Lauren Bittman

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The SEC voted to publish for comment a proposal to create a single database that would allow regulators to track trading activity in the U.S. equity and options markets, referred to as a consolidated audit trail (“CAT”).  The CAT is being created by a joint plan of eighteen national securities exchanges and FINRA (collectively, the self-regulatory organizations or “SROs”) pursuant to Rule 613 of Regulation NMS under the Securities Exchange Act of 1934. Plans for the…
In a recent regulatory notice, FINRA Notice 16-08, FINRA noted that its review of securities offering documents has revealed instances in which broker-dealers have not been complying with the contingency offering requirements of Rules 10b-9 and 15c2-4 under the Securities Exchange Act of 1934.  The most common type of contingency offerings are referred to as “all-or-none” or “part-or none” offerings that require all or a certain amount of the securities to be sold for…
On January 11, 2016, the SEC published its Office of Compliance Inspections and Examinations’ (“OCIE”) 2016 exam priorities.  The exam priorities address issues involving a variety of financial institutions, including investment advisers, broker-dealers, transfer agents and clearing agencies.  OCIE selected its priorities after discussions with the SEC’s Commissioners, the SEC’s policy divisions and regional offices, the Division of Enforcement, the SEC’s Investor Advocate and other regulators.  As with the 2015 exam priorities, the 2016…
The SEC charged two Bitcoin mining companies and their founder with operating a Ponzi scheme to defraud investors.  “Mining” for virtual currency means applying computer power to solve complex equations that verify a group of transactions in that virtual currency.  The first computer (or collection of computers) to solve such an equation is awarded new units of that virtual currency. The SEC’s complaint, filed in federal court in Connecticut, alleged that through his Connecticut based…
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) released a national exam program risk alert concerning investment advisers and funds that outsource their chief compliance officers (“CCOs”).  Rule 206(4)-7 under the Investment Advisers Act of 1940 (the “Advisers Act”) and Rule 38a-1 under the Investment Company Act of 1940 (the “Investment Company Act”) require registrants to designate an individual as CCO that is responsible for administering the policies and procedures of the firm. OCIE…
  The SEC recently adopted rules that allow companies to offer and sell securities through crowdfunding.  The Jumpstart Our Business Startups Act (the “JOBS Act”), enacted in 2012, established a regulatory framework for startups and small businesses to raise capital through securities offerings using crowdfunding. The SEC’s rules that implement this framework, referred to as Regulation Crowdfunding, govern the offer and sale of securities under new Section 4(a)(6) of the Securities Act of 1933.  In…
The SEC provided an overview of significant actions that were brought by the SEC’s Division of Enforcement in 2015.  The SEC filed 807 enforcement actions in the 2015 fiscal year and obtained orders totaling approximately $4.2 billion in disgorgement and penalties, slightly higher than the 755 enforcement actions and orders totaling $4.16 billion in disgorgement and penalties brought in the 2014 fiscal year. The SEC noted that it was a year of many first-of-their-kind cases…
The Financial Industry Regulatory Authority (“FINRA”) has issued Regulatory Notice 15-33, which provides guidance on prudent practices that broker-dealers should consider and implement in order to effectively manage liquidity.  In its notice, FINRA stressed that failure to manage liquidity has contributed to firm failures as well as wide spread systemic crises. The notice described a review that FINRA recently conducted of the policies and procedures of 43 firms related to managing liquidity needs in a…
The SEC has approved amendments to FINRA Rule 1250 that permit the Regulatory Element of a broker-dealer’s continuing education program to be fulfilled through a web-based platform.  The continuing education requirements under FINRA Rule 1250 are broken up into two categories, a Firm Element and a Regulatory Element. The Firm Element requires broker-dealers to establish a training program, in accordance with its annual Needs Analysis and Written Training Plan, to keep covered registered persons up…