Securities Compliance Sentinel

Analysis of cutting-edge securities industry issues

Latest from Securities Compliance Sentinel

Ever wonder what it’s like to argue in front of the Supremes? Fox partner Ernest E. Badway will moderate a forum with two Supreme Court advocates – Robert G. Heim and Howard Meyers – that will offer a fascinating glimpse into one of the most intense experiences in the practice of law.  The program will take place on January 3, 2019, from 12 p.m. to 1 p.m. E.S.T., and focus on their recent high court…
We wanted to announce that Ernie Badway has taken over the authorship of Chapter 7, Proxy Regulation, in Lexis-Nexis Matthew Bender’s Federal Securities Exchange Act of 1934 treatise: https://store.lexisnexis.com/products/federal-securities-exchange-act-of-1934-skuusSku10509.  His work will be available on November 26, 2018, just in time for the holiday season!…
Acknowledging the self-promotion aspect of this blog, we wanted to invite you to attend Josh Horn’s seminar at the NSCP National Conference in Atlanta.  Josh’s presentation is on Monday, October 29, 2018, at 1:55 p.m. and lasts 75 minutes.  Josh, along with Tanya Kerrigan, General Counsel & CCO, Boston Advisors, will be speaking on “Testing the Written Policies & Procedures Lab.”  We invite all to join Josh and Tanya for this very interesting program. Conference information may be…
Just this week, a United States District Judge for the Eastern District of New York told a defendant in a criminal case that he was out luck with the claim there was no securities fraud because he was selling  digital tokens.  See United States v. Zaslavskiy, Case Number 1:17-cr-00647 (E.D.N.Y.). The defendant tried to argue that the digital tokens were not securities.  The court was simply not buying what the defendant was now selling.  The case involved claims the defendant…
A year in the making, FINRA announced in late July 2018, that it had completed the reorganization of its enforcement program.  See the FINRA website.  Coupled with the consolidation was the creation of 2 new units: the Office of the Counsel to the Head of Enforcement and the Investigations Unit.  FINRA’s stated goal was to ensure consistency in its enforcement program while maintaining expertise in a number of areas. In particular, over 150 attorneys…
In a very interesting webcast, the FINRA staff discusses how FINRA rules are made and reviewed.  See http://www.finra.org/industry/podcasts/how-finra-rules-get-made-and-reviewed.  Although it will not reach the level of Schoolhouse Rock (as the FINRA staff seemingly hopes it will), it is an excellent discussion of the process, and should be considered by all those in the securities industry, or, at the very least, those regulated by FINRA.…
A chief compliance officer (“CCO”) for a registered investment adviser (“RIA”) found himself barred from any compliance or supervisory role in the future because he willfully refused to fix a number of compliance issues.  See https://www.sec.gov/litigation/admin/2017/34-82397.pdf.  The RIA had conducted a review that uncovered numerous compliance problems.  Despite having notice of the results of this review, the CCO simply ignored it, and did not address any of the problems, including, among other things, the failure to…
Most FINRA arbitration awards are unanimous.  However, once in a while, we have an interesting set of facts that results in a dissent, and, in the almost unheard of cases, we have an outright attack on the entire FINRA Dispute Resolution system as well as the FINRA staff itself.  Such was the case in Hasko v. Morgan Stanley Smith Barney LLC, et al.  See Hasko v. Morgan Stanley Smith Barney LLC, et al., FINRA Dispute…
We are regularly approached by both our RIA (and BD too) clients, who inquire, usually around election time, how they should make political contributions. Our advice is usually do not make the political contribution and you can blame your lawyer! However, those persons, ignoring that advice, should be concerned that the SEC, recently, fined an investment adviser for violating the Investment Advisers Act of 1940’s pay-to-play rule prohibiting an RIA from accepting compensation for 2…
Securities attorneys routinely are asked by people in the securities industry a form of this question: “how do I get rid of the marks on my license.”  Typically, registered representatives are talking about the fact of life in the securities industry where every time some customer makes a claim, regardless of how baseless it may be, it will end up on the person’s CRD record.  Once there, it is nearly impossible to expunge. Nonetheless, FINRA has developed over the years a process whereby…