.  These expert networks have drawn regulatory attention, especially… Continue Reading

Josh Horn’s Ponzi Scheme Response Road Map

Posted in CFTC Compliance, CFTC Enforcement, Federal and State Criminal Activities, FINRA Compliance, FINRA Enforcement, NFA Enforcement, PCAOB Enforcement, SEC Compliance, SEC Enforcement, State Enforcement

My colleague, Josh Horn, has written an amazing article that should be on every compliance officer’s desk.  It details methods for investigating and responding to ponzi schemes.  In this day and age, we are met with another Ponzi scheme occurring or being uncovered almost every day.  Josh’s article is an exceptional primer since it details… Continue Reading

Securities Podcast with Ernest Badway

Posted in Broker-Dealer Regulation, CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Hedge and Private Equity Funds, Intra-Industry Arbitrations, Investment Adviser Regulation, NFA Enforcement, PCAOB Enforcement, Public Customer Arbitrations, Registered Representatives, Sarbanes-Oxley, SEC Enforcement, Securities Class Actions, State Enforcement

Thought you might be interested in a recent podcast I did concerning my securities law practice.  http://web.me.com/cordpar/Client_Development_Tips/Law_Consulting_Coaching_Podcast/Entries/2011/10/28_Developing_a_Securities%2C_White_Collar_and_Complex_Litigation_Practice.html

Potential Federal Legislation to Register Behind the Scenes Corporate Principals

Posted in Compliance and Supervision, Federal and State Criminal Activities, State Enforcement

Recently, a bipartisan bill was introduced in the United States Senate that would require states to obtain the identity of persons who act behind corporations.  Essentially, this legislation would end the practice of unidentified persons forming corporations and remaining invisible.  In particular, the legislation is designed to prevent hidden and faceless persons from running or… Continue Reading