As the Coronavirus pandemic continues to sweep through the United States, schools are shuttering for the Fall session, employers are extending remote work plans, and the nation’s healthcare system is preparing for an upward trend in positive COVID-19 cases, hospitalizations and, sadly, deaths. With the rates at which people have suddenly fallen ill and become […]
On August 8, 2020, President Trump took the unusual—and highly controversial—unilateral executive action route to provide limited economic relief to U.S. citizens without the approval of Congress. His actions were in the form of three executive memoranda and one executive order, which are summarized herein.
Lawrence Kamin, LLC is pleased to announce that our decorated colleague, Barry B. Nekritz, has joined a distinguished national group as an appointed Founding Fellow of the American College of LLC and Partnership Attorneys.
The College honors members of the Bar who have substantial experience and have distinguished themselves by devoting their time to advancing LLC, partnership and other unincorporated entity law by writing articles, organizing bar projects, teaching, drafting legislation, or focusing a significant amount of their time and practice on relative matters. The College was created to promote high standards of professional and ethical responsibility, facilitate networking, promote the continuing education of professionals within this practice area, and consult with and support the efforts of international, national, state and local bar associations, government entities and other stakeholder groups with an interest in LLC, partnership and other unincorporated entity law.
Barry is widely recognized as a subject matter expert in the real estate, zoning and development, uniform property, finance, and business entity sections of law. He spends a vast majority of his time guiding clients through complex real estate transactions and serving as trusted business counsel to clients on acquisitions, dispositions and new development of large real estate projects. Read more >
In early June 2020, Congress adopted and the President signed the Payroll Protection Program (“PPP”) Flexibility Act of 2020 (“Flexibility Act”), which was designed to ease some of the strictures and address some of the confusion arising from the PPP. In particular, the Flexibility Act expanded the Covered Period for loan forgiveness from eight weeks […]
Since the passage of the CARES Act on March 27, 2020, and the introduction of the Payroll Protection Program (“PPP”) on April 3, 2020, almost four and a half million businesses, non-profit organizations, and self-employed individuals have received PPP loans totaling some $510 billion. The Department of Treasury and the Small Business Administration (“SBA”) worked […]
On Friday, May 15, 2020, the Small Business Administration began outlining the process for obtaining forgiveness of loans issued pursuant to the Payroll Protection Program, when it issued SBA Form 3508, entitled “Paycheck Protection Program Loan Forgiveness Application” (“Forgiveness Application”). The 11-page document sets forth write papers information and documentation required to obtain loan forgiveness, […]
After Congress’s adoption of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, including the Payroll Protection Program (“PPP”) on March 27, 2020, the Department of the Treasury and the Small Business Administration (“SBA”) issued an Interim Final Rule (“Final Rule”) that governed the implementation of the CARES Act. Since then, the SBA has supplemented […]
Congress created the Paycheck Protection Program (PPP) as a key avenue for economic relief under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Small businesses quickly drew down the $350 billion free grammar checker that Congress set aside for the program, and Congress is in the process of authorizing an additional $310 billion for […]
In the recently-adopted Coronavirus Aid, Relief and Economic Security (CARES) Act, Congress and the President put in place a program designed to introduce cash into the economy and provided greater liquidity for businesses. For many small and mid-sized businesses, the CARES Act provides a direct infusion of capital through the Paycheck Protection Program (PPP). The […]
The linchpin of the recently-adopted Coronavirus Aid, Relief and Economic Security (CARES) Act is the Paycheck Protection Program (PPP)—a program designed to rapidly infuse cash into the U.S. economy through forgivable Small Business Administration (SBA) loans targeted to paying employee expenses. The CARES Act was only adopted on March 27, 2020, and the Department of […]
On Wednesday, April 1, 2020, the U.S. Department of Labor posted a Temporary Rule issuing regulations pursuant to the Emergency Paid Sick Leave Act (“EPSLA”) and Emergency Family and Medical Leave Expansion Act (“EFMLEA”), both part of the Families First Coronavirus Response Act (“FFCRA”). Both the new law and rules are effective as of April 1, 2020.
Under the recently-passed CARES Act, the Federal government created several new programs to protect and bolster the United States economy from the fallout resulting from the COVID-19 pandemic. Perhaps the most important of those programs to businesses is the Paycheck Protection Program (“PPP”), because it provides loans, which can be completely forgiven, to eligible small businesses throughout the United States. The PPP also applies to other entities, including charities.
In addition to the expansion of SBA Section 7(a) loans available to subsidize payroll expenses, as provided in Section 1102, the CARES Act contains provisions (a) that allow eligible employers carrying on a trade or business to receive a refundable tax credit against Social Security taxes imposed under section 3111(a) of the Internal Revenue Code (the “Code”) or Railroad Retirement Tax Act taxes imposed under section 3221(a) of the Code, and (b) permit employers to defer payment of certain payroll taxes for up to two years. Set forth below is a summary of those provisions.
The CARES Act contains provisions that temporarily broaden unemployment assistance and tax rebates to cover more types of individual employees impacted by the Coronavirus pandemic who otherwise may not have been eligible for financial aid prior.
In addition to stimulus payments to taxpayers, expanded unemployment benefits for workers, and tax
relief and loans for businesses, the CARES Act provides tax relief for individual taxpayers, including
expansion of tax benefits for charitable giving.
In the wake of the coronavirus pandemic, the Illinois Department of Commerce and Economic Opportunity (IDCEO) has created three programs offering emergency financial assistance to small businesses. Under these programs, Illinois businesses with fewer than 50 employees can apply for low- interest loans and grants. The first program has an April 1st deadline, so hospitality businesses seeking emergency financial assistance should act immediately.
Illinois Governor J.B. Pritzker has entered Executive Order 2020-10, which becomes effective March 21, 2020. With some exceptions, the Executive Order directs Illinois residents to remain at home and temporarily shutters many Illinois businesses. This Executive Order follows federal action that also affects Illinoisans and employers alike.
On March 14, 2020, the House of Representatives passed H.R. 6201, the Families First Coronavirus Response Act (“FFCRA”), after negotiation with the U.S. Secretary of Treasury. The Senate adopted the bill on March 18, 2020, which the President signed the same day. Under the terms of the legislation, the Act becomes effective no later than April 2, 2020.
The Denmark Tax Authority’s secret billion-dollar settlement in the dividend case with a group of New York backers is assessed by law and tax experts in the United States. Criticism from Lawrence Kamin partner Michael Wise and others is summarized in this TV2 News (Copenhagen, Denmark) article.
In December 2019, Congress enacted the Setting Every Community Up for Retirement Enhancement Act of 2019, or as it’s more commonly known, the “SECURE Act.” The SECURE Act took effect January 1, 2020 and changed many rules that govern your retirement plans and other tax deferred plans. As a result, changes may need to be […]
As of January 1, 2020, numerous changes to the law regarding trusts took effect in Illinois. Herein, we are focusing on the one change we think clients should be most concerned about: A trustee’s duty to inform trust beneficiaries of the existence of the trust and providing them with financial records regarding the trust.
Chances are, you know someone who has been sued. Maybe that someone is you. The fact is, your enviable position as a successful business owner comes with a major downside: You are a potential target for lawsuits (some of which may be frivolous and unfounded) and other attacks that can wreak havoc on your business […]
Disputes often arise among family members when a loved one dies, including the disposition of remains. These disputes are time sensitive. Death certificates must be timely filed and accurately reflect the method of disposition. Failure to do so could result in regulatory problems for involved parties. The Illinois Disposition of Remains Act, 755 ILCS 65/1 […]
Under Illinois law, a plaintiff who voluntarily dismisses its claim may refile that same claim within one year. Yet, the state’s “single refiling rule” prohibits a party from refiling the same cause of action more than once.
The United States Supreme Court recently decided in the case North Carolina Dept. of Revenue v. Kimberley Rice Kaestner 1992 Family Trust (588 U.S. (2019)) that a State cannot tax income of a trust based solely on a beneficiary’s in-state residency, especially if no distributions are made.
Since 1967, the Freedom of Information Act (“FOIA”) has provided the public the right to request access to records from any federal agency. Federal agencies are required to disclose any information requested under the FOIA unless it falls under one of nine statutory exemptions. FOIA Exemption 4 of the 5 U.S.C. §552(b)(4) prevents mandatory disclosure […]
Illinois Governor J.B. Pritzker recently signed into law an omnibus bill aimed at limiting harassment and discrimination within the workplace. The bill amends the Illinois Human Rights Act by requiring annual trainings and disclosures. Additionally, the bill enacts two new laws that may impact Illinois employers: the Workplace Transparency Act and the Sexual Harassment Victim […]
Illinois is poised to join over a dozen states in banning employers from inquiring as to applicants’ salary history. A recently-signed set of amendments to the Illinois Equal Pay Act of 2003 (IEPA), which will become effective on September 29, 2019, will prohibit employers from inquiring about and considering an applicant’s salary history when making […]
We are pleased to share that Lawrence Kamin partner Peter E. Cooper is a 2019 recipient of the Frank H.T. Rhodes Exemplary Alumni Service Award from Cornell University. This prestigious award, named after the university’s ninth president, recognizes alumni who have demonstrated extraordinary long-term service to Cornell through a broad spectrum of volunteer activities.
In its recent opinion in Wadler v. Bio-Rad Laboratories, Inc., 916 F.3d 1176 (9th Cir. 2019), the United States Court of Appeals for the Ninth Circuit provided important guidance for determining whether provisions of the Foreign Corrupt Practices Act (FCPA) can be considered “any rule or regulation of the Securities and Exchange Commission,” upon which an employee can base a retaliation claim under §806 of the Sarbanes-Oxley Act (SOX).
In January 2015, Illinois became the first state to fully enact legislation requiring that private-sector employers offer their workers retirement benefits. Now as employer registration deadlines for mid-sized and small companies approach, local businesses are on notice to take appropriate action steps to ensure they comply with the Illinois Secure Choice Savings Program Act to […]
In a recent unpublished opinion, the Illinois Appellate Court held that a person has a duty to preserve video recordings, if that person reasonably should have foreseen that the video might contain material evidence to a potential civil action. Weigand v. Nine Fifty Ltd., 2019 IL App (1st) 173169, (February 11, 2019). Failure to maintain and preserve such recordings justifies an inference that the deleted video contained evidence adverse to the defendant and support an action for spoliation.
Congratulations to the Special Olympics Illinois on its record-setting 2019 Inspire Greatness Gala and the more than $1.3MM in fundraising achieved. As a proud sponsor of the event, Lawrence Kamin salutes this year’s Athlete Honoree, Patrick McCarthy, and all of the Special Olympics athletes for their perseverance and commitment to always do their best. Way to go!
When a registered representative (“Rep”) with a large book of customers voluntarily resigns from one firm to join another, the Rep’s old firm immediately assigns a replacement. Excited about the potential to keep the book, the replacement Rep frequently races to contact the customers and secure their business. And when some of those customers question what happened, the replacement Rep – perhaps out of youthful enthusiasm – might “play dumb” by pretending not to know why the departing Rep left the firm, or worse, may imply that the departed Rep retired, was fired, or left because of customer complaints, poor investment recommendations, or some cloud of suspicion.
On March 21, 2019, the Illinois Supreme Court issued its long-anticipated decision in Van Dyke v. White, 2019 IL 121452. The 30-page opinion affirms the 2016 Appellate Court decision, which had overturned a Final Administrative Order from the Illinois Department of Securities…
A case recently decided by the Illinois Appellate Court (Herbert v. Cunningham, 2018 IL App (1st) 172135, December 28, 2018, Cook Co., 6th Division) issues an important reminder to anyone who is considering or has completed a journey through divorce or domestic separation: Make sure to update your estate plan documents, beneficiary designations and the titling of your assets after the divorce has been finalized.
An enduring gray area in the Protocol for Broker Recruiting, dating back to 2004, has been whether and to what extent the Protocol preempts a notice provision of an adviser’s employment contract. In HA&W Capital Partners, LLC v. Bhandari, the Georgia Court of Appeals was tasked with deciding the Protocol’s impact on notice provisions contained within a moving adviser’s employment contract.
The Appellate Court for the Second District of Illinois recently expanded the reach of Illinois’ “common interest” doctrine in a professional negligence case against an insurance broker. In The Robert R. McCormick Foundation v. Arthur J. Gallagher Risk Management Services, Inc., 2018 IL App (2d) 170939 (July 20, 2018), the Court held that an insurance malpractice defendant was a de facto insurer and, thus, was able to secure access to documents that might otherwise be protected by the attorney-client privilege.
On May 29, 2018, the CFTC and NFA1, respectively, issued enforcement decisions against Chicago-based Xchange Financial Access, LLC (“XFA”) that should serve as a cautionary tale for Futures Commission Merchants, and other registrants, about the importance of training, updating supervisory procedures, and appropriately maintaining records. According to the regulators, XFA failed to supervise its staff […]
The new AML rules significantly expand the obligations of FCMs and IBs when taking in new clients, opening new accounts for existing clients, and even updating the information on existing clients’ existing accounts – through the Customer Due Diligence (CDD) requirements for financial institutions. The new rules make two major changes to the existing AML […]
In Cassidy v. China Vitamins LLC, 2017 IL App (1st) 160933 (“China Vitamins”), the First District Appellate Court made it a lot harder for non-manufacturers to free themselves from litigation through the Illinois Distributor’s statute (sometimes referred to as the “innocent seller’s statute” or “seller’s exception”). Under China Vitamins’ new interpretation of the statute, a trial court now has discretion to reinstate a case against a non-manufacturer when a foreign manufacturer is able to pay, but chooses not to pay a judgment.
The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) has reduced the federal estate taxes to the point that such taxes currently affect a very small percentage of U.S. citizens and residents. Nevertheless, many individuals and families are still affected by State estate and inheritance taxes, which typically apply to individuals with wealth […]
Two Illinois cases, Van Dyke v. Jesse White, 2016 IL App (4th) 141109 (currently pending before the Illinois Supreme Court as Docket No. 121452) and Thrivent Investment Management v. Illinois Securities Department, Circuit Court of Cook County Case No. 2016-CH-16406 (currently pending before the First District Appellate Court as Docket No. 1-17-1913), could have broad-reaching implications for the multibillion dollar annuity marketplace and for financial advisers across the country.
The post-sale duty to warn has been the subject of intense debate ever since it was included in the Restatement (Third) of Torts: Products Liability (1997) (hereinafter “Third Restatement”). This article provides an overview of the history and nature of the post-sale duty, summarizes some of the challenges it creates for practitioners, seeks to predict […]
On June 12, 2014, the Supreme Court ruled that inherited IRAs, unlike traditional IRAs, do not receive protection in bankruptcy. Depending on the size of the IRA and the age of the intended beneficiary(ies) and estate planning considerations, IRA holders may wish to consider creating a trust for each intended beneficiary, and designating those trusts […]
During the last five years, the securities and futures industry has been rocked by highly publicized insolvencies of several major broker-dealers and futures commission merchants. These events have highlighted deficiencies in the customer asset protection schemes of both the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). On July 31, 2013, […]
The MF Global, Inc.1 (“MFGI”) bankruptcy shocked the ﬁnancial service world and raised a signiﬁcant number of regulatory and other issues that will shape the future world of ﬁnancial service regulation, including securities, futures and derivatives.
Did you know that on January 1, 2013 (just ten months from now), our tax laws in the U.S. will be changing? Based on the increases required under the Patient Protection and Affordable Care Act passed in 2010 and expiring Bush tax cuts, our taxes will change dramatically.
On December 16, 2011 Governor Quinn signed legislation that will increase the Illinois’ estate and generation-skipping transfer tax exemptions. What this means is that one can leave more money to one’s family and friends ($1.5 million more next year and $2 million more in 2013) without incurring any Illinois estate or GST tax.
The Financial Industry Regulatory Authority (“FINRA”)1 has adopted and proposed important changes to the current regulatory scheme and obligations relating to notice and supervision of outside business activities and private securities transactions. For a number of years, the National Association of Securities Dealers, Inc. (“NASD”) rules 3030, 3040 and 3050 were the principal rules of […]
The answer to this question is unclear as a result of the SEC interpretation of the statutory broker-dealer exemption from investment adviser registration and changed brokerage and investment adviser business practices in the securities industry. Although the SEC has attempted to clarify the broker-dealer exemption through informal interpretations and a forma Rule 202(a)(11)-1 (the “Vacated […]
The Commodity Futures Trading Commission (“CFTC”) adopted rules, effective March 31, 2010, which significantly increase net capital requirements for both futures commission merchants (“FCMs”) and introducing brokers (“IBs”). The National Futures Association (“NFA”) has also imposed parallel higher capital requirements for futures commission merchants (“FCMs”) effective March 31, 2010.
This article highlights key business and regulatory developments and issues relevant to the clearing arrangement between an introducing broker-dealer (“introducing broker”) and a clearing broker-dealer (“clearing firm”). It details clearing firm operations and regulations, clearing agency membership, and securities clearance and settlement, only as is relevant to introducing broker-dealers.
In today’s global economy, compliance officers may encounter questions concerning foreign broker-dealers directing investment opportunities to United States residents. These foreign broker-dealers may seek to enlist a United States firm or resident in their activities. Compliance issues arise whether sales activities are conducted in person, by telephone or e-mail, or through a website.
Part 1 of this article series describes the applicable self-regulatory organization rules, particularly FINRA and NYSE rules. In addition, it discusses proposed revisions to those rules and applicable NASD Notices to Members dealing with personal outside business activities of associated persons of broker-dealers.
This article focuses on outside business activities, particularly selling away issues, and discusses the language and interpretations of FINRA Rules 3030, 3040, and 3050. It provides an overview of how and when mandatory arbitration applies to selling away cases, sets forth legal views which may impose civil or regulatory liability against a firm for outside […]
FINRA Proposes Guidance with Respect to International Prime Brokerage Transactions Effecting United States Executing Brokers, Prime Brokers and Custodians, Practical Compliance & Risk Management for the Securities Industry
While the new Customer Code, under terms of the SEC Release No. 34-55158 (January 24, 2007), codifies certain well-known practices and limits other more controversial customs, it also imposes new restrictions and duties – in particular upon industry participants – which may affect the way in which brokerage firms approach and handle securities arbitrations in […]
Broker-dealer supervisory procedures and compliance systems have been significantly strengthened during the last five years, and now include enhanced training, documentation, testing and exception reporting. Notwithstanding these tools, the key to a successful compliance program is thoughtful analysis by supervisory personnel.
In 2004, securities customers filed over 9000 arbitration claims with the NASD Dispute Resolution and the New York Stock Exchange. Although 2003 and 2004 represent the high-water mark for securities arbitrations, a broker-dealer must anticipate that it will regularly be sued by disgruntled customers. Accordingly, a firm must establish and maintain a protocol for quickly […]
The purpose of this outline is to discuss key business and regulatory issues that every introducing broker-dealer should consider before entering into a clearing arrangement. There are numerous business as well as regulatory complexities to the clearing arrangement between an introducing broker-dealer and clearing broker-dealer.
In the Chapter 11 proceeding in the matter of Refco, Inc., et al., case number 05-6006 (RDD), involving not only Refco, Inc., but its unregulated affiliate Refco Capital Markets, Ltd. (“RCM”), the Court found that RCM was a “stockbroker” under the Bankruptcy Code. Although the Court ruled, it postponed the effective date of its ruling […]
Despite its growing importance, mediation continues to be used ineffectively by many litigants and their counsel. Commonly, ineffective counsel fails to focus on the roles and differing goals that they, their client and the mediator have in mediation. This article offers compelling insight and effective strategies from the viewpoints of both an experienced client advocate […]
FINRA and the NYSE released a joint interpretation of the new uniform definition of the term “Branch Office” interpreting the exemptions from the term “Branch Office.” Members should carefully review the new interpretation in NTM 06-12 because it is quite complex and certain offices may fall within the definition of “Branch Office.”
Rules adopted by the NASD and NYSE in the past year have heightened the supervisory requirements for securities firms. Among the more significant changes are a certification requirement by the Chief Executive Officer and mandatory compliance inspections.
In the Chapter 11 proceeding in the matter of Refco, Inc., et al., case number 05-6006 (RDD), involving not only Refco, Inc., but its unregulated affiliate Refco Capital Markets, Ltd. (“RCM”), a number of issues were raised after the Court initially held that RCM, a Bermuda company, was a “stockbroker” under the Bankruptcy Code. The […]
This article discusses key business and regulatory issues that every introducing broker-dealer should consider before entering into a clearing arrangement. There are numerous business and regulatory complexities to the clearing arrangement between an introducing broker-dealer and a clearing broker-dealer.
The SEC substantially narrowed the exemption from the Investment Advisers Act of 1940 for broker-dealer activity by adopting a new Rule 202(a)(11)-1. Among the many changes is a requirement that any discretionary account will be considered and advisory account requiring a broker-dealer to register as an investment adviser.
In a 2000 article, we noted increasing attention and focus on whether individuals described as “proprietary traders” were truly trading on behalf of a firm or were, in fact, customers trading under the guise of proprietary trader. Nearly four years later, regulatory guidance in this area remains inconsistent and continues to result in uncertainty and […]
The purpose of this panel and the accompanying outline, presented to the National Regulatory Service, is to focus on various areas of advanced broker-dealer compliance, including supervisory responsibilities, key supervisory issues for remote office branches, and marketing issues.
The SEC adopted Rule 13b2-2 as part of the Sarbanes-Oxley Act of 2002, with the intention of precluding issuers, their officers, directors and others, including attorneys, from misleading independent public accountants. The Rule affects attorneys representing issuers, private or public, including broker-dealers and investment advisers that file with the SEC financial statements audited or reviewed […]
The SEC has promulgated final amendments to its investment adviser custody Rule 206(4)-2. Advisers will have until April 4, 2004 to change their procedures, policies and client arrangements to meet the requirements of this rule and a number of key changes within it.
The Securities and Exchange Commission (“SEC”) has placed a significant amount of enforcement and examination emphasis on personal trading and insider trading policies and procedures of investment advisers. Investment advisers are required to have written supervisory procedures to prevent insider trading and to prevent vicarious liability for personal trading. The absence of procedures and policies […]
Conflicts between research recommendations and the other activities of a broker-dealer, such as investment banking, market making and proprietary trading, have been a long-standing issue in the securities industry. Because of the Enron debacle and its resulting publicity, and because of Congressional, SEC and industry pressure, the NASD and NYSE developed and submitted to the […]
The purpose of this panel and the accompanying outline, presented at the Futures Industry Association’s Law & Compliance Division 25th Annual Workshop, is to focus on various areas of advanced broker-dealer compliance, including supervisory responsibilities, new books and records rules, key supervisory issues for remote branches, marketing, mandatory disclosure of order execution and routing practices, […]
Two-part series outlines the Sarbanes-Oxley Act of 2002 and its impact on broker-dealers and investment advisers.
The Commodities Futures Modernization Act of 2002 (“CFMA”) established for the first time in the United States a regulatory scheme to permit trading of futures on individual equities and narrow-based equity indices. This article discusses each of the major areas of CFMA involving security futures and comment on the efficiency of the regulation.
The SEC’s proposed Rule 13b2-2 will have an impact on attorneys representing issuers, private or public, including broker-dealers and investment advisers filing with the SEC financial statements audited or reviewed by independent public accountants. Audit letter responses, opinions and oral conversations by an attorney with an independent public account are within the scope of the […]
Because of the Enron debacle and its resulting publicity, and because of Congressional, SEC and industry pressure, the NASD developed and submitted to the SEC in record time Rule 2711, a new rule with respect to research conflicts. The new Rule 2711 is far more encompassing than the proposals to amend NASD Rule 2210 set […]
While the Sarbanes-Oxley Act (the “Act”) was directed primarily to publicly held companies and regulation of independent public accountants, it has a number of other provisions that impact privately owned and publicly held broker-dealers. This article discusses some of the key provisions that affect all broker-dealers.
Broad definitions of “commodity pool operator” and “commodity trading adviser”, together with the very broad interpretations of these terms by the CFTC staff, has led to the “inadvertent pool” problem for many registered broker-dealers and futures commission merchants (“FCM”) engaged in proprietary trading activities. These problems have increased significantly over the last five years as […]
In the normal course of business, investment advisers face an increasing number of potential conflicts of interest between the investment adviser and the client. These conflicts arise in several areas and in connection with other activities, such as investment banking, if an investment adviser is part of or affiliated with a broker-dealer.
The Patriot Act of 2001 together with new and proposed regulations has significantly increased the anti-money laundering duties of broker-dealers. This article reviews new and proposed regulations and outlines supervisory procedures and programs that broker-dealers will need to comply with the rules.
The Commodity Futures Modernization Act of 2000 permitted for the first time the trading of futures on single stocks and narrow-based indices. This article describes new and proposed rules on a variety of subjects relating to the new trading, including the protection of customer funds, reporting and recordkeeping, minimum capital, margin, and SRO requirements.
Disclosure of conflicts resulting from a broker-dealer’s recommendations to clients and the public and the other activities of the recommending broker-dealer, such as investment banking, market making and its proprietary trading, have been a long-standing issue in the industry. It has recently received renewed emphasis from the Securities and Exchange Commission (“SEC”). The principal catalyst […]
The Commodity Futures Modernization Act of 2000 (“CFMA”) made fundamental changes in several federal acts, including the CEA, SEC “34 Act” and the Investment Advisers Act of 1940,6. This article focuses on changes affecting the financial responsibility requirements of broker-dealers, futures commission merchants, and introducing brokers as a result of CFMA and subsequent regulations, as […]
It is critically important that broker-dealers and investment advisers recognize when an examination by the SEC, an SRO, or a state is an examination for cause and how to deal with such an examination or investigation. This article details how the SEC, the SROs and states conduct for-cause examinations and investigations, and provides practical advice […]
The number of for-cause examinations and investigations by the SEC and self-regulatory organizations (“SROs”) and state securities departments (“state”) has increased markedly over the last several years and will probably continue to increase. High volume, new products and the market downturn have resulted in an increased number of complaints to regulators resulting in more examinations […]
Supervisory responsibilities in connection with branch offices, offices of supervisory jurisdiction (“OSJs”), and offsite brokers, including independent contractors, can be particularly challenging. Without on-site supervisors and compliance personnel, there are more opportunities for supervisory failures and sales practice abuse. The most serious of these problems is selling away of securities products or Ponzi schemes, many […]
This article focuses on selected customer litigation issues that arise in customer disputes and unfair competition. The areas covered include controversies dealing with arbitrator selection, discovery in arbitration, emerging on-line brokerage litigation issues, clearing firm liability, and correspondent arbitration agreement coverage under clearing firm customer agreements. The content sets forth the procedural or substantive rules […]