Posts Categorized: Broker-Dealers

Second Circuit Find Private Right of Action to Rescind Contracts Under Investment Company Act

The Second Circuit has created a split with the Third and Ninth Circuits by finding that Section 47(b) of the Investment Company Act provides plaintiffs an implied private right of action with regard to contracts, and the plaintiffs in that case could therefore seek rescission of the contracts in the form of junior notes.  This… Read more »

SEC Office of Compliance Inspections and Examinations (“OCIE”) Issues Alert on Cross-Trades Under Investment Advisers Act

On September 4, 2019, the OCIE issued a Risk Alert on issues identified by the staff during audits of firms of cross-trades that violate the applicable rules.  Section 206(3) of the Investment Advisers Act effectively prohibits an adviser, acting as a principal or agent, from carrying out certain cross trades that would be the result… Read more »

SEC Adopts New Broker-Dealer Rules on Standard of Behavior

On June 5, 2019, the Securities and Exchange Commission (the “SEC”) adopted new rules, including: (i) Regulation Best Interest, raising the requirement for broker-dealers recommending securities to retail clients from determining that the securities are suitable to acting in the best interests of clients, and requiring certain specified disclosure, care in carrying out transactions, written… Read more »

SEC Acts Against Private Fund Asset Transfers

On March 15, 2019, the Securities and Exchange Commission (the “SEC”) took cease and desist action against Talimco, LLC (“Talimco”), a private fund manager, and Grant Rogers, its Chief Operating Officer (“Rogers”), finding that Talimco had sold mortgage participations owned by collateralized debt obligations (“CDOs”) that it managed to a fund (the “Fund”) also managed… Read more »

SEC Reinforces Ban on Testimonial Marketing for Investment Advisers

In March 2014 the Securities and Exchange Commission (the “SEC”) issued guidance on the use by investment advisers and investment advisory representatives (together, “IAs”) in their marketing of testimonials (but not objective third-party articles) posted on social media.  Under Section 206(4) of the Investment Advisers Act (prohibiting fraudulent, deceptive or manipulative acts) and Rule 206(4)-1(a)(1) (finding testimonials… Read more »

U.K. Exit from E.U. Taking Shape Amid Political Confusion

On June 26, 2018, the United Kingdom adopted the European Union (Withdrawal) Act 2018 providing for a framework for “Brexit” under which E.U. law adopted in the U.K. would continue to apply during an implementation period and government minsters would have the power to adopt implementing rules.  The United Kingdom is currently to leave the European… Read more »

SEC Proposes Standards for Broker-Dealers and Investment Advisers

On April 16, 2018, the Securities and Exchange Commission (the “SEC”) adopted three new proposals for standards that would apply to broker-dealers and investment advisers in dealing with retail customers.  Regulation “Best Interest” would apply to broker dealers.  Another release would interpret and enhance the “fiduciary” standard applicable to investment advisors.  Finally, the third release… Read more »

FinCEN Guidance on AML Customer Due Diligence Rules to Become Fully Effective May 11, 2018

The Finance Crimes Enforcement Network (“FinCEN”) of the U.S. Treasury Department, which oversees most of the federal anti-money laundering (“AML”) regulations, issued Customer Due Diligence (“CDD”) rules on May 11, 2016, that are to become fully effective on May 11, 2018.  These rules apply to AML diligence to be done by covered U.S. financial institutions,… Read more »

FINRA Issues Letter Guidance On Use of Performance Information with Institutional Investors

On June 9, 2017, the Financial Industry Regulatory Authority (“FINRA”) issued a letter (the “Letter”) giving guidance in response to a request by an open-ended fund to allow it to provide “Related Performance Information” in marketing material used with institutional investors. “Related Performance Information” is defined as the actual performance of separate or private accounts or funds… Read more »

U.K. Anti-Money Laundering Regulation Updated

The United Kingdom has published a near final regulation, the Money Laundering and Transfer of Funds (Information on the Payer) Regulations 2017 (the “Regulation”) under the E.U. Fourth Money Laundering Directive, to replace the Money Laundering Regulations 2007.  The Regulation is due to go into effect on June 26, 2017, although it may be delayed.  Under the… Read more »