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
Broker-Dealer Regulation
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…
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.…
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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SEC Orders Equity Exchanges and FINRA to Modernize Consolidated Market Data
On May 6, 2020, the U.S. Securities and Exchange Commission (“SEC”) issued an order that required equity exchanges and FINRA to submit a new National Market System (“NMS”) plan with a modernized governance structure for the production of public consolidated equity market data and the dissemination of trade and quote data. As explained in its order, the SEC hopes that a consolidation of equity market data systems will help to eliminate duplicative systems and reduce lags in data dissemination as well as data inaccuracies.…
SEC Approves MEMX as a new National Securities Exchange
On May 4, 2020, the U.S. Securities and Exchange Commission (“SEC”) approved MEMX LLC (“MEMX”), standing for “Members Exchange,” as a new national securities exchange under Section 6 of the Securities Exchange Act of 1934. According to the MEMX website, the investors in MEMX include global financial institutions, comprised of online retail broker-dealers, global banks and financial services firms, and global market makers. MEMX will operate a fully automated electronic order book, and will not operate a physical trading floor. Similar to other national securities exchanges, only broker-dealer members of MEMX and entities that enter into market access arrangements with members will have access to the MEMX system. As a national securities exchange, MEMX will be a self-regulatory organization and will be responsible for oversight of its members.
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SEC’s Use of Trading Suspensions During the COVID-19 Pandemic and Considerations for Issuers and Broker-Dealers
The SEC has the authority under the Securities Exchange Act of 1934 to suspend trading in a given security if it deems it necessary for the public’s interest. It has been exercising its authority to suspend trading with increased frequency for potentially false and misleading statements made in connection with the COVID-19 pandemic. The following …