Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Tag Archives: Broker-Dealer

SEC Issues TurnKey Jet, Inc. No-Action Letter

Posted in Broker-Dealer, Digital Assets and Virtual Currencies
On April 3, the Securities and Exchange Commission’s Division of Corporate Finance (the “Division”) responded to TurnKey Jet, Inc.’s (TKJ) letter dated April 2, requesting confirmation that the Division would not recommend enforcement action to the SEC in connection with its offer and sale of tokens without registration under the Securities Act of 1933 and… Continue Reading

FINRA Proposes Data Service for Corporate Bond New Issues

Posted in Broker-Dealer
The Financial Industry Regulatory Authority (FINRA) has filed with the Securities and Exchange Commission a proposed rule change to establish a new issue reference data service for corporate bonds. FINRA currently requires underwriters of initial offerings for corporate bonds to submit information relating to the bonds to FINRA under Rule 6760. This information is limited… Continue Reading

FINRA Issues Guidance on FOCUS Reporting for Operating Leases

Posted in Broker-Dealer
On March 19, the Financial Industry Regulatory Authority, Inc. (FINRA) released Regulatory Notice 19-08 to provide guidance to members for reporting lease assets and liabilities on their FOCUS reports. FINRA’s notice follows an October 2018 No-Action Letter (the No-Action Letter) in which the staff of the Securities and Exchange Commission’s Division of Trading and Markets… Continue Reading

FINRA Reminds Firms of Obligations Under Rule 15c2-11(a)(4)

Posted in Broker-Dealer
On March 20, the Financial Industry Regulatory Authority, Inc. (FINRA) released Regulatory Notice 19-09, which reminds members of their obligations under Securities Exchange Act Rule 15c2-11 and FINRA Rule 6432 (Compliance with the Information Requirements of Rule 15c2-11). Rule 15c2-11 prohibits a broker-dealer from publishing (or submitting for publication) a quotation in an unlisted security… Continue Reading

FINRA Files Proposed Rule Change to CAB Rules Governing Qualification, Registration and Continuing Education of Associated Persons of CABs

Posted in Broker-Dealer
The Financial Industry Regulatory Authority (FINRA) is filing with the Securities and Exchange Commission a proposed rule change to amend the Capital Acquisition Broker (CAB) Rules governing the qualification, registration and continuing education of associated persons of CABs (CAB Rules 119-125). The proposed rule change reflects new consolidated FINRA qualification and registration rules and changes… Continue Reading

FINRA Requests Comment on Its Rule on Business Continuity Plans and Emergency Contact Information

Posted in Broker-Dealer
The Financial Industry Regulatory Authority (FINRA) recently released a regulatory notice requesting comment on the effectiveness and efficiency of Rule 4370 (Business Continuity Plans and Emergency Contact Information). The comment period expires April 26. Rule 4370 requires a member firm to create, maintain, annually review and update upon any material change a written business continuity… Continue Reading

Report from FINRA Board of Governors Meeting: Board Approves Rule Proposals, Engages with Boca Raton-Area Firms

Posted in Broker-Dealer
The Board of Governors of the Financial Industry Regulatory Authority (FINRA) met on February 28 and March 1 in Boca Raton, Florida, where it discussed the organization’s finances, reviewed several significant technology and other capital initiatives, and considered certain rulemaking items.… Continue Reading

SEC Chairman Clayton and Trading and Markets Director Redfearn Call for a Reassessment of Regulation NMS

Posted in Broker-Dealer
On March 8, US Securities and Exchange Commission chairman Jay Clayton and director, Division of Trading and Markets Brett Redfearn gave a speech entitled “Equity Market Structure 2019: Looking Back & Moving Forward.” Chairman Clayton, who noted that their comments were their own and not necessarily those of the SEC or its staff, opined that… Continue Reading

SEC Examines Stock Exchange Pricing

Posted in Broker-Dealer
The US Securities and Exchange Commission has begun looking into whether the current multi-tiered pricing system used by stock exchanges favors large brokers and traders at the expense of small ones. In an effort to increase the volume of trading on an exchange, certain exchange operators (including New York Stock Exchange-owner Intercontinental Exchange Inc., Nasdaq… Continue Reading

FINRA Extends Deadline To Self-Report Violations Under 529 Plan Share Class Initiative

Posted in Broker-Dealer
The Financial Industry Regulatory Authority has extended the deadline for member firms to self-report violations under the 529 Plan Share Class Initiative to April 30. The extension will allow firms to have more time to review their supervisory systems and procedures with respect to their 529 plan transactions. A more detailed discussion of the Plan… Continue Reading

FINRA Working Paper Concludes High Broker-Affiliated ATS Order Routing is Associated with Lower Fill Rates, Higher Transaction Costs

Posted in Broker-Dealer
The Financial Industry Regulatory Authority’s Office of the Chief Economist has released a working paper (Study), maintaining that institutional orders routed by brokers that send a high percentage of such orders through affiliated alternative trading systems (ATSs) tend to receive lower order fill rates and higher execution costs. The Study examined order-handling information over the… Continue Reading

FINRA Issues Information Notice Regarding Suspicious Email Sent to Member Firms

Posted in Broker-Dealer
On February 13, the Financial Industry Regulatory Authority (FINRA) published an information notice alerting member firms about a suspicious email received by compliance personnel at a number of member firms. The email, sent by a purported BSA-AML compliance officer at a credit union, describes an attempted transfer of money from a firm client that the… Continue Reading

FINRA Issues Regulatory Notice on Effective Date Extension of Margin Requirements for Covered Agency Transactions

Posted in Broker-Dealer
On February 12, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-05 (Notice) informing member firms that the effective date for the implementation of the amendments to FINRA Rule 4210 has been postponed. The amendments, which will establish mandatory margin requirements for certain covered agency transactions, will go into effect on March 25, 2020… Continue Reading

FINRA Releases 2019 Annual Risk Monitoring and Examination Priorities Letter

Posted in Broker-Dealer, Digital Assets and Virtual Currencies
On January 22, the Financial Industry Regulatory Authority (FINRA) issued its annual Risk Monitoring and Examination Priorities Letter. This year’s letter includes a number of new areas for firms to consider in seeking to improve their compliance, supervisory and risk management programs.… Continue Reading

SEC and New Jersey US Attorney’s Office Bring Parallel Charges in EDGAR Hacking Scheme

Posted in Broker-Dealer
On January 15, the Securities and Exchange Commission announced charges against nine defendants, alleging their participation in a previously disclosed scheme to hack into the SEC’s EDGAR system and extract nonpublic information to use for illegal trading. The SEC charged a Ukrainian hacker, six individual traders in California, Ukraine and Russia, and two entities. In… Continue Reading

FINRA Issues Regulatory Notice Regarding Updates to Supplemental Statement of Income

Posted in Broker-Dealer
On January 8, the Financial Industry Regulatory Authority issued a Notice advising its members of updates to the Supplemental Statement of Income (SSOI). The updates are designed to conform with amendments adopted by the Securities and Exchange Commission that simplify and update certain FOCUS reporting requirements applicable to broker-dealers. Pursuant to FINRA Rule 4524, the… Continue Reading

FINRA Issues Notice Related to Reporting Requirements for Auction Transactions

Posted in Broker-Dealer
On January 9, the Financial Industry Regulatory Authority issued a Notice to remind its members that they should not report auction transactions in US Treasury securities—including auction awards to either direct or indirect bidders—to the Trade Reporting and Compliance Engine (TRACE), as these transactions are excluded from the TRACE reporting requirements under FINRA Rule 6730(e)(8).… Continue Reading

SEC Announces Examination Priorities for 2019

Posted in Broker-Dealer
On December 20, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission announced its 2019 examination priorities. This year, OCIE’s examination priorities are divided into six categories: examining compliance and risk in registrants responsible for critical market infrastructure; protecting retail investors, including seniors and those saving for retirement; continuing oversight… Continue Reading

FINRA Files Proposed Rule Change Regarding Arbitration Subpoenas, Orders of Appearance of Witnesses and Production of Documents

Posted in Broker-Dealer
On December 20, the Financial Industry Regulatory Authority filed a proposed rule change with the Securities and Exchange Commission to amend various FINRA Code of Arbitration Procedure Rules that govern objections in arbitration proceedings to subpoenas, orders of appearance of witnesses and production of documents by non-parties. Since non-parties to a FINRA arbitration do not… Continue Reading

SEC Adopts Transaction Fee Pilot for NMS Stocks

Posted in Broker-Dealer
On December 19, the US Securities and Exchange Commission announced that it had voted to conduct a Transaction Fee Pilot in national market system (NMS) stocks, following a recommendation from the Equity Market Structure Advisory Committee. The SEC is initiating the Pilot to study the effects of exchange transaction fee and rebate pricing models on… Continue Reading

FINRA Issues Report on Examination Findings

Posted in Broker-Dealer
This month, the Financial Industry Regulatory Authority (FINRA) issued a report summarizing various findings from recent examinations of its member firms (Report). In particular, the Report sets forth selected observations from recent examinations that FINRA considers worth highlighting because of their potential significance, frequency and impact on investors and the markets. The Report also describes… Continue Reading

FINRA Proposes Rule Change Relating to Rule 4512 (Customer Account Information)

Posted in Broker-Dealer
On November 28, the Financial Industry Regulatory Authority filed a proposed change to Rule 4512(a)(3) (Customer Account Information) with the Securities and Exchange Commission. FINRA Rule 4512(a)(3) currently requires member firms to obtain the “wet” signature of each named, natural person authorized to exercise discretion in an account. Members have stated that the requirement to… Continue Reading