The Financial Industry Regulatory Authority (FINRA) recently released for comment three regulatory notices that propose amendments to various FINRA rules affecting capital formation. This initiative is part of the comprehensive self-evaluation and improvement initiative that FINRA announced several months ago called the FINRA 360 initiative. The initiative, FINRA's recent request for comment on its engagement efforts and these regulatory notices certainly reflect a new tone.
The District Court for the District of Columbia recently entered a final judgment in National Association of Manufacturers v Securities Exchange Commission (SEC), affirming the prior holding of the US Court of Appeals for the District of Columbia that the so-called 'Conflict Minerals Rule' violates the First Amendment. The SEC has since issued guidance on the effect of this decision.
The Securities and Exchange Commission recently approved the adoption of a new Financial Industry Regulatory Authority rule which, among other things, permits brokers to place holds on disbursements of funds or securities from the accounts of "specified adult" customers. This includes those 65 and older or those 18 and older who the broker "reasonably believes has a mental or physical impairment that renders that individual unable to protect his or her own interests".
The US District Court for the District of Salt Lake City recently granted the Securities and Exchange Commission's request for a preliminary injunction against Traffic Monsoon after complaining that its operation as a web traffic exchange violated the Exchange Act. This represents the first time that a US district court has affirmatively held that Section 929P(b) of the Dodd-Frank Act supersedes Morrison v National Australia Bank Ltd.
The Securities and Exchange Commission recently adopted an amendment to Rule 15c6-1 under the Securities Exchange Act to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date to two business days. This is designed to enhance efficiency, reduce risk and ensure a coordinated and expeditious transition by market participants to the shortened standard settlement cycle.
The Financial Industry Regulatory Authority (FINRA) recently filed with the Securities and Exchange Commission proposed changes to the private placement filer form that FINRA members must complete when submitting private placement filings. The proposed changes will assist FINRA in evaluating the private placement activities of its members and assessing whether members are conducting a reasonable investigation for private placements in which they participate.
A number of bipartisan bills designed to promote capital raising for companies were recently approved by the House Financial Services Committee and the Senate Committee on Banking, Housing and Urban Affairs. The approved bills include the Fair Access to Investment Research Act 2017, the Supporting America's Innovators Act 2017 and the Securities and Exchange Commission Overpayment Credit Act.
In a letter to the Investment Adviser Association, the staff of the Division of Investment Management said that investment advisers acting pursuant to a standing letter of instruction or other similar asset transfer authorisation (SLOA) established by a client with a qualified custodian will be deemed to have custody of client assets for Custody Rule purposes. Nonetheless, the staff will not recommend enforcement action if an adviser, acting pursuant to an SLOA, did not obtain a surprise examination of custody accounts.
A recent cease-and-desist order from the Securities and Exchange Commission illustrates the types of activity and compliance issue that should be causes for concern for registered investment advisers (RIAs) when recommending non-traditional exchange traded funds. The order stated that the RIA wilfully violated the anti-fraud provisions of the Advisers Act and the requirements to maintain policies and procedures designed to prevent violations of the act.
In a recent case, a former investment adviser lost a petition to review and vacate a Securities and Exchange Commission (SEC) administrative law judge's decision relating to the improper use of backtested information. The case is an illustration of how the improper presentation of backtested information can lead to trouble under the SEC's rules and regulations.
The Securities and Exchange Commission (SEC) recently banned the managing member and chief compliance officer of a registered investment adviser from the securities industry for illegally 'cherry-picking' investments among the adviser's managed accounts. The SEC has alleged that the principal made more than $1.3 million in profits from cherry-picking stocks to be allocated to his account versus client accounts.
The Securities and Exchange Commission (SEC) recently approved the National Securities Clearing Corporation's (NSCC's) proposed rule change to accommodate a second business day after the trade date (T+2) settlement cycle. The technical rule changes will help to support the NSCC's prompt and accurate clearance and settlement of securities transactions made by its members. The SEC also approved NYSE Arca, Inc's proposed rule change to accommodate a T+2 settlement cycle.
The Depository Trust Company (DTC) recently adjusted its eligibility procedures to comply with the Internal Revenue Code. For securities to become and remain DTC eligible securities, issuers must now comply with the new procedures. An officer of the issuer must attest to the applicability of compliance and issuers must provide the DTC with dividend equivalent payments.
The New York City Department of Finance recently took the unusual step of disavowing, through an Audit Division pronouncement, two finance letter rulings that permitted the application of the securities broker-dealer sourcing provisions under the New York City unincorporated business tax to an unregistered broker-dealer.