August 1, 2002 A Pool Too Big for a FCM or a Broker-Dealer 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… View Article
June 2, 2002 Investment Adviser Conflicts 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. View Article
June 2, 2002 Anti-Money Laundering Provisions for Broker-Dealers 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. View Article
May 1, 2002 Security Futures – A New Frontier 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… View Article
October 17, 2001 Advanced Concepts of Broker-Dealer Compliance 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… View Article
October 1, 2001 Capital, Customer Funds and Margin After the Commodity Futures Modernization Act of 2000 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… View Article
September 1, 2001 Managing Regulatory Investigations and Examinations for Cause 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… View Article
June 5, 2001 Regulatory Examinations For Cause 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… View Article
May 24, 2001 Supervision of Branch Offices, OSI’s and Offsite Brokers and Independent Contractors 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… View Article
April 30, 2001 Broker-Dealer Customer and Recruiting Disputes 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… View Article