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In a stark 3-2 vote along political lines, the SEC announced today that it was proposing new rules relating to finders. Essentially, if the proposed rules are, ultimately, approved, the SEC will sharply change the position it has maintained for over 8 decades, allowing unregistered finders to sell securities to the investing public while receiving
FINRA’s National Adjudicatory Counsel (“NAC”), recently, affirmed a disciplinary panel decision significantly sanctioning a broker-dealer for paying unregistered persons and entities. See https://www.finra.org/sites/default/files/2020-07/NAC_2014042606902_Silver-Leaf_062920.pdf.
FINRA alleged, among other things, that a broker-dealer paid transaction-based compensation to “unregistered finders,” and non-registered entities owned by its registered persons. Ultimately, the NAC agreed that, over a 3 year period,
Although we are certain that Shakespeare never had to deal with the vagaries of Regulation BI, we do, and, in a series of questions relating to Regulation BI, the SEC Staff made it abundantly clear that, if you are a broker-dealer and not also a registered investment adviser, you cannot use the term “adviser” or
Recently, a REIT sought to avoid using a broker-dealer in a distribution. Woe, onto those who seek to avoid the broker-dealer, especially when it leads to a SEC investigation and enforcement action.
The REIT charged a 3% commission as part of its sales process, and used its website, social media, and radio ads. These commissions
Most brokers despise the fact that they need to re-take their examinations if they are not employed with a broker-dealer for 2 years or if they are not associated with a member firm. Now, FINRA comes to the rescue with a new proposal to permit registered representatives to avoid re-taking their exams for up to
At Fox Rothschild, we are constantly advising clients regarding the peril of engaging in the securities industry without the proper license. In fact, we have developed materials to provide our clients with information about the process. See http://www.foxrothschild.com/content/uploads/2016/10/e-book-Horn-Badway-McCoy-Broker-Dealers-Registered-Investment-Advisers-and-Commodities-Futures-Registered-Entities-October-2016.pdf.
A recent case before the SEC has only confirmed this advice. The SEC barred a person
The SEC recently announced that an equity advisory firm and its owner agreed to pay more than $3.1 million to resolve charges that they improperly engaged in brokerage activity, as well as charging fees without registering as a broker-dealer. In other words, the firm acted like a broker-dealer but never bothered to register as one.
Over the years that I have defended broker-dealers and investment advisors, a more robust overview of outside business activity (OBA) disclosures would have gone a long way to disprove a number of claims. So where did these firms go wrong?
The biggest issue that I have seen is a firm’s willingness to take the OBA
As you may know, FINRA, last April, launched a senior helpline to address issues pertaining to senior investors. According to recent reports, FINRA received calls on many different issues such as how to read an account statement up fraud targeted to senior investors.
FINRA has reported that some of these calls resulted in follow-up calls
