The SEC Division of Examinations recently announced its examination priorities for fiscal year 2021, discussing key risks, trends, and examination priorities in an overall effort to promote and improve compliance. The two largest programs run by the Division, Investment Adviser/Investment Company Program and Broker-Dealer and Exchange Program, focus on the protection of retail investors and…
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On February 1, 2021, FINRA published the 2021 Report on FINRA’s Examination and Risk Monitoring Program (“2021 Report”). Annually, FINRA publishes the Report on its Examination and Risk Monitoring Program in order to provide member firms with information they can use to assess and strengthen their compliance, supervisory, and risk management programs. The Report summarizes…
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FINRA recently issued Regulatory Notice 21-03 providing information to help FINRA member firms that engage in low-priced securities business assess and, as appropriate, strengthen their controls to identify and mitigate their risk, and the risk to their customers, including specified adults and seniors, of becoming involved in activities related to fraud involving low-priced securities. FINRA…
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FINRA’s Board of Governors met on December 2-3, 2020, to review FINRA’s 2020 financial performance, approve the organization’s 2021 proposed budget, reaffirm FINRA’s Financial Guiding Principles, approve rule proposals, and receive several operational updates. The Board approved two rule proposals to be filed with the Securities and Exchange Commission (SEC), directing impacting our clients. As…
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On November 2, 2020, the SEC adopted amendments to “simplify, harmonize, and improve certain aspects of the exempt offering framework” under the Securities Act of 1933. The amendments are intended to meet evolving market needs by providing, among other changes, all of the following: greater clarity around the SEC’s integration doctrine that can pose challenges…
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FINRA recently adopted Rule 3241, limiting registered representatives from being named a customer’s beneficiary or holding a position of trust for a customer. The rule limits a registered representative from being named a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust for or on behalf of a…
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In 2019, FINRA launched a retrospective review to assess the effectiveness and efficiency of its rules and administrative processes meant to help protect senior investors from financial exploitation. Based on feedback received during the review, FINRA is now proposing amendments to Rule 2165 regarding financial exploitation of specific adults to extend the hold period and…
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FINRA recently issued Regulatory Notice 20-30 “Fraudsters Using Registered Representatives Names to Establish Imposter Websites.” The Notice warns of individuals maliciously using publicly available information regarding registered representatives in order to create “imposter websites” exhibited as the registered representative’s personal website. Through these “imposter websites,” individuals are able to collect personal information from potential customers…
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For over 40 years, the Securities and Exchange Commission (SEC) has used disgorgement as a common enforcement tool. In securities enforcement matters, disgorgement requires wrongdoers to disgorge ill-gotten profits or commissions. The Ninth Circuit has stated that “disgorgement is designed to deprive a wrongdoer of unjust enrichment, and to deter others from violating securities laws…
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On February 7, 2020, FINRA filed with the SEC a proposed rule change to amend FINRA’s Code of Arbitration Procedure for Customer Disputes and Code of Arbitration Procedure for Industry Disputes to apply minimum fees to requests for expungement of customer dispute information. The SEC recently approved this proposed rule change in an order dated…
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