The U.S. Securities and Exchange Commission (“SEC”) released its 2021 Examination Priorities on March 3. The Examinations group – elevated last December to Division status (formerly the Office of Compliance Investigations and Examinations (“OCIE”)) -- covered the list of perennial concerns. The 2021 priorities include some new subjects, however, reflecting the policy emphasis of the Biden administration.
“This year, the Division is enhancing its focus on climate and ESG-related risks by examining proxy voting policies and practices to ensure voting aligns ...
The Securities Industry and Financial Markets Association (“SIFMA”) recently proposed sweeping modernization of industry self-regulatory rules to reflect firms’ successful pivot to remote operations over the past year. SIFMA suggests significant remote work likely will continue, even after the COVID-19 “pilot program.”
SIFMA proposed a “location agnostic” overhaul of the Rules in its February 16 comment letter in response to FINRA’s call for “lessons learned” during the COVID-19 pandemic. See FINRA Reg. Notice 20-42 (Dec. 16, 2020).
Firms’ ...
The Wall Street Journal reports traders on Reddit’s WallStreetBets forum – the same social medium that helped fuel the GameStop short squeeze – have started bidding up cannabis stocks. Mentions on the forum jumping from near zero to over 8,000 in just a few days. WallStreetBets Traders Set Cannabis Stocks Alight (Wall St. J., Feb. 11, 2021), is here.
Perhaps not coincidentally, the day before, FINRA issued a Special Alert reminding firms of their regulatory obligations regarding low-priced, often volatile, stocks. The Alert is to
“help FINRA member firms that engage in ...
On June 16, the SEC issued a temporary exemptive order, allowing registered municipal advisors to solicit banks, their wholly-owned commercial lenders and credit unions in connection with direct placements by municipal-issuer clients. Ordinarily, that placement-agent activity would require broker-dealer registration under ’34 Act Section 15 (15 U.S.C. § 78o).
The Commission granted the temporary exemption to allow MAs to assist municipal issuers – especially smaller municipalities not otherwise eligible for the Fed’s Municipal Liquidity Facility – with ...
On May 28, 2020, FINRA issued its Regulatory Notice 20-16 sharing firms’ WFH practices observed to date. They include common practices adopted across most industries, as one would expect.
During the TRANSITION TO WFH, firm practices included:
- Increased Customer Assistance through outreach and web-based communications, to ensure customers knew how to access representatives and other resources;
- Location Monitoring & Contact Lists to know where staff were and ensure they knew how to stay in touch;
- Increased Support for staff, including more frequent training and ...
On May 8, FINRA filed an expedited request for an immediate rule change that would allow service by email, extensions of time, and video-conference hearings in member-application, disciplinary proceedings and appeals. FINRA notes that the COVID-19 work-from-home (“WFH”) environment makes it “exceedingly difficult to send and receive hard copy mail and conduct in-person meetings and hearings.” The rule change is expected to be temporary through June 15, subject to another later filing extending the provisions if and as necessary.
FINRA previously made similar ...
In the past week, the Securities and Exchange Commission has suspended trading in five separate over-the-counter (“OTC”) stocks due to dubious COVID claims or related identity confusion.
The latest order came Thursday, April 9, when the SEC suspended trading in Turbo Global Partners, Inc. over claimed ability to provide non-contact testing equipment.
On Wednesday, April 8, when the SEC suspending trading in BioELife Corp. f/k/a US Lithium Corp. (“LITH”) over claimed production of a COVID-19 prevention product line, coupled with manipulative trading indicia.
On ...
Securities and Exchange Commission Chair Jay Clayton issued an April 2 public statement that the SEC will hold firm on its June 30, 2020 deadline for firms to implement Reg. BI and Form CRS. There had been industry speculation that the SEC might push that compliance deadline back in the face of the COVID-19 pandemic.
Regulation Best Interest (“Reg. BI”) was adopted by the SEC last June in the wake of the turmoil from the Department of Labor’s “Fiduciary Rule” – a preemptive regulatory incursion into financial markets outside DOL’s usual “portfolio” that resulted in a ...
The Municipal Securities Rulemaking Board (“MSRB”) on April 2 published its statistical analysis and list of COVID-19 continuing disclosures filed by municipal issuers during the first quarter of 2020. Of 43,667 disclosures, 506 were related to the Coronavirus pandemic.
Securities and Exchange Commission Rule 15c2-12 requires all underwriters of municipal securities to require municipal issuers to enter an agreement that issuers will file continuing disclosures of events that may have a material effect upon bond repayment. Although the COVID pandemic itself is not ...
SEC Enforcement Co-Directors Stephanie Avakian and Steven Peiken issued a March 23 public statement warning that the novel Coronavirus pandemic increases material non-public information and reminding corporate insiders of their obligation to disclose or abstain.
“Corporate insiders are regularly learning new material nonpublic information that may hold an even greater value than under normal circumstances. This may particularly be the case if earnings reports or required SEC disclosure filings are delayed due to COVID-19. Given these unique circumstances, a greater ...
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 ...