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Cady Bar the Door Insight & Commentary on SEC Enforcement Actions and Related Issues

Category Archives: Broker-Dealers

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SEC Says the Cyber Police Are Coming

Posted in Broker-Dealers, Compliance, Investment Advisers

Pretty soon we’ll all be data privacy lawyers.  The SEC is certainly doing its part to ensure that comes to pass.  Earlier this year the SEC’s Office of Compliance, Inspections, and Examinations announced that its 2014 Examination Priorities included a focus on technology, including cybersecurity preparedness.  On  March 26, the SEC sponsored a Cybersecurity Roundtable… Continue Reading

SEC Sues McGinn Smith Gatekeepers

Posted in Broker-Dealers, Investment Frauds, Parallel Proceedings

If you’re the SEC’s Enforcement Division, suing primary violators is one thing.  Bringing cases against “gatekeepers”, or professionals who allow access to securities markets, can be quite another.  Theories of liability are not always obvious, and often involve searches for evidence of “red flags” that should have been caught before a fraud was allowed to… Continue Reading

How’s Your BCP?

Posted in Broker-Dealers, FINRA

Last week, staff at the SEC, CFTC, and FINRA drew some lessons from Hurricane Sandy and warned broker-dealers and other firms to take steps to prepare themselves for natural disasters that could disrupt their operations.  As government regulators do, they sprinkled in some abbreviations, so if you have a significant market presence, you should get… Continue Reading

Lenny Dykstra Is Open for Business!

Posted in Broker-Dealers, FINRA

On Dealbreaker last week, Bess Levin hilariously reported former baseball player Lenny Dykstra’s release from a California prison after his guilty plea and sentencing for three felony counts – bankruptcy fraud, concealment of assets, and money laundering.  As Levin noted, with his new free time, Dykstra might be available to weigh in on your investment… Continue Reading

SEC Highlights Compliance and Ethics for Broker-Dealers

Posted in Broker-Dealers, Compliance

On Tuesday the SEC held a National Compliance Outreach Program for Broker-Dealers at an open meeting at its D.C. headquarters.  The first panel – titled The Role of Compliance and Ethics – was nominally targeted to broker-dealers, but its lessons could be applied to any businesses under significant regulatory scrutiny. The participants were: Merri Jo… Continue Reading

SEC Ramps Up Its Private Equity Parade

Posted in Broker-Dealers, Investment Advisers, Non-scienter-based Violations, Private Equity

Bruce Karpati, chief of the SEC’s Asset Management Unit, promised us several weeks ago that enforcement actions against private equity firms were about to heat up.  He wasn’t kidding.  Last Monday, the SEC filed two sets of settled administrative proceedings against private equity firms.  We’ll discuss one of them today, and the second in a… Continue Reading

SEC Charges Indian Firms with Acting as Unregistered Broker-Dealers

Posted in Broker-Dealers, Non-scienter-based Violations

On November 27th, the SEC charged four Indian financial services firms with acting as unregistered broker-dealers in the United States.  The firms were accused of providing brokerage services to institutional investors in the U.S. without registering with the SEC as required by Section 15(a) of the Exchange Act.  The SEC censured the firms, who paid… Continue Reading

Saturday Links

Posted in Accounting Fraud, Broker-Dealers, Compliance

Good morning!  Some stories for you to read today: The Legal Times reports that Harvey Pitt says the SEC has been saddled with an impossible job in writing rules to implement the JOBS Act.  At an ABA conference in D.C., he said, ”We’ll see some sort of scandal rise and of course everyone will blame the… Continue Reading

Stories Worth Reading This Morning

Posted in Broker-Dealers, FCPA, FINRA

Among the stories you should consider reading today: FINRA’s Susan Axelrod announced at a PLI panel on Wednesday that FINRA is reviewing conflicts of interest at 14 broker-dealers.  The review seems to be geared toward being sure that registered representatives keep their focus on suitability of the products sold to their customers. This article suggests… Continue Reading

NASAA Identifies Top Broker-Dealer Compliance Violations and Best Practices

Posted in Broker-Dealers, FINRA

On Sunday, the North American Securities Administrators Association released its list of broker-dealer compliance violations and best practices to avoid those violations.  The list is based on a compilation of 236 examinations by state securities examiners from 24 jurisdictions around the United States.  The exams were conducted in the first half of 2012 under the… Continue Reading

FINRA Reminds World about Global Research Settlement

Posted in Broker-Dealers, FINRA

Remember the Global Research Settlement?  It has been somewhat in the news recently.  You might recall that it involved ten huge banks and the, uh, symbiotic relationship between those banks’ research and investment banking arms.  The pattern that had developed worked like this:  equity analysts published favorable coverage of a publicly traded company’s stock, and… Continue Reading

FINRA Expels Biremis Corp. for Anti-Money Laundering Abuses

Posted in Broker-Dealers, FINRA, Non-scienter-based Violations

On July 30th, FINRA expelled broker-dealer Biremis Corporation and permanently barred Biremis’s CEO, Peter Beck, from association with any FINRA member firm in any capacity.  FINRA found Biremis and Beck liable for a host of violations.  FINRA alleged that among other things, Biremis failed to implement an adequate anti-money laundering (“AML”) program, failed to maintain… Continue Reading

3½ Thoughts about the Consolidated Audit Trail

Posted in Broker-Dealers, FINRA, Insider Trading, SEC Structure

On July 11th, the SEC adopted Rule 613, a rule that requires national securities exchanges and FINRA “to jointly submit a comprehensive plan detailing how they would develop, implement, and maintain a consolidated audit trail that must collect and accurately identify every order, cancellation, modification, and trade execution for all exchange-listed equities and equity options… Continue Reading

SEC Charges AXA Advisors with Failure to Supervise

Posted in Broker-Dealers, Investment Advisers, Non-scienter-based Violations

The SEC has brought two failure-to-supervise cases in the last several days.  I’ll cover both in the order of their release. The first of this duo was against AXA Advisors, which failed to supervise a registered representative with the comically villainous name of Leo T. Buggy.  Buggy operated out of a single-representative office in Rock… Continue Reading

SEC Targets Insider Trading Compliance Failures

Posted in Broker-Dealers, Compliance, Insider Trading, Non-scienter-based Violations

In light of Cady’s recent IA compliance gala celebration, I thought I would spend a post discussing In re Janney Montgomery Scott LLC, Admin. Proc. File No. 3-14459 (July 11, 2011), a compliance matter involving a broker-dealer. The case was based in Section 15(g) of the Exchange Act, which requires all registered broker-dealers to establish, maintain,… Continue Reading