Compliance, Enforcement, Standard of Care

SEC Sanctions Firm for Policies that (Theoretically Could Have) Curtailed Whistleblowers

June 28, 2021 Lauren C. Jackson Leave a comment

On June 23, 2021, the U.S. Securities and Exchange Commission (the “Commission”) entered an administrative order (the “Order”) that, among other things, fined a broker-dealer (“BD”) $208,912 for alleged violations of Rule 21F-17(a), which relates to individuals reporting possible securities laws violations to the Commission (a.k.a., whistleblowers).

Practice Tip: While the Order was entered against a broker-dealer, Rule 21F-17(a) applies to all entities subject to the Commission’s jurisdiction (e.g., public companies, broker-dealers, and investment managers). Indeed, the Commission has previously sanctioned public companies and investment advisers for violations of Rule 21F-17(a).

Read more here for both a summary of the Order’s findings, and take-aways for legal and compliance practitioners who support firms that are subject to the Commission’s jurisdiction.

Compliance, Standard of Care

SEC Conducts Sweep of Customers Impacted by SolarWinds Cyber Breach

June 24, 2021 Ronak V. Patel Leave a comment

Reuters reported today that the SEC is investigating last year’s hack of SolarWinds, focusing on whether SEC registrants failed to disclose that they had been impacted by the cyber breach.[1] According to the article, the SEC sent voluntary requests for information to “a number of public issuers and investment firms…” The SEC is reportedly investigating whether SolarWinds customers had been victims of the hack and failed to adequately disclose that fact.

Securities Regulators Focus on Forgivable Recruitment Loans/Bonuses, Social Media Influencers, and Rescission Offers

June 14, 2021 Lauren C. Jackson Leave a comment

In recent weeks, we have observed significant new developments in securities regulation related to two enforcement actions by the Commission and an unexpected (and, to our knowledge, unprecedented) new rule adopted by a state securities regulator. First, the Commission has published enforcement actions against registered investment advisers (“RIAs”), involving: (a) failure to make conflicts-related disclosures about payment of forgivable recruitment loans/bonuses; and (b) failure to comply with Rule 206(4)-3 (the “Solicitation Rule”) when using social media influencers acting as referral sources. Second, the Tennessee Securities Division has fundamentally changed the process for issuers and broker-dealers attempting to shield themselves from civil liability arising from unregistered, non-exempt securities offerings through rescission offers.

DOL Weighs In With Cybersecurity Guidance, FINRA Issues Reminders on Options and Predispute Arbitration Agreements, NASAA Releases Annual State Advisers Report, Cayman Extends CRS Compliance Form Deadlines

June 8, 2021 Cari Hopfensperger Leave a comment

June Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.

Topics include:

DOL issues Cybersecurity Guidance — The DOL guidance was published in three separate pieces: Tips for Hiring a Service Provider with Strong Cybersecurity Practices, Cybersecurity Program Best Practices, and Online Security Tips for Participants and Beneficiaries. Contributed by Glenn R. Skreppen, Senior Compliance Consultant
Updates to State Senior Laws & Resources — The law firm of Bressler, Amery and Ross, has created and continues to update its Senior and Vulnerable Investors Issues map, with summaries of the requirements for all 50 states. Contributed by Carolyn W. Mendelson, Senior Compliance Consultant
Form ID Updates
NASAA Annual Report on State Registered Advisers
2021 Cayman CRS (and FATCA) Updates
Do Your Options Procedures Need Work?
Can You Pass This Quiz Regarding the Use of Predispute Arbitration Agreements?
SEC Charges Broker-Dealer for Failing to File SARS

InSecurities Podcast — It’s All About Connecting: The Value of PLI’s IA/BD Programs

June 7, 2021 Clifford E. Kirsch, Editor Leave a comment

Thanks to Kurt Wolfe and Chris Ekimoff for having me as a guest on the lastest installment of PLI’s inSecurities podcast. As someone who tunes in regularly, it was a pleasure for me to do. I enjoyed chatting about broker-dealer and investment adviser regulatory issues, my work with PLI including the upcoming live webcast Securities Law and Practice 2021: How the SEC Works on June 28.

To hear this episode, and other episodes, click here.