The Federal Reserve announced on August 3, 2016, that it would fine Goldman Sachs $36.3 million in connection with a leak of confidential information from its New York branch. The leak was discovered and reported by Goldman Sachs in 2014 after Goldman learned that a junior executive had received information from a contact at the New York Fed. Both the junior executive and one of his supervisors were fired as a result.
The fine once again brings to bear the importance of maintaining and enforcing compliance programs. In addition to the clear benefits of having infrastructure in place to ...
In an August 1 release, the MSRB said it has scratched a proposed rule that would have required reporting of direct-purchases and bank loans by municipal issuers.
In the March concept release (MSRB Reg. Notice 2016-11) , the MSRB noted concerns that municipal borrowings in the form of direct purchases or bank loans increased the risk to investors in municipal securities if the other borrowings remained undisclosed. The Board's concept release proposed rule-making that would require municipal advisors and others to disclose such borrowings. That proposal, though, posed potential ...
This SRO gamesmanship is making a mockery of governing.
The latest is the SEC's position that it didn't take any action on the new MSRB Rules extending pay-to-play prohibitions to municipal advisors, so it can't be sued to stop the implementation of the regulations implemented by the MSRB under the SEC's jurisdiction. Making it only worse, the SEC says that it's because Congress prohibited the Agency from spending any money on this part of the Dodd-Frank mandate Congress required.
Whaaat?!? So hold onto your hat, as we go down the rabbit hole to explain this:
The MSRB: The SEC's ...
Last month, the 6th Circuit joined the majority view recognizing the "materialization of the risk" theory of loss-causation as an alternative to "corrective-disclosure" in securities litigation under Rule 10b-5.
The Public Securities Litigation Reform Act ("PSLRA") and federal jurisprudence (Tw-Iqbal) require pleading specific factual allegations of each element of Rule 10b-5 claim, including loss-causation (a proximate causal relationship between not merely the alleged misrepresentation or omission and the transaction, but also the plaintiffs' loss). Dura-Pharm
In an effort to provide transparency, the Dodd-Frank Act has previously formed an Investor Advisory Committee to assist the SEC on various issues including regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.
One of the goals of the Committee is to ensure the effectiveness of corporate disclosures that are made for investors. In keeping with this goal, the Committee ...
The Eleventh Circuit Friday joined three others in concluding that Congress intended Respondents must wait until appeal from the Commission to have a Court consider their challenges to the Constitutionality of the SEC's administrative forum.
Following the Thunder Basin line of cases, the Eleventh Circuit held that federal courts do not have jurisdiction to short-circuit the SEC's administrative process to hear claims that the process is not constitutional. Instead, Respondents must raise their arguments twice before the very tribunals they claim aren't Constitutional ...
For years, self-regulatory agencies (like FINRA or the Exchanges) have wielded the statutory authority granted them by Congress - and backed by the SEC - exercising governmental power to compel testimony, impose fines and punishments, and even bar a person or firm from an entire industry.
At the same time, they declaim that they're just membership organizations, so don't owe anyone Constitutional protections (like Fifth Amendment Due Process) and aren't subject to Equal Access to Justice Act claims for your litigation expenses when they lose.
So SROs essentially are the ...
Last week, industry groups filed two suits seeking to block the Labor Department's new fiduciary rule governing IRA and other retirement-fund investment recommendations.
In the first, the U.S. and several local Texas Chambers of Commerce and the Securities & Financial Markets Association filed suit in Dallas (in the conservative Fifth Circuit). The suit calls the rule-making a usurpation of SEC authority (and Dodd-Frank's specific authorization of the SEC to promulgate uniform fiduciary standard) that deliberately adopts an unworkable rule, then conditions exemptions from ...
In a recent new release, the Tennessee Securities Division urged investors to ask tough questions of their investment advisors, and about their compensation, account arrangements and educational / regulatory history.
The May 26 release is here.
SEC-registered investment advisors are required to provide the answers to those (and other) questions on their ADV Part 2, which is kept on file with the SEC and publicly-available through the Commission's IA Public Disclosure Portal, here. Information on registered broker-dealers and their associated persons is available through ...
Congress voted this week to de-rail the Department of Labor's sweeping fiduciary-duty suite of rule-making, but doesn't have the votes to override the President's threatened veto. The Rule (over a 1,000 pages in all) imposes a sweeping definition of who owes fiduciary duties to retirement investors in retail IRA, HSA, Roth, Coverdell and other "qualified money" situations and prohibits conflicted transactions (including differential compensation), unless they comply with a series of exceptions, carve-outs and exemptions. Industry groups say the compliance and paperwork ...