Posts from August 2014.

The SEC's Office of Compliance Inspections and Examinations ("OCIE") announced August 19 a two-year, three-phase examination initiative targeting newly-registered municipal advisors. SEC Press Rel. 2014-170 (Aug. 19, 2014). The MA Examination Initiative hopes to engage a significant portion of newly-registered MA's. In the first phase, Engagement, OCIE will engage in nationwide outreach to inform MA's of their obligations under Dodd-Frank, the SEC's new MA Rule and related implementing Rules by MSRB and others. The second phase, Examination, will review identified ...

Posted in: Dodd-Frank, OCIE, SEC
The Second Circuit joined the Ninth in holding that a subsequent contractual forum-selection clause requiring federal-court litigation trumps the base requirement that FINRA member firms must arbitrate upon a customer's request. FINRA Rule 12200 provides member firms "must arbitrate a dispute ["between a customer and a member" "arising in connection with the business activities of the member"] under the Code if: … Requested by the customer…." Public-financing authorities brought FINRA arbitrations against Goldman, Sachs and Citigroup Global Markets over ...
Posted in: FINRA
In its August 18 Regulatory Notice No. 2014-15, the Municipal Securities Rulemaking Board ("MSRB") proposed amendments to Rule G-37 that would extend the long-standing "pay-to-play" prohibition's reach to newly-registered municipal advisors. The Notice is here. Rule G-37 prohibits municipal securities dealers and their municipal-finance-professionals from making political contributions to elected officials of issuers who are in a position to influence the selection of underwriters. The new proposal would extend the Rule to impose similar prohibitions on ...
Posted in: MSRB, SEC

The SEC recently announced another issuer settlement under its Continuing Disclosure Cooperation Initiative (see our blogs First Settled Proceeding (July 23, 2014) here). In this settled action, Kansas consented to the standard sanctions offered municipal issuers under the Initiative - a settled administrative action (without admitting or denying) charging negligence under '33 Act §17(a)(2-3) and requiring remedial efforts (new policies and procedures), disclosure of the sanction during the next five years, and continuing cooperation. The charges arose from eight bond ...

Posted in: SEC
Responding to industry complaints, the SEC's Enforcement Division modified its Municipal Continuing-Disclosure Cooperation ("MCDC") Initiative to (a) extend the deadline for issuer disclosures until December 1 (from September 1) and (b) implement a tiered set of caps on fines, more proportional to underwriters' revenues. Announced last March, the Initiative offers standardized terms for settlement of administrative proceedings for those municipal-securities-market participants who admit their participation in securities offerings having mis-stated a public ...
Posted in: SEC

When a member or shareholder of a company or corporation sustains a loss, is that member's loss directly compensable by a direct suit? Or does the member have to bring a derivative suit on behalf of the corporation? While it may sound like an easy question, the inquiry involved to arrive at the answer can be confusing. Recently, the Third District Court of Appeals in Florida shed some light on the analysis. In Dinuro Investments, LLC v. Camacho et al., 2014 WL 3290609, ---So.3d--- (Fla. 3d DCA July 9, 2014), the plaintiff and the two defendants established an LLC to develop real property. The ...

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