Category Archives: FINRA

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Voluntary Disclosure to Regulators May Result in Waiver of Privileges

When producing documents to regulators, financial services firms should remain mindful that such disclosures may inadvertently waive attorney-client privilege and work product protection as to third parties.  In In re Steinhardt Partners, L.P., the Second Circuit held that the voluntary disclosure of documents to the SEC waived any work product protection of the same documents … Continue Reading

Due Diligence Outsourcing: Traps for the Unwary

Just as a client performs due diligence on a registered representative before engaging him or her, each broker-dealer must perform different types of due diligence in the course of its business. This can pose a particular burden for smaller firms, which often do not have the compliance staff necessary to conduct specific due diligence responsibilities. … Continue Reading

The SEC and FINRA Double-Down on Cybersecurity Enhancement and Prevention

In the wake of recent cybersecurity breaches, the SEC and FINRA simultaneously issued reports this week to the securities industry summarizing cybersecurity examination findings and to investors recommending certain precautions to safeguard online investment information. In its Risk Alert – Cybersecurity Examination Sweep Summary, the SEC describes the results from examinations of more than 100 … Continue Reading

Payments to Unregistered Persons – The Next Round

The role of the Financial Industry Regulatory Authority (FINRA) regarding payments to unlicensed persons for securities-related and capital-raising activities has expanded. This post gives an overview of the FINRA Rule 2040 (approved by the SEC on Dec. 30, 2014) which governs when and how registered broker-dealers can provide compensation to unregistered persons. Approval of Rule … Continue Reading
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