On February 9, Acting SEC Chair Lee announced she was restoring the delegated authority of Enforcement Division senior officials to issue subpoenas to compel document production and sworn testimony without the need of a Formal Order of Investigation by the full Commission.
Until 2009, the SEC could only issue compulsory processes (for document production and testimony) under a Formal Order of Investigation issued by the Commission. In 2009, however, then-Chair Mary Shapiro delegated that authority to the Director of Enforcement for a trial period of one year. The Final Order, No ...
During the height of the GameStop (NYSE: GME) mania, Slate author Jordan Weissman explained that
“[A]t a moment that the markets are being overrun, for better or worse, by posters who’ve basically dedicated themselves to shredding the idea that markets are efficient, rational mechanisms for allocating capital and discovering value, tweeting about stonks seems far more appropriate than discussing something as reasonable and comprehensible as stocks. It’s an emotional onomatopoeia for talking about people throwing their money at the market when, lol, nothing ...
On Thursday, January 28, trading-app broker-dealer Robinhood – a self-styled disrupter democratizing trading – suspended its users’ ability to buy Gamestop stock or options (along with other stocks). After playing a prominent role in the crowd-sourced short-squeeze on the meme stock, abruptly shutting the “buy” door prompted swift and fierce reactions. NY Rep. Alexandria Ocasio Cortez tweeted that Robinhood’s freeze on Gamestop buys was “unacceptable” and called for Congressional hearings. Texas Sen. Ted Cruz quickly agreed (eliciting a snarky ...
On February 1, 2021, the Financial Industry Regulatory Authority (“FINRA”) released its “Report on FINRA’s Risk Monitoring and Examination Activities.” The Report combines two of FINRA’s long-standing reports: (a) the retrospective Report of Examination Findings from the prior year; with (b) its forward-looking Examination Priorities Letter.
The new format is more user-friendly for supervision and compliance professionals than the prior reports, setting out for each topic:
- Regulatory Obligation with citation to relevant rules;
- Related Considerations
On the new year’s first day, Congress passed the NDAA over President Trump’s veto and gave the SEC more clear – and longer – disgorgement authority for enforcement actions in the courts. The National Defense Authorization Act for Fiscal Year 2021, H.R. 6395 (116th Cong. 2019-2020) is here.
First, Section 6501(a)(3) of the Act amends Securities Exchange Act Section 21(d), 15 U.S.C. § 78u(d) to provide express statutory authorization for SEC’s disgorgement remedy in court actions:
- (7) Disgorgement.--In any action or proceeding brought by the Commission under any ...
Phishing FINRA
October is cyber-security awareness month, so it’s only appropriate that FINRA started it with another Regulatory Notice warning member firms to beware of a false-survey phishing scheme. The Notice warns of “a widespread, ongoing phishing campaign” soliciting survey responses in an email using the fake domain “@regulation-finra.org.” See Reg. Notice 20-35 (Oct. 6, 2020), here.
That’s more of the same for FINRA. It warned in August that fraudsters were using a fake FINRA domain (www.finnra.org – with an extra “n”) in Regulatory Notice 20-27 ...
On August 20, FINRA warned member firms about a rash of imposter websites, using registered representative’s names, pictures, CRD numbers and other information to gull investors into providing personally-identifying information to fraudsters.
FINRA suggests member firms should contact the FBI and financial regulators, and posting a notification to investors on their legitimate websites. Other response measures include conducting a who-is search, complaining to host ISP or domain-name registrar, among others.
Websites maintained by FINRA member firms and their ...
The Financial Industry Regulatory Authority (“FINRA”) has issued a special alert to its member firms, alerting them to an imposter website: www.finnra.org (containing an extra “n”).
The fake site contains a purported “registration” form and firm gateway page, apparently phishing for credentials. FINRA also warns members that the fake domain may be the source of phishing emails.
Both FINRA and the SEC have amped up their cybersecurity warnings during the pandemic.
Regulatory Notice 20-27 is here.
Thomas K. Potter, III (tpotter@burr.com) is a partner in the ...
The SEC recently announced the creation of the Event and Emerging Risks Examination Team (“EERT”) in its Office of Compliance Inspections and Examinations (“OCIE”). OCIE is the unit charged with conducting compliance exams on registered investment companies, investment advisors, and broker-dealers -- although primary responsibility for examining broker-dealers lies with their self-regulatory organization, FINRA (itself subject to OCIE exams).
The SEC said the EERT unit “will proactively engage with financial firms about emerging threats and current market ...
In XY Planning Network, LLC, et al. v. SEC, et al., the United States Court of Appeals for the Second Circuit rejected a challenge to Regulation Best Interest brought by an organization of investment advisers, an individual investment adviser, seven states, and the District of Columbia. The Court denied the Petitioners’ petition, holding that: the individual investment adviser had standing but the states did not, that § 913(f) of the Dodd-Frank Act authorized the SEC’s promulgation of Regulation Best Interest, and that Regulation Best Interest is not arbitrary and ...