Compliance Regulatory: Corporate Governance and Securities: Calfee

One of the key services that members of this practice provide to our clients is the regular assistance of a consistent and dedicated team to prepare, review and advise on current and periodic Exchange Act reports, proxy statements and other filings made with the SEC. This approach allows our lawyers to remain current with the specific disclosure and compliance issues our clients are facing and to serve them in the most efficient and effective manner. Our team also works closely with attorneys in our corporate governance practice in areas where governance and compliance with securities regulation overlap. Our Securities Enforcement & Compliance Practice provides sophisticated legal guidance and defense in government enforcement proceedings, internal investigations, regulatory examinations, whistleblower claims and shareholder and class action lawsuits. We represent companies and individuals confronted with complex securities enforcement matters related to the federal and state securities laws, financial regulations and accounting standards.

Many advisers received “mixed-use” products or services and a few advisers received products and services outside those that are defined in the safe harbor under Section 28 of the Securities Exchange Act of 1934. Some firms had not documented their review of the proxy service providers used; therefore, examiners could not assess whether the adviser had established and implemented measures reasonably designed to identify and address proxy voting firms’ conflicts of interest. Examiners also could not confirm claims of proxy service provider independence.

Regulatory Compliance and Enforcement in the Securities Industry

The Fixed Income Distributions file is a cumulative list of distributions that have been announced during the calendar year. These include cash, stock and in kind distributions as a result of a bankruptcy reorganization plan, default interest payments, or other distributions in fixed income securities. FINRA’s Operations Department reviews and processes these company-related actions pursuant to SEA Rule 10b-17 and FINRA Uniform Practice Code to facilitate the orderly trading and settlement of OTC securities. This branch receives and investigates complaints regarding potential violations of Hawaii securities laws and prosecutes securities fraud and other securities violations. Designed as a personal master class for the securities legal and compliance professional, this podcast embodies Patrick’s passion to help you put Compliance In Context™ by combining the technical expertise of industry thought leaders and innovators with the practical experience of doers and key decision makers.

They can integrate Jumio into their existing algorithms, rule sets, and systems without complete software replacement. Jumio’s superior detection software analyzes hundreds of factors about millions of financial transactions. It adaptively searches for abnormal trends and activity, such as wash trading, flow-through, penny stocks, and high-risk transfers. When companies do not comply with anti-money laundering laws, they can incur huge fines.

What is Securities Compliance

Represented a target/subject in SEC and Department of Justice investigations into payments by a Brazilian subsidiary of a U.S. corporation made to government officials in a Far East country in order to secure a portion of a monopoly market in tobacco. Represented a senior executive of a multinational transportation and logistics company in investigations by the SEC and Department of Justice into FCPA violations. It appeared that some transfer agents inappropriately refused to deal with securityholders who attempted to correct their addresses on the transfer agents’ records. Access persons were prohibited from engaging in short-term trading (i.e., the purchase and sale of a security within 60 days).

SEC laws and regulations

Our attorneys include former officials in the SEC’s Enforcement Division, former assistant U.S. attorneys, former counsel with the CFPB and the special inspector general for TARP, former senior federal banking regulatory officials, and former state and local prosecutors. In particular, examiners noted that the investment adviser attempted to delegate responsibility for performing a suitability review to the broker-dealers by contract, which created an apparent gap in the supervision between the adviser and the broker-dealer. Many sales seminars were advertised as “educational,” “workshops,” and “nothing will be sold at this workshop,” and many advertisements did not mention any investment products. Nonetheless, the seminars apparently were intended to result in the attendees’ opening new accounts with the sponsoring firm and, ultimately, in the sales of investment products, if not at the seminar itself, then in follow-up contacts with the attendees.

What is Securities Compliance

Funds attributed these mistakes to clerical errors or misapplication of fund voting guidelines to specific votes. Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. If a client, including those in the securities industry, encounters securities related problems with investors, customers, regulators or shareholders, we protect our client’s interests in civil litigations, FINRA arbitrations and administrative proceedings. BMC works with 86% of the Forbes Global 50 and customers and partners around the world to create their future.

What is Securities Compliance?

Implemented compliance programs and conducted compliance training and pre-transactional due diligence for multiple public companies. Drafted trading desk manuals and supervisory procedures for major investment banks. Industry organizations also have the power to make and enforce some rules that govern securities transactions and related activities.

Patrick D. Hayes focuses his attention on gamification—what is it, why are regulators and investors concerned about it, what are the benefits of it, and most importantly, what are the key things you should be considering from a compliance perspective? In the Headlines section, Patrick looks at Chair Gensler’s Spring 2022 Agency Rule list, what it means, and the overall impact to the industry. And finally, Patrick wraps up today’s show with another installment of Outtakes where an old compliance violation takes on a brand new look in crypto.

Securities Enforcement & Compliance

Skadden received a 2017 Chambers USA Award for Excellence for having the nation’s top Securities and Financial Services Regulation practice. With certain exceptions, this Act requires that firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors. Since the Act was amended in 1996 and 2010, generally only advisers who have at least $100 million of assets under management or advise a registered investment company must register with the Commission.

What is Securities Compliance

The opinions expressed by guest speakers and panelists during Securities Compliance Podcasts may not necessarily reflect the viewpoints of the attorneys and professionals of Calfee, Halter & Griswold LLP or its subsidiaries or affiliates. Calfee’s educational content is intended to inform and educate readers about legal developments and is not intended as legal advice for any specific individual or specific situation. With regard to all content including case studies or descriptions, past outcomes do not predict future results.

The Office of Compliance Inspections and Examinations

In some examinations registered representatives or investment advisers holding the sales seminars had recommended investments that did not appear to be suitable for the individual customers. In 25 of the 110 examinations (or 23% of examinations conducted), examiners found indications that unsuitable recommendations to purchase investments were made at the sales seminars, or following the seminar when an attendee opened an account. The investments appeared to be unsuitable in light of the customers’ investment objectives or time horizon – e.g., a risky investment was recommended to an investor with a “conservative” investment objective, or an illiquid investment was recommended to an investor with a short-term need for cash. Individuals attending the sales seminars may not understand that the seminar is sponsored by an undisclosed company with a financial interest in product sales. Attendees at the seminars are not always provided with the name of the firm sponsoring the seminar, and may not be aware that product sponsors (e.g., mutual fund companies and insurance companies) may provide funding for the seminars with the expectation that investment professionals will sell their products.

As challenging as compliance with the laws applicable to securities offerings may be, for public companies, that is just the start of the compliance demands that they face. Assisting in benchmarking governance practices against peer company practices and regulatory requirements and in identifying best practices. Among many of their duties, the SEC enforces securities laws including the Securities Act of 1933, Securities Act of 1934, Sarbanes-Oxley Act of and the Dodd-Frank Act of 2010, among others. We successfully represented a public company in an 18-month Securities & Exchange Commission investigation related to accounting and disclosure…

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The seminars are commonly held at upscale hotels, restaurants, retirement communities and golf courses. In addition to providing a free meal, the firms and individuals that conduct these seminars often use other incentives (e.g., door prizes, free books, and vacation deals) to encourage attendance. High yield funds with higher average credit qualities, fewer unrated securities, and fewer distressed and defaulted securities were generally less likely to have issues regarding valuation and liquidity raised by examiners.

Clearance and Settlement – This program is responsible for the examination of clearing agencies and the coordination of transfer agents in accordance with the Securities Exchange Act.

  • UBS had failed to establish and implement an adequate anti-money laundering program.
  • Examiners particularly focused on whether funds may have been overvaluing securities classified as illiquid.
  • Such records include inputs to models, cash flow analyses, valuation matrix assignments, a description of third party valuation sources that were utilized, and any other relevant information.
  • In some cases, these firms were managed by individuals whose primary experience was in the insurance industry, and who did not appear to have a comprehensive knowledge of the rules and regulations of the securities industry.
  • Given the current market volatility, public company earnings releases are more important than ever.
  • Advised senior management of a large public technology company in an internal review of potential leaks of confidential earnings information and in the development of procedures for properly protecting such information.

In reviewing soft dollar transactions, examiners generally review arrangements that an adviser may have with both third-party and proprietary providers. Generally, examiners will review documents and information regarding the adviser’s policies and procedures related to brokerage, trading, and soft dollar arrangements. Calfee attorneys routinely represent privately held and publicly traded companies when they access the capital markets and assist publicly traded companies and their officers, directors and major shareholders in complying with their obligations under the securities laws and stock exchange rules. Securities and Exchange Commission, holding senior management positions such as deputy director of the Division of Corporation Finance and chief of the SEC’s Office of Mergers and Acquisitions.

SEC Compliance and Securities

This “ComplianceAlert” letter summarizes select areas that SEC examiners have recently reviewed during examinations and describes the issues found. We encourage you to review compliance in these areas at your firm, address any compliance or supervisory weaknesses and implement improvements as appropriate to your firm’s compliance and supervisory programs. Some transfer agents received a part of the fee that the search firms charged to securityholders when the securityholder was found on the third search. Some transfer agents received preferential pricing from the search firm for conducting the required two searches if they were also engaged to conduct the third search.

Industry Regulators

Each company must also make its annual reports available to shareholders through its website. Although most companies are required to register their securities, some organizations may have the option to avoid going through these rigorous requirements. The SEC is actively focusing on protecting crypto investors as more ICOs and token funding campaigns appear.

Written policies and procedures were designed to address conflicts of interest with respect to trading in personal and proprietary accounts. The Act empowers the SEC with broad authority over all aspects of the what is compliance for brokers securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation’s securities self regulatory organizations .

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