Header graphic for print
Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

Tag Archives: fiduciary duty

“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

The Thirteen Dirty Secrets That A Fraudster Does Not Want You To Know?

Posted in Compliance and Supervision, Corporate Governance, Dodd-Frank, Registered Representatives

The late great comedian, George Carlin, was made famous by his routine, “The Seven Dirty Words You Can Never Say On Televisions”.  Likewise, fraudsters do not want compliance personnel to ever mention the 13 common dirty traits that may uncover a fraud. Although not as funny as George Carlin, focusing on these traits may be… 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.

Who Else Wants To Avoid Being Considered A Supervisor?

Posted in Broker-Dealer Regulation, Corporate Governance, Dodd-Frank, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

 A simple review of FINRA’s enforcement proceedings demonstrates a new norm; compliance officers are being held accountable as supervisors for rules violations.  How can a compliance officer avoid being held accountable as a supervisor? The best way for compliance to insulate yourself is to make sure that there are clear divisions between compliance and supervisory… Continue Reading

Will The SEC Address Its Cost-Benefit Analysis?

Posted in Financial Industry Trends, SEC Organization, SEC Structure

The SEC’s obligation to review its proposed rules through a cost-benefit analysis has been under fire for quite some time.  More recently, the SEC has been especially criticized in failing to apply this approach in a meaningful way when it came to its review of a potential uniform fiduciary duty standard for those who provide… Continue Reading

Can The SEC And Department Of Labor Live With One Fiduciary Duty

Posted in Compliance and Supervision, Dodd-Frank, Financial Industry Trends

The Department of Labor’s head of the Employee Benefits Security Administration recently announced that the DOL is going to coordinate with the SEC on fiduciary policy, but that the DOL and SEC will maintain and pursue their own regulations.  This statement has garnered confusion and concern by many in the industry, as it should. The… Continue Reading

FINRA Seeks Expansion At A Time Of Contraction

Posted in Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement, SEC Organization

Chairman Ketchum is seeking new areas of growth for FINRA.  At FINRA’s annual meeting, Ketchum stated that he wanted to see FINRA take on the role as regulator for both retail professionals and institutions.  He also wants greater market transparency through the use of audited quote and trade systems.  Ketchum stated that he wants to see investors increase… 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

Beware of the Arbitration Waiver Issue

Posted in Intra-Industry Arbitrations, Public Customer Arbitrations

The 11th Circuit Court of Appeals recently vacated a FINRA arbitration panel arbitration award because the panel had failed to decide if the securities firm had waived its right to arbitration by engaging in litigation.  The arbitration arose out of a bond offering and a dispute between underwriters.  Ultimately, there was an arbitration award that was… Continue Reading

The SEC’s Large Trader Reporting Rule Is Now On-Line

Posted in Broker-Dealer Regulation, Compliance and Supervision, FINRA Compliance, FINRA Enforcement, Hedge and Private Equity Funds, Investment Adviser Regulation, Registered Representatives, SEC Compliance, SEC Enforcement

The new SEC Rule 13h-1, the large trader reporting rule, became effective.  Starting on April 30, 2012, broker dealers will be required to maintain records of large trader trading, similar to records maintained relating to the electronic blue sheet system.  Further, supplemental information will also be required. This new large trader rule could implicate investment advisers, banks, broker… Continue Reading

Enforcement Division Announces Private Equity Firm Initiative

Posted in Broker-Dealer Regulation, Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Enforcement

The Co-Chief of the SEC’s Asset Management Enforcement Unit, recently, informed the public that the Staff will be paying particular attention to private equity firms. The SEC Staff will be using the information it compiled from its risk assessment review of private equity firms in this endeavor.  These reviews will take note of valuations as well as… 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

Beware of Brokerage Firm Arbitrations. . . Tardiness is Unacceptable

Posted in Intra-Industry Arbitrations, Public Customer Arbitrations

The United States District Court for the Southern District of Florida recently determined that, although investors had signed a brokerage agreement after purchasing certain securities, those investors still needed to arbitrate the matter. Certain investors had filed a lawsuit against a brokerage company alleging that they had been defrauded regarding certain stock purchases.  These stock… Continue Reading

SEC Issues guidelines for Form PF Reporting

Posted in Broker-Dealer Regulation, CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Dodd-Frank, Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

The SEC published a small entity compliance guide for investment advisers relating to the new Form PF.  These new reporting requirements affect SEC registered investment advisers with at least $150 million dollars in assets under management.  Some of these new guidelines will also apply to CFTC commodity pool operators and commodity trading advisers. The SEC… Continue Reading

Fox Guarding Hen House? Chamber of Commerce proposals for SEC Overhaul.

Posted in SEC Organization, SEC Structure

Although the report submitted by the United States Chamber of Commerce regarding an overhaul of the SEC will probably have no immediate effect, it does present several interesting specific recommendations to improve the SEC.  In particular, its 28 recommendations include adding two more commissioners to the SEC and having three separate subcommittees cast with different… Continue Reading

It’s Coming . . . Investment Advisers Will Have to Register

Posted in Compliance and Supervision, Dodd-Frank, Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

We want to take this opportunity to urge all investment advisers for private equity and hedge funds, as well as venture funds, leveraged buyout funds and the like, that the time the SEC permitted for these entires to transition to registered investment adviser status will expire on March 30, 2012.  That is, registration will be required… 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

SEC Approves FINRA’s Telemarketing Rule

Posted in Broker-Dealer Regulation, FINRA Enforcement

In late January, the SEC approved FINRA’s Rule 3230 relating to telemarketing, essentially, adopting FINRA’s proposed rule. This new rule will remove NYSE Rule 440A and its interpretive material.  However, FINRA Rule 3230 will include several provisions from the NYSE Rule 440A, including, but not limited to, certain caller identification rules.  The SEC also commented… Continue Reading

SEC Rule Making in 2012

Posted in Broker-Dealer Regulation, CFTC Enforcement, Compliance and Supervision, Dodd-Frank, Financial Industry Trends, Hedge and Private Equity Funds, Investment Adviser Regulation, Registered Representatives, SEC Compliance

Although the SEC’s rulemaking deferral regarding the uniform fiduciary standard has gained much press, the SEC’s other rulemaking initiatives pursuant to the Dodd-Frank Act march on, and will have a significant effect on broker dealers and investment advisors in the upcoming year. In particular, the SEC has scheduled a joint SEC-CFTC report to Congress on stable value contracts, and the adoption of rules… 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

Investor Literacy . . . Does It Exist?

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

As part of the requirements of the Dodd-Frank Act, the SEC was compelled to seek information from the public as to retail investors’ financial literacy.  The SEC issued a release asking for comments on the type of information retail investors use in choosing financial advisors or brokers.  The SEC also sought information on investor purchases, … Continue Reading

New Businesses and Obtaining Money

Posted in Corporate Governance, Hedge and Private Equity Funds, Securities Registration

Often, we are asked to consider assisting clients in obtaining funds for their start-up businesses.  Before asking for money, new businesses must have an understanding as to their business plan, need funding, and disposition of said funds.  Accordingly, new businesses must develop an understandable business plan.  Further, these entrepreneurs must consider the amount of capital necessary… Continue Reading

Investment Advisors Must Address Social Media in their Compliance Programs

Posted in Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Enforcement

Over the last several weeks, the SEC staff made it abundantly clear that registered investment advisors must address social media communications in their compliance programs. In particular, investment advisors should consider the frequency of monitoring content.  The SEC staff said that “after the fact” review may not be sufficient.  That is, the SEC may, ultimately, require that… Continue Reading