FINRA has placed a renewed focus on “firm culture” and its “profound influence on how a broker-dealer conducts its business,” as stated in its February targeted exam letter, titled “Establishing, Communicating and Implementing Cultural Values.” The letter aligns with FINRA’s 2016 Regulatory Examinations and Priority Letter, which states that “firm culture, ethics and conflicts of … More Running a Broker-Dealer Firm: What’s Culture Got To Do With It?
On December 16th, the Financial Industry Regulatory Authority (FINRA) posted the final report prepared by FINRA’s Arbitration Task Force, which was assigned the responsibility of reviewing FINRA’s arbitration and mediation forum for areas of improvement. The task force, formed in July 2014, consisted of 13 individuals from the public and industry sectors who met regularly … More Can parties expect changes to FINRA Arbitration? Arbitrators can.
Another situation that may arise between the tipper and original tippee is one where the tippee is a relative or significant other of the tipper. In such a scenario, the Securities and Exchange Commission (SEC) seems to be pushing the limits of the personal benefit test and suggesting that under Dirks an exchange of information in … More Happy Anniversary Newman – Part III
When does a friendship give rise to personal benefit? S.E.C. v. McGinnis – order denying Defendants’ MSJ entered on Sept. 23, 2015 The SEC alleges that McGinnis, the tipper, received a personal benefit from Pugatch, the tippee, because Pugatch provided McGinnis “with a number of benefits in exchange for material nonpublic information including his friendship, … More Happy Anniversary Newman – Part II
In December 2014, the Second Circuit’s decision in U.S. v. Newman addressed two major issues that have changed the analysis in insider trading cases. 773 F.3d 438 (2d Cir. 2014). First, it substantially reduced the potential liability of remote tippees by holding that a tippee cannot be convicted unless the tippee “knows of the personal benefit received … More Happy Anniversary Newman! Part I
On November 20, 2015, the Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE) stated in a speech that OCIE would begin conducting routine examinations of “exempt reporting advisers” that file with the SEC. These remarks were made in a speech to the ABA Hedge Fund Sub-Committee during the ABA’s Business Law Section … More SEC Staff May Begin Routine Inspections of Exempt Reporting Advisers
In response to an increase in the number of registered investment advisers outsourcing their compliance function to unaffiliated third parties, the SEC’s Office of Compliance, Inspections and Examinations (OCIE) created an Outsourced CCO Initiative and conducted 20 inspections of advisers specifically focused on identifying areas of concern and weakness in such arrangements. On November 9, … More The SEC Staff Issued Guidance on Outsourcing Compliance Functions – 5 Questions to Ask
On November 4, 2015, the Director of the SEC’s Division of Enforcement discussed the Division’s perspective on the role of a registered investment adviser’s chief compliance officer (CCO) and how the Division determines whether to charge a CCO in connection with wrongdoing or compliance failures by his or her firm. This speech is a “must … More SEC’s Director of Enforcement Provides Guidance on CCO Liability
Last week the SEC approved Title III, thereby giving non-accredited investors (those who have a net worth of less than $1 million, including spouse, and those who earned less than $200,000 annually or $300,000 with spouse in the last two years) the opportunity to invest in start-up companies in early 2016. Ideally, opening the gates to non-accredited investors will … More Top 10 Things to Know About the SEC’s Equity Crowdfunding Rules
On October 26, 2015, the Securities Exchange Commission (SEC) announced that it will consider whether to adopt rules and forms under Title III of the Jumpstart Our Business Startups (JOBS) Act, what has become known as the “Crowdfund Act.” Three years ago, President Obama signed into law the JOBS Act, which is comprised of seven … More It’s Time to Open the Gates for Equity Crowdfunding