Between November 2017 and November 2021, three individuals actively solicited investments in securities, including providing marketing materials and advising on the merits of the investment, and receiving commissions for their sales. In May 2022, the U.S. Securities and Exchange Commission (SEC) halted the activities of the individual defendants involved in May 2022, for operating a
FINRA Emphasizes Reg BI Standards for Complex Product Recommendations
In the blitz of regulatory and financial developments that have made headlines throughout the first quarter of 2023, a recent FINRA enforcement action serves as a reminder to both broker-dealers and their representatives that Regulation Best Interest (Reg BI) remains an area of focus for FINRA. This action underscores how important it is for broker-dealers
Market Turmoil Caused by “Run on the Banks” Leads to Trading Halts
On March 10, 2023, volatility resulting from concerns regarding runs on certain banks triggered trading halts in those banks’ stocks on the New York Stock Exchange (NYSE) and Nasdaq. March 13, 2023, saw additional trading halts on bank stocks. This post provides a brief explanation of the Limit Up Limit Down (LULD) rules that
DOJ Brings First Criminal Charges Stemming from Use of Rule 10b5-1 Trading Plan
On March 1, 2023, the U.S. Department of Justice (“DOJ”) unsealed an indictment against the CEO of a publicly traded health care company (the “Executive”) relating to charges of an insider trading scheme. The indictment represents the first time that DOJ has brought criminal insider trading charges stemming from an executive’s use of a Rule
FINRA Issues Update on Brokers’ Social Media Practices and Privacy
In February 2023, FINRA provided an update on its review of member broker-dealer firms’ practices for their social media practices and related privacy protection. In it, FINRA summarized practices it has observed to date to help firms evaluate whether their practices and supervisory systems are reasonably designed to address risks related to social media influencer
FINRA Repeats Warnings of Imposter Websites
The Financial Industry Regulatory Authority (“FINRA”) issued two regulatory notices in August 2020 with warnings of imposter websites (Regulatory Notice 20-30 and Regulatory Notice 20-27). In Regulatory Notice 20-30, FINRA warned that it has received notifications from several member firms that malicious actors are using registered representatives’ names and other information to create imposter websites that appear to be the representatives’ personal sites. FINRA also reported that the malicious actors were calling and directing potential customers to use the imposter websites and, in turn, may be responding through imposter-based email addresses that could contain malware or imbedded phishing links. Regulatory Notice 20-30, raises concerns that imposters may be using these sites to collect personal information from the potential customers to commit financial fraud.
FINRA Issues Guidance on Virtual Business Entertainment
With the influx of virtual business meetings resulting from the pandemic, FINRA recently issued an FAQ on how non-in-person events should be treated pursuant to entertainment, gifts, and noncash compensation rules. Specifically, FINRA addressed whether it is allowable for an associated person to host virtual business entertainment events or video conferencing with the employees of an institutional customer or third-party broker-dealer and provide food and beverage to be consumed during the event. The guidance is limited to interactions with representatives of institutional customers.
FINRA and CFTC Staff Issue COVID-19 Advisories on Commodity-Linked ETPs and Funds
FINRA and the CFTC each issued recent advisories on commodity-linked exchange traded products. Directed at retail investors and broker-dealers, the advisories each highlighted certain issues unique to commodity-linked exchange traded products that were recently demonstrated by market reactions to fluctuating oil prices caused by the COVID-19 pandemic. The advisories provided guidance on relevant considerations in
New York State Proposes to Regulate “Finders” as Broker-Dealers
The Investor Protection Bureau of the New York Attorney General’s Office (“IPB”) recently proposed a series of changes to its rules regulating broker-dealers. The proposal would require “finders” in New York to register as broker-dealers and pass broker-dealer examinations. In doing so, IPB would codify its regulation of finders in a manner similar to several other states.
SEC to Amend National Market System Plan Governing Consolidated Audit Trail
On May 15, 2020, the U.S. Securities and Exchange Commission adopted amendments to the national market system plan governing the consolidated audit trail. The release adopts amendments to the CAT NMS Plan to address goals of increasing operational transparency and financial accountability.
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