Ana-Maria Ignat

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In a case reminiscent of the “breakpoint” enforcement actions brought 10 years ago by securities regulators, the SEC recently found that a registered investment adviser and broker-dealer overcharged clients because it improperly calculated advisory fees. According to the SEC’s settlement order, the firm offered breakpoint discounts designed to reduce advisory fees payable by clients who increased their assets in certain investment programs.  In particular, the firm permitted clients to aggregate balances in certain related family…
In its recently issued 2014 Regulatory and Examination Priorities Letter, FINRA stated that cybersecurity remains a priority given the ongoing cybersecurity issues reported across the financial services industry, including the increasing frequency and sophistication of attacks targeting the nation’s largest financial institutions. The securities industry watchdog continues to be concerned with the integrity of firms’ infrastructure and the safety and security of sensitive customer data. Broker-dealers are well-advised to ensure that their data security systems…
The SEC should put more of its efforts into pursuing regulatory violations, such as failure to supervise, instead of trying to pursue fraud theories on weak facts, according to an SEC Commissioner. In his November 7, 2013 remarks to the FINRA Enforcement Conference, SEC Commissioner Daniel Gallagher observed that, in some cases, the Commission chooses to pursue weaker, non-scienter fraud charges against an entity rather than pursuing a cleaner regulatory violation against both the entity…
The SEC has provided some much-needed clarity on the issue of when broker-dealer compliance or legal personnel may be considered to be supervisors.  On September 30, 2013, the Division of Trading and Markets (the “Division”) issued a set of eight FAQs providing guidance relating to potential liability of Chief Compliance Officers, and other compliance and legal personnel at broker-dealers under Sections 15(b)(4) and 15(b)(6) of the Securities Exchange Act of 1934.  Broker-dealers should carefully review…
Having issued a new suitability rule and explicated it for the industry, on September 25, 2013, the Financial Industry Regulatory Authority (FINRA) took the next step and issued Regulatory Notice 13-31 (“Notice”), providing practical advice to member firms about how it will be examining for compliance with the rule, some findings about failures to comply and a set of best practices for compliance.  The good news is that FINRA’s examinations have found that firms for…
On September 17, 2013, the Securities and Exchange Commission (SEC or “Commission”) announced settled enforcement actions against 23 firms for short selling in violation of Rule 105 of Regulation M, which limits the ability of firms, in the absence of an exception, from participating in firm commitment offerings after short selling those same stocks. Andrew J. Ceresney, Co-Director of the SEC’s Division of Enforcement, stated that their efforts will continue to focus on these violations:…
The SEC recently finalized amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act relaxing prohibitions against general solicitation in certain private offerings of securities implementing Section 201(a) of the Jumpstart Our Business Startups Act (“JOBS Act”), while adopting bad actor disqualification provisions for all private placements under Rule 506 implementing Section 926 of the Dodd-Frank Act.  Both of these rule amendments will be effective on September 23, 2013. Aside from…
For two years, the Public Company Accounting Oversight Board (PCAOB) has been reviewing the work of auditors of broker-dealers, with a view to assessing their work and enabling the PCAOB to develop a permanent program for inspection of broker-dealer audits.  Last week, the PCAOB issued its second progress report on this interim inspection program.  For broker-dealers, PCAOB’s report provides a useful preview of the issues on which their auditors will be increasing their focus in…
As hurricane season approaches, the securities and commodities industries’ principal regulators are effectively encouraging firms to do the equivalent of putting up storm shutters, stocking up on batteries and bottled water, and installing generators. The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the Commodities Futures Trading Commission’s (CFTC) issued a staff advisory on business continuity and disaster recovery planning.  This advisory follows a joint review of the effects of Hurricane…
The STOCK Act could spell trouble for investors who rely on the political intelligence industry, according to panelists at a recent ABA event. Stephen Cohen of the SEC’s Enforcement Division warned that the Act, by imposing a fiduciary duty on members and employees of Congress, further exposes investors to insider-trading liability. Even those recipients two or three times removed from the original source invite the SEC’s scrutiny. But no one knows how rigorously the SEC…