Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

FINRA Proposes to Adopt Rules on Quotation Requirements for OTC Equity Securities

Posted in Broker-Dealer

The Financial Industry Regulatory Authority, Inc. is proposing to adopt rules governing the quotation requirements applicable to over-the-counter (OTC) equity securities. The rules would establish minimum standards for quotations and require fair and non-discriminatory access to member inter-dealer quotation systems. Member inter-dealer systems would be required to adopt and provide to FINRA written (i) policies and procedures on the collection and dissemination of OTC securities quotations, (ii) standards for fair and non‑discriminatory system access and (iii) descriptions of each quotation-related data product along with pricing information. FINRA is also proposing minor amendments to its existing rules on quotation reporting requirements and to delete FINRA Rule 6500 Series governing the operation of the OTC Bulletin Board Service. 

Click here to read the proposed rules.

CFTC Seeks Comment on ICE Clear Europe Portfolio Margining Proposal

Posted in CFTC

The Commodity Futures Trading Commission has requested public comment on a petition submitted by ICE Clear Europe Limited to amend an order issued by the CFTC on May 30. Under the May order, ICE Clear Europe and its clearing members that are registered futures commission merchants (FCMs) are permitted (i) to commingle and hold in segregated funds accounts established pursuant to Section 4d(a) of the Commodity Exchange Act customer funds used to margin, secure or guarantee futures traded on ICE Futures US with customer funds used to margin, secure or guarantee interest rate, energy and financial foreign futures and options traded on ICE Futures Europe and (ii) to provide for portfolio margining of such positions. The May order is available here. Continue Reading

New York DFS Proposes First Comprehensive Regulatory Framework for Virtual Currency Businesses

Posted in Digital Assets and Virtual Currencies

On July 17, the New York State Department of Financial Services (DFS) released the draft “BitLicense,” a proposed regulatory framework to license Virtual Currency Business Activity. The proposed regulations follow DFS hearings held in January 2014 and are intended to promote consumer protection, stability and security in the operation of virtual currency exchanges, among other virtual currency businesses. The DFS regulations would apply to digital assets such as bitcoins and litecoins, but not to digital gaming units (e.g., World of Warcraft gold) or consumer rewards programs (e.g., Starbucks stars). Continue Reading

FDIC Proposes Changes to Assessments Rule

Posted in Banking

On July 15, the Federal Deposit Insurance Corporation (FDIC) proposed (1) to revise the ratios and ratio thresholds for capital evaluations used in its risk-based deposit insurance assessment system (the FDIC stated this was done “to conform to the prompt corrective action capital ratios and ratio thresholds adopted by the FDIC, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency”); (2) to revise the assessment base calculation for custodial banks to conform to the asset risk weights adopted by the FDIC, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency; and (3) to require all highly complex institutions to measure counterparty exposure for deposit insurance assessment purposes using the Basel III standardized approach credit equivalent amount for derivatives and the Basel III standardized approach exposure amount for other securities financing transactions, such as repo-style transactions, margin loans and similar transactions, as adopted by the federal banking agencies. These changes are intended to accommodate recent changes to the federal banking agencies’ capital rules that are referenced in portions of the assessments regulation. Continue Reading

SEC Publishes Guidance for Investment Advisers and Proxy Advisory Firms Regarding Proxy Voting and Solicitation

Posted in SEC/Corporate

On June 30, the Securities and Exchange Commission’s Division of Investment Management and Division of Corporation Finance published Staff Legal Bulletin No. 20 (SLB 20), which offers guidance regarding investment advisers’ responsibilities in voting proxies and retaining proxy advisory firms, as well as the availability of two exemptions from federal proxy rules often relied upon by proxy advisory firms. Continue Reading

SEC Division of Corporation Finance Issues C&DIs Relating to Accredited Investor Verification Methods

Posted in SEC/Corporate

On July 3, the Securities and Exchange Commission’s Division of Corporation Finance issued six new Compliance and Disclosure Interpretations (C&DIs) with respect to determination of accredited investor status and, in particular, verification of accredited investor status under Rule 506(c) of the Securities Act of 1933 (the rule adopted by the SEC in 2013 that allows general solicitation in connection with offerings under Rule 506 of Regulation D). Continue Reading

FINRA to Conduct Targeted Examinations Regarding Order Routing and Execution Quality of Customer Orders in Exchange-Listed Stocks

Posted in Broker-Dealer

The Financial Industry Regulatory Authority, Inc.’s Market Regulation Department has issued a targeted examination letter dated July 2014 to certain FINRA member firms notifying each firm that FINRA’s Trading Examinations Unit (TEU) is conducting a review of the firm’s processes and procedures in connection with order routing and execution quality of customer orders in exchange-listed stocks. As part of the review, TEU is requesting certain information from January 1, 2014 to the present, including, among other things, the firm’s (i) written supervisory procedures related to FINRA Rule 5310 (regarding best execution and interpositioning), (ii) customer order execution procedures and reviews, including an explanation of how the firm’s exchange order-routing decisions are made for customer non-marketable limit orders and customer market and marketable limit orders, (iii) use of other broker-dealers for execution of customer orders and (iv) policies regarding passing exchange marker/taker fees on to its customers.   

Click here to read the July 2014 Targeted Examination Letter. 

SEC Settles Civil FCPA Action Against Two Former Oil Services Executives

Posted in Litigation

On the eve of a trial which was scheduled to begin this week, the Securities and Exchange Commission settled a civil Foreign Corrupt Practices Act (FCPA) case it brought against two former oil services executives. The case was an outgrowth of an industry-wide investigation the SEC had initially commenced beginning in 2010.   Continue Reading