The SEC's administrative forum has been under increasing scrutiny over the past year. Now the SEC has removed an ALJ from a high-profile case, after he refused the Commission's "invitation" to provide a no-bias affidavit in similar case. In a May 6 article, "SEC Wins With In-House Judges," the Wall Street Journal reported that former ALJ Lillian McEwen felt pressured by the SEC's Chief Administrative Law Judge over her failure to rule more often in the Commission's favor. Respondents appealing an administrative case to the full Commission have alleged the process is unfair and ...
Posted in: SEC
Tags: ALJ, Barbara Duka, burr forman, CMBS, Duka, Lillian McEwen, no-bias affidavit, SEC, SECs Chief Administrative Law Judge, Securities Litigation & Arbitration, Timbervest
The Department of Justice today appealed the Second Circuit's Newman decision to the U.S. Supreme Court, after several extensions. United States v. Newman, No. 15-137 (U.S. filed July 30, 2015). Last December's ruling narrowed the scope of tippee liability in insider-trading cases. The latest extension of the cert-petition deadline resulted in a bit of row, when the government hand-delivered the request June 15 and Justice Ginsburg granted it June 16, (extending the filing deadline to August 1). But Newman's counsel apparently wasn't even served with the government's request ...
Posted in: Supreme Court
Tags: burr forman, Department of Justice, DOJ, insider-trading, Justice Ginsburg, Newman, Securities Litigation & Arbitration, U.S. Supreme Court
The Financial Industry Regulatory Authority (FINRA) announced last week that it is seeking comment on a proposal to create a new academic Trade Reporting and Compliance Engine (TRACE) data set. While academic researchers already use historic TRACE data, the data currently available to researchers does not include identifying information about dealer identities. The new data product, which would be available solely to institutions of higher education, would include masked dealer identities. FINRA's proposal, which is similar to a proposal recently made by the Municipal ...
Tags: burr forman, Financial Industry Regulatory Authority, finra, MPIDs, MSRB, Municipal Securities Rulemaking Board, TRACE, TRACE data, Trade Reporting and Compliance Engine
Last week the US Chamber of Commerce, through its Center for Capital Markets Competitiveness, issued a white paper proposing wide-ranging changes to the SEC's enforcement process. Most of the 28 recommendations were refinements of existing processes or prior recommendations, but some likely would require congressional mandate. The report called for changes to five categories of enforcement policy, to Commissioners' oversight of the enforcement process and improvements to SEC investigations. The Center's objective is to ensure "vigorous, effective enforcement coupled ...
Posted in: SEC
Tags: Admissions, burr forman, Center for Capital Markets Competitiveness, Choice of Forum, Parallel Proceedings, Refining the Wells Process, SEC, SEC Enforcement Changes, Securities Exchange Commission, US Chamber, US Chamber of Commerce, “Broken Windows”
In mid-June, SEC Commissioner Gallagher issued a strongly-worded public dissent from two enforcement actions against investment-adviser CCOs, accusing the Commission of "cutting off its nose to spite its face" by punishing CCOs upon whom regulators depend to help ensure legal and regulatory compliance. Our blog post covering the remarks is here. Commissioner Aguilar responded June 29 to Gallagher's remarks, "concerned [they] may have unnecessarily created an environment of unwarranted fear in the CCO community," and calling it "unhelpful." Aguilar cited agency ...
Posted in: SEC
Tags: broker-dealer compliance, burr forman, CCOs, Chair White, Commissioner Aguilar, SEC, SEC Commissioner Gallagher, Securities Litigation & Arbitration
The U.S. Securities and Exchange Commission recently proposed rules under the Investment Company Act of 1940 and related regulations that would require certain funds, including Exchange-Traded Funds, to provide additional information to the SEC relating to, among other things, certain types of investments, liquidity, pricing, and risk metrics. This additional information will assist the SEC with assessing potential risks to investors and allow investors to better understand their exposure and risk factors. The proposal requires that the information be reported in a ...
Posted in: SEC
Tags: burr forman, Investment Company Act of 1940, SEC, SEC's Proposed Reporting Requirements, securities litigation, U.S. Securities and Exchange Commission
In a strongly-worded public statement last week, SEC Commissioner Gallagher chided the Commission for "cutting off the noses of CCO's to spite its face." Explaining his dissent in two recent enforcement actions imposing sanctions on investment-advisor Chief Compliance Officers, the Gallagher accused the Commission and its Enforcement staff of wrongly blurring the lines between the CCO's (staff) function of administering compliance programs and the business-line obligation to implement them (through supervision). Gallagher is "especially worried" about creating ...
Posted in: SEC, Third Circuit Court
The Financial Industry Regulatory Authority ("FINRA") recently filed a proposed rule change with the Securities and Exchange Commission ("SEC") to amend Rules 12214 and 12601 of the Code of Arbitration for Customer Disputes ("Customer Code") and Rules 13214 and 13601 of the Code of Arbitration Procedure for Industry Disputes ("Industry Code") (collectively, "Codes") to require that parties to an arbitration to provide more advance notice before cancelling or postponing a hearing or pay a higher cancellation fee if advance notice is not provided. These changes are ...
Posted in: FINRA, Third Circuit Court
The Securities Exchange Commission announced June 18 the first major wave of underwriter sanctions under its Municipalities Continuing Disclosure Cooperation ("MCDC") Initiative. The SEC sanctioned 36 municipal underwriting firms a total of about $9 million. The SEC's Enforcement Division announced the MCDC Initiative in March 2014 as part of the Commission's increased focus on municipal markets. The Initiative aims to improve compliance with regulations requiring municipal-issuers to periodically update their financial disclosures - and did so by asking issuers and ...
Posted in: Third Circuit Court
In a ruling that may signal the end to much of the litigation over mortgage-backed securities, New York's highest court held limitations for breach of warranty litigation over portfolio loans run from the MLSA closing date and not from breach of the contractual repurchase obligation. Many investors have argued that a sponsor's obligation to repurchase non-conforming loans constitutes a separate "springing" obligation 150 days after notice of a non-conforming loan (60 for cure, then 90 for repurchase). The Court rejected that notion, in favor of its long-standing preference ...
Posted in: Third Circuit Court