Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Tag Archives: Broker-Dealer

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

SEC Adopts Securities Act Rule 139b To Promote Research Reports on Investment Funds

Posted in Broker-Dealer
On November 30, the Securities and Exchange Commission adopted new Rule 139b under the Securities Act of 1933. Rule 139 currently provides a safe harbor for the publication or distribution of research reports concerning one or more issuers by a broker-dealer participating in a registered offering of a covered issuer’s securities. However, Rule 139’s safe… Continue Reading

SEC Approves New Supplement to Options Disclosure Document

Posted in Broker-Dealer
On November 9, the Securities and Exchange Commission approved a new supplement (Supplement) to the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD), published by the Options Clearing Corporation (OCC). The ODD provides general disclosures regarding the characteristics and risks of exchange traded options. Generally, broker-dealers must provide a… Continue Reading

SEC Amends Rules to Increase Order Handling Disclosure

Posted in Broker-Dealer
On November 2, the Securities and Exchange Commission adopted amendments to Rule 606 of Regulation NMS in order to require broker-dealers to provide certain individualized disclosures to customers with respect to the firm’s handling and execution of orders. This disclosure would only be required upon the request of a customer in connection with certain orders… Continue Reading

FINRA Reminds Members of Obligations Related to OTC Securities Quoted by a Filed Form 211

Posted in Broker-Dealer
On September 24, the Financial Industry Regulatory Authority (FINRA) issued a Regulatory Notice (Notice) reminding firms of their applicable obligations when publishing a quote in an OTC security, in addition to filing a Form 211. Securities Exchange Act of 1934 (SEA) Rule 15c2-11 prevents a broker-dealer from initiating quotations in an OTC security unless such… Continue Reading

SEC Commissioner Jackson Gives Speech Regarding the State of America’s Stock Exchanges

Posted in Broker-Dealer
On September 19, Commissioner Robert J. Jackson, Jr. of the Securities and Exchange Commission gave a speech related to the state of the SEC’s regulation of the nation’s 13 stock exchanges in light of the transition of the exchanges from not-for-profit entities to for-profit corporations, with both regulatory and profit-seeking mandates, about a decade ago.… Continue Reading

CBOE Proposes Rule Change Relating to Qualification Examinations

Posted in Broker-Dealer
On September 20, the Securities and Exchange Commission approved a rule proposal filed by Cboe Exchange, Inc. (CBOE) related to the registration categories and qualification examinations required for Trading Permit Holders and associated persons that engage in trading activities on CBOE (Proposal). In light of FINRA’s adoption of the Securities Industry Essentials Examination (SIE), which… Continue Reading

SEC Releases Statement on Expiration of Tick Size Pilot

Posted in Broker-Dealer
On September 10, the Securities and Exchange Commission announced the early expiration of its Tick Size Pilot Program. Under the program, the minimum quoting and trading increments (tick sizes) for stocks of certain smaller companies was widened. The program was intended to expire on October 2. However, due to concerns relating to a mid-week shifting… Continue Reading

Amended FINRA Registration Rules To Take Effect October 1

Posted in Broker-Dealer
Amended Financial Industry Regulatory Authority registration, qualification and continuing education rules will become effective on October 1. The amended rules, which the Securities and Exchange Commission approved on October 13, 2017, will consolidate and replace the National Association of Securities Dealers, Incorporated New York Stock Exchange and existing FINRA registration rules.… Continue Reading

SEC Amends Disclosure Obligations in Municipal Securities Market

Posted in Broker-Dealer
The Securities and Exchange Commission has adopted new disclosure requirements for participants in the municipal securities market. As background, Rule 15c2-12 under the Securities Exchange Act of 1934 requires each broker, dealer and municipal securities dealer that acts as an underwriter in a primary offering of municipal securities with an aggregate principal amount of $1,000,000… Continue Reading

SEC Disapproves Bitcoin Exchange-Traded Products

Posted in Broker-Dealer
The Securities and Exchange Commission, acting through authority delegated to the Division of Trading and Markets (Division), disapproved proposals by the New York Stock Exchange Arca Exchange and the Chicago Board Options Exchange (Cboe) BZX Exchange to list bitcoin exchange-traded products (ETPs) for trading. Both exchanges previously filed proposals to list ETPs that invest in… Continue Reading

FINRA Publishes Regulatory Notice Regarding ATS Supervision Obligations

Posted in Broker-Dealer
On August 13, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 18-25 to remind Alternative Trading Systems (ATS) to evaluate their supervisory systems to ensure compliance with their supervision obligations, including, without limitation, with respect to business continuity, recordkeeping, Regulation ATS, Regulation NMS, Regulation SHO and the SEC’s Market Access Rule, to the extent… Continue Reading

FINRA Seeks Comment on Fintech Innovation in Broker-Dealer Industry

Posted in Broker-Dealer
On July 30, the Financial Industry Regulatory Authority (FINRA) issued a Special Notice requesting comment on how to continue to foster financial technology (fintech) innovation in the financial services industry. In particular, to support its mission of investor protection and market integrity, FINRA is seeking comment from market participants on how FINRA rules or administrative… Continue Reading