Newly Created “Capital Acquisition Broker” Rule Reduces Regulatory Burdens on Some Broker-Dealers

Lauren Mack Broker Dealer Registration, Compliance, FINRA, SEC

By Greg Caramenico and Lauren Mack On August 18th, the Securities and Exchange Commission (“SEC”) approved a Financial Industry Regulatory Authority Inc. (“FINRA”) rule that establishes less burdensome regulations for “Capital Acquisition Brokers” (“CABs”), which are a subclass of broker-dealers that engage only in limited activities. CABs can elect to be governed by the new rules by converting their current FINRA membership or by submitting a new …

Debate Over Accredited Investor Definition Gaining Momentum

Simon Riveles Accredited Investor, Private Placement, SEC

Discussions surrounding the accredited investor definition have crescendoed of late, demonstrating a sharp divide in opinion among regulators. On one side lies the North American Securities Administrators Association (“NASAA”), the lobbying group that represents the state securities administrators. The NASAA published a comment letter on the definition on May 25, 2016, evidencing a highly conservative approach.[1] The group relies on investor protection concerns in calling …

SEC Issues Notice of Intent to Raise Net Worth Threshold for Qualified Clients

Simon Riveles Investment Advisers, Qualified Client

By William Kelly and Simon Riveles On May 24, 2016, the Securities and Exchange Commission (“SEC”) published a notice of its intent to issue an order increasing the net worth threshold for “qualified clients,” as defined in Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisers Act generally prohibits SEC-registered investment advisers from charging any client a performance-based …

SEC Moves to Update Regulation A

Simon Riveles Jobs Act, Regulation A+, SEC

By Kathryn Dachille and Simon Riveles December 18, 2013, the SEC voted to propose amendments to Regulation A that would allow  offerings of up to $50 million in any twelve month period (“Tier 2 offerings”), as mandated by Title IV of the JOBS Act (so called Regulation A+”). While Tier 2 offerings would be subject to significant additional requirements, such as the provision of audited …

SEC Shows Commitment to Whistleblower Program Following Second-Ever Whistleblower Award

Simon Riveles SEC, Uncategorized, Whisteblower

By Peter Tyson and Simon Riveles On June 12 2013, the Securities and Exchange Commission (SEC) issued its second-ever whistleblowing award to three anonymous tipsters who helped the SEC enforce an action for fraud against Locust Offshore Management, LLC and its CEO, Andrey Hicks. Two of the tipsters provided information to the SEC regarding the fraudulent offer and sale of shares in the Locust Offshore …

SEC Approves New FINRA Member Communication Rules

Simon Riveles Advertising, FINRA, SEC

In April, the SEC approved a significant revamping of FINRA rules regarding member communications with the public (the “New Rules”). The rule changes are a culmination of a multi-year effort by FINRA to update, harmonize and consolidate various NASD rules and interpretations regarding communication and advertising rules. New Communication Categories One of the most significant changes brought about by the New Rules is the consolidation …

SEC Brings Naked Short Selling Action Against Brothers

Simon Riveles SEC

January 31, 2012, the SEC charged against two brothers for engaging in naked short selling in violation of Rule 203(b)(1) and (3) of Regulation SHO. While short selling is legal, sellers must locate shares to borrow before selling them short and must deliver borrowed shares before a specified date. Jeff Wolfson, and his brother Robert, allegedly generated $17 million in ill gotten gains from naked …

Your Investment Adviser on Facebook: SEC Issues Release on Advisers and Social Media

Simon Riveles Uncategorized

On January 4, 2012 the SEC’s Office of Compliance Inspections and Examinations released an Alert regarding the use of social media by registered investment advisers and the policies and procedures they have in place in connection with social media (such as Facebook, Twitter and blogs). In reviewing compliance programs the SEC encouraged advisers to consider the following factors in respect to the standards for investment …

SEC Clarifies Registration Requirements for Affiliated Advisers

Simon Riveles Hedge Funds, SEC, Uncategorized

On January 18, 2012, the SEC issued ‘no action’ guidance permitting investment advisers to private funds to include certain affiliated advisers in their Form ADV registration. When a manager advises one or more private funds or certain managed accounts through a structure involving multiple entities such structure will be regarded as a “single advisory business” if such affiliated entities are: subject to a uniform compliance …

SEC Provides Guidance for Cyber-Security Disclosure

Simon Riveles Cyber-security, SEC

As digital technology and operating online has become ever more important for American companies, the risk associated with deliberate cyber-attacks and unintentional cyber-incidents has caught the attention of regulators. On October, 13, 2011, the Securities and Exchange Commission provided guidance to public companies concerning their duty to disclose these risks under the securities laws.[1]

If You Live There It Doesn’t Count: SEC Adopts New Accredited Net Worth Standard

Simon Riveles Uncategorized

In order to conform to the requirements of Dodd-Frank, the SEC has amended its rules to exclude the value of a person’s primary residence from net worth calculations used to determine whether such individual is an “accredited investor” for purposes of qualifying for certain private offerings under the securities laws. SEC rules permit certain private and limited offerings to be made without registration, and without …