Written by: Jay Gould and Peter Chess The Financial Industry Regulatory Authority (“FINRA”) released new guidance last month regarding new FINRA Rule 2111 (the “Suitability Rule”), which requires a broker-dealer to have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is…
Written by: Jay B. Gould, Michael Wu and Peter Chess Note: Pillsbury and KPMG, along with the California Hedge Fund Association, will be sponsoring a “Managers Only” event on the JOBS Act and the new world of “general solicitation” for Funds on June 14. The Jumpstart Our Business Startups Act…
Written by Peter J. Chess On November 30, 2011, FINRA and the SEC’s Office of Compliance Inspections and Examinations (OCIE) released a National Exam Risk Alert on effective procedures and policies for broker-dealer branch inspections. This follows other recent guidance for broker-dealers regarding the Market Access Rule and reasonable investigations…
Written by Ildiko Duckor An entity that meets the definition of a “Large Trader” after October 3, 2011 must file its initial Form 13H with the SEC by December 1, 2011 to be assigned a large trader identification number (LTID). The filing is done electronically through the SEC’s EDGAR system. …
Written by Jay Gould On October 18, 2011, the SEC released a notice of FINRA’s filing of Proposed Rule 5123 (the “Proposed Rule”) which would require FINRA members and associated persons to: 1) provide to investors disclosure documents in connection with private placements prior to sale and 2) file with…
Written by Michael Wu On September 29, 2011, the SEC’s examination staff issued a Risk Alert warning of significant concerns regarding trading through sub-accounts, and offered suggestions to help securities industry firms address these risks. In the alert, the staff identified certain risks associated with the master/sub-account trading model such…
Written by Michael Wu The SEC has adopted a new rule pursuant to Section 13(h) of the Securities Exchange Act of 1934 requiring large traders to register with the SEC and imposing reporting requirements on their broker-dealers. In her speech on July 26, 2011, SEC Chairman Mary L. Shapiro said,…
Written by Michael Wu On January 21, 2011, the SEC released its study on the effectiveness of the standard of care required of broker-dealers and investment advisers that provide personalized investment advice regarding securities to retail customers (“Covered Broker-Dealers and Investment Advisers”). The study also considered the existence of regulatory…
Hedge fund and private equity fund managers that use registered broker-dealers to raise capital on behalf of their funds should be aware of a recent report from the North American Securities Administrators Association (“NASAA”). The 2010 Broker-Dealer Coordinated Examination Report identifies the most prevalent compliance deficiencies by broker-dealers and offers a…