On September 16, the Securities and Exchange Commission adopted amendments to the Securities Exchange Act of 1934 (Exchange Act) Rule 15c2-11 to modernize the rule, including by recognizing advances in communications technology. The rule requires broker-dealers to review key, basic issuer information before initiating or resuming quotations for the issuer’s security in the over-the-counter (OTC) market.
Continue Reading SEC Amends Exchange Act Rule 15c2-11 to Enhance Retail Investor Protections and Modernize Governing Quotations for Over-the-Counter Securities

On September 11, the Securities and Exchange Commission announced that it had adopted rules that update and expand the statistical disclosures that bank and savings and loan registrants provide to investors while eliminating duplicative disclosures. The new SEC rules require disclosure about the following:
Continue Reading SEC Modernizes Disclosures for Banking Registrants

On August 26, the Securities and Exchange Commission adopted amendments to the definitions of “accredited investor” in Rule 501(a) and “qualified institutional buyer” in Rule 144A under the Securities Act of 1933 (Securities Act). The amendments expand the definition of accredited investor, a principal test to determine eligibility for participation in private capital markets, even if they do not meet specified income and net worth tests. Amendments to the qualified institutional buyer definition similarly expand the list of eligible entities under that definition. The amendments were adopted generally as proposed with no significant changes. The proposed amendments were previously covered in the December 20, 2019 edition of the Corporate & Financial Weekly Digest.
Continue Reading SEC Amends the Definitions of “Accredited Investor” and “Qualified Institutional Buyer”

On August 14, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-28 that included an updated Security Futures Risk Disclosure Statement (the “2020 Statement”). The uniform Security Futures Risk Disclosure Statement (the “Statement”) was jointly developed by FINRA, the National Futures Association (NFA) and several other self-regulatory organizations. The Statement is composed of nine sections and discusses the characteristics and risks of standardized security futures contracts traded on regulated US exchanges.
Continue Reading FINRA Releases an Updated Security Futures Risk Disclosure Statement

On August 17, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-29 to request comment on the practice of internalizing customer trades in the corporate bond market after obtaining auction responses, commonly known as “pennying.” The Securities and Exchange Commission’s Fixed Income Market Structure Advisory Committee (FIMSAC) defined “pennying” as a practice where a dealer initiates a bid or offer-wanted auction process on behalf of a customer, reviews the auction responses, and then executes the customer order itself at a price that either matches or slightly improves the best-priced auction response. FIMSAC stated that pennying may appear to benefit a customer but may harm overall auction competitiveness over time.
Continue Reading FINRA Requests Comment on the Practice of Pennying in the Corporate Bond Market

On July 24, the Securities and Exchange Commission announced that the SEC and the Federal Deposit Insurance Corporation (FDIC) have adopted a final rule clarifying and implementing provisions relating to the orderly liquidation of certain brokers or dealers (covered broker-dealers) in the event the FDIC is appointed receiver under Title II of the Dodd–Frank Wall Street Reform and Consumer Protection Act.
Continue Reading SEC and FDIC Adopt Final Rule on the Orderly Liquidation of Covered Broker-Dealers Under Dodd-Frank

On July 28, the Securities and Exchange Commission announced the creation of the Event and Emerging Risks Examination Team (EERT) in the Office of Compliance Inspections and Examinations (OCIE). The EERT will engage with financial firms about emerging threats and current market events so that it can provide expertise and resources to the SEC’s regional

On May 22, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice seeking comment on two proposed changes to the Trade Reporting and Compliance Engine (TRACE) reporting rules recommended by the Securities and Exchange Commission’s Fixed Income Market Structure Advisory Committee. The changes would require firms to identify (1) delayed treasury spot trades; and