The U.S. Department of Justice (“DOJ”) has filed its first criminal action against fraudulent activity taking advantage of the novel coronavirus pandemic.
DOJ filed suit on March 21 in Austin, Texas accusing the operators of “coronavirusmedicalkit.com” of wire fraud under 18 U.S.C. § 1343 by purporting to sell WHO-approved COVID-19 vaccines online in return for credit-card payments of $4.95 for shipping. But there are no approved vaccines yet, and WHO is not involved with the website.
The United States District Court for the Western District of Texas entered temporary ...
The New York Stock Exchange announced today that it will activate its Business Continuity Plan, temporarily closing its equities and options (Amer and Arca) trading floors, and will move to all-electronic trading starting at the open on Monday, March 23. Some Floor Broker order types will not be available.
The announcement is here.
The SEC has gathered its guidance in a single location. Topics covered include:
(a) The SEC’s own Business Continuity Plan (“BCP”) and its implementation;
(b) Increased market monitoring and surveillance;
(c) Issuer guidance regarding COVID-related disclosures;
(d) Conditional exemptive orders for registrants, including investment companies and investment advisers, easing meeting and certain reporting requirements;
(e) Delaying certain open rulemaking proposals until April 24.
The Enforcement Division remains active, having implemented temporary trading ...
The Massachusetts Securities Division adopted a watered-down fiduciary-rule for broker-dealers, effective March 6, with a compliance deadline of September 1, 2020. The move comes after years of announced intention to do so – especially after the Obama Labor Department’s fiduciary-rule got shot down in the courts.
The Rule requires a broker-dealer to act as a fiduciary for retail customers (excluding institutional accounts and investment advisers) when a broker:
• Has discretion (other than time and price);
• Has undertaken a contractual fiduciary duty; or
• Has ...
Paxos Settlement Service announced February 20, 2020 that it has commenced P2P settlement of US listed equity trades over a private, permissioned blockchain with Credit Suisse and Instinet (a Nomura Bank subsidiary). Paxos expects Societe Generale will join soon.
Paxos is registered with the New York Department of Financial Services and regulated as a limited-purpose trust company.
Late last year, Paxos obtained SEC No-Action relief from clearing-agency registration, limited to a “Feasibility Study No-Action Phase” restricted to a maximum of seven participants for 24 ...
This week FINRA issued Reg. Notice 20-08 on “Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief.”
FINRA urges member firms to review and update their Business Continuity Plans (“BCP”) to ensure they fit the effect of an infectious disease pandemic on each firm’s operations and risk profile. See Rule 4370 (annual BCP review requires an update on any material change).
FINRA anticipates that firms may need to implement remote work arrangements (whether telecommuting or working from firm alternate or recovery sites). In those instances ...
Former Louisiana deputy sheriff and Russian resident Steven Seagal agreed to a Cease and Desist (“C&D”) Order by the SEC, finding violations of the non-touting provisions of Securities Act § 17(b) and imposing civil penalties for acting as a Twitter and Facebook “brand ambassador” for cryptocurrency Bitcoiin2Gen without disclosing it was a paid endorsement.
The Order required Seagal to forego such opportunities for any issuer for three years, disgorge his endorsement fees and pay a civil penalty of a like amount over the coming year.
In 2017, the SEC’s Office of ...
FINRA held its bi-annual Cybersecurity Conference in January and recently published five take-away real-world experiences from the conference:
- A firm’s social media posts about a charity golf tournament, tipped the scammers when to send an urgent email changing wire instructions, while most of the firm’s management was out on the course;
- A thumb-drive planted in a parking lot labeled “bonuses,” “payroll,” or “commissions” proved bait too tasty for a firm’s personnel to resist;
- Even the best vendor-based data systems have hidden vulnerabilities lurking ...
FINRA issued a targeted-exam letter on February 20, 2020 seeking information on the effect of zero-commission trading upon compliance with related obligations of Best Execution, payment for order flow, and non-commission account fees. The Exam Letter is here.
The zero-commission tide rose quickly throughout 2019, together with some industry consolidation as well. Among those announcing no commissions:
- Ally Invest, the investment affiliate of online Ally Bank;
- E-Trade, to be acquired by Morgan Stanley, announced February 20, here.
- Fidelity
- Interactive Brokers
- Robinhood