Category Archives: Securities

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Amendments to ‘Volcker Rule’ to Exclude Certain ‘Small’ Banks From Key Prohibitions

In connection with the U.S. financial crisis 10 years ago, legislation was adopted to enhance the safety and soundness of the commercial banking system in the United States. Amendments to the Bank Holding Company Act of 1956 required five federal financial agencies to adopt joint regulations to (i) limit the authority of commercial banking institutions to … Continue Reading

SEC Issues ‘No-Action’ Letters Allowing Sales of Utility Tokens

In a significant step forward for the cryptocurrency industry, the U.S. Securities and Exchange Commission issued its first “no-action” letter (NAL) to a U.S.-based company using utility tokens created for consumptive use rather than investment. The regulator sent the letter to TurnKey Jet, Inc. (TKJ) on April 3, 2019, agreeing with the Florida-based air charter … Continue Reading

New Regulations in Japan on Security Token Offerings

A bill to amend the Act on Settlement of Funds and the Financial Instruments and Exchange Act (FIEA) has passed both the upper and lower houses of Japan’s National Diet and was enacted on May 31, 2019. The amendments enhance the regulations on ICOs (Initial Coin Offerings) by applying the securities regulations under the FIEA … Continue Reading

SEC Issues Concept Release to Overhaul Current Framework for Exempt Offerings

The SEC is seeking public comment (due by September 24, 2019) on possible ways to improve the framework for exempt offerings under the Securities Act of 1933 and related SEC rules and regulations, via a June 18 concept release. The SEC seeks input from issuers, investors, and other market participants on potential updates to the exempt offering … Continue Reading

Illinois Supreme Court Rules Annuities Are Not Securities Under Illinois Securities Act

On March 21, 2019, in Van Dyke v. Jesse White, the Illinois Supreme Court issued a long-awaited opinion relating to Illinois Securities Department authority to regulate annuities under the Illinois Securities Law of 1953 (Act). By way of background, in 2011, the Illinois Securities Department audited Richard Lee Van Dyke following complaints from the adult … Continue Reading

NASDAQ Provides Additional Flexibility Under Its 20% Shareholder Approval Rule

Effective Sept. 26, 2018, the Securities and Exchange Commission approved amendments to Nasdaq’s shareholder approval rule regarding issuances of 20% or more of an issuer’s outstanding common stock or voting power in a private offering. The amendments are intended to update Nasdaq’s shareholder approval rules from their 1990 adoption and enhance the ability for capital … Continue Reading

11th Circuit Answers When Would-Be ‘Customers’ May Bring a FINRA Arbitration Against FINRA Members and Associated Persons

Last week, in Pictet Overseas, Inc. v. Helvetia Trust, the Eleventh Circuit U.S. Court of Appeals affirmed a Florida district court’s order permanently enjoining two offshore trusts from pursuing a FINRA arbitration against a FINRA member and its associated person owners. In Pictet, two offshore trusts, Helvetia Trust and AAA Group International Trust, held custodial … Continue Reading

SEC Adopts Amendments to Rule 15c2-12

Rule 15c2-12 of the Securities Exchange Act of 1934 (Rule 15c2-12) was adopted by the Securities and Exchange Commission (SEC) in 1989 to establish standards for the procurement and dissemination of disclosure documents by underwriters as a means of enhancing the accuracy and timeliness of disclosure to municipal securities investors. Previous amendments to Rule 15c2-12 … Continue Reading

SCOTUS Rules Dodd-Frank Does Not Protect Internal Whistleblowing

On Feb. 21, 2018, the U.S. Supreme Court held that the anti-retaliation provision of the Dodd-Frank Act (DFA) protects only employees who complain to the Securities and Exchange Commission (SEC) and not those who make only internal complaints. In a unanimous decision, the justices ruled in favor of Digital Realty Trust (Digital Realty), finding that … Continue Reading

SEC Investor Advisory Committee Considers Blockchain Technology

On Oct. 12, 2017, the Investor Advisory Committee of the U.S. Securities Exchange Commission (the SEC) hosted a panel discussion on blockchain technology. The session represented another instance of the SEC’s ongoing consideration of the impact of blockchain technology on U.S. securities markets and investors. Different perspectives on blockchain technology and its application to U.S. … Continue Reading

Confidential Financial Information of Non-Party Customers Placed at Risk When Litigants Subpoena FINRA Enforcement Files

An increasingly common tactic among claimants’ lawyers in Financial Industry Regulatory Authority (FINRA) arbitrations is to issue subpoenas to securities regulators, including FINRA itself, calling for the production of investigative files. This is accomplished by asking the arbitration panel to issue a subpoena pursuant to FINRA Rule 12512 (or Rule 13512 in an employee versus … Continue Reading

Lex Machina’s Securities Litigation Report 2017 Names Greenberg Traurig a Top Federal Securities Defense Firm

According to the report issued last week, Greenberg Traurig is among the top 15 firms in the United States, defending national and global financial institutions against bet-the-company securities litigation cases. The report found that securities case filings rose 23 percent from 2015 to 2016, to 1,144 cases. According to Lex Machina, securities litigation is relatively steady … Continue Reading

Derivatives Update: What You Should Know As We Enter 2017

This year has been full of surprises in the global markets with Brexit, the Republicans’ win of the executive branch and continuing control of the legislative branch in the U.S. and the impact of the privatization of energy markets in Mexico. In this GT Alert, we are simply going to address two critical proposals and … Continue Reading

New Proposed RIC Regulations

The Internal Revenue Service (the Service) issued guidance last month that will, practically speaking, make it slightly more difficult for entities to qualify as regulated investment companies (RICs) for federal income tax purposes. Under current law, an SEC registered investment company may qualify as a RIC only if, inter alia, (i) 90 percent of its … Continue Reading

The DOL Fiduciary Duty Rule: Impact on Cash Solicitors for Advisory Firms

Under Rule 206(4)-3, adopted by the U.S. Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940 (and under a number of parallel state securities laws or regulations), an investment adviser may compensate a cash solicitor who is not otherwise connected to the advisory firm for soliciting and referring prospective clients to the … Continue Reading

SEC Share Class Sweep of Registered Investment Advisers Appears to be Underway

On July 13, 2016, the SEC’s Office of Compliance Inspections and Examinations (OCIE) announced its 2016 Share Class Initiative (the Initiative). The Initiative is focused on addressing the perceived risk that registered investment advisers may be providing conflicted advice to their clients when recommending investments in mutual fund share classes.  For example, OCIE staff is … Continue Reading

FinCEN Finalizes Customer Due Diligence Rule

May 6, 2016, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) finalized regulations that will require banks, securities broker dealers, mutual funds, futures commission merchants, and introducing brokers in commodities (collectively, Covered Institutions) to identify and perform due diligence on the ultimate beneficial owners and control persons of any legal … Continue Reading

Not Every Broker-Dealer is an EB-5 Broker-Dealer

Nearly all U.S. broker-dealers are members of the Financial Industry Regulatory Authority (FINRA).  FINRA regulates, and provides oversight and guidance for its member firms.  When a broker-dealer becomes a FINRA member, they enter into a membership agreement which, among other things, specifies which financial products and services the broker-dealer is permitted to offer to its … Continue Reading

SEC Seeks Additional Resources for Examination and Enforcement in FY 2017 Budget Request

The Securities and Exchange Commission (SEC) recently presented the President’s Fiscal Year 2017 budget request for the SEC to Congress.  Among the notable requests, the SEC seeks significant additional resources for increased examination coverage, primarily of investment advisers and investment companies but also related to broker dealers, crowdfunding portals, and other entities.  The SEC also seeks … Continue Reading

SEC Continues its Focus on Advisory Fees

The SEC recently brought a settled enforcement action against an SEC-registered investment adviser and its CEO/CCO that represents a continued focus on the calculation of advisory fees. On March 2, 2016, the SEC charged Marco Investment Management, LLC (the Adviser), and its CEO/CCO, Steven Marco (Marco), with charging certain clients advisory fees that were calculated in … Continue Reading

First Circuit Offers Rebuke to SEC in Vacating Sanctions Order

The U.S. Court of Appeals for the First Circuit recently overturned an order by the U.S. Securities and Exchange Commission (Commission) in which the Commission had imposed sanctions against two former banking executives for violations of the federal securities laws.  In so doing, the First Circuit offered a stern rebuke to the Commission and its … Continue Reading

OCIE Issues Risk Alert on Use of Outsourced Chief Compliance Officers

Earlier this week, the Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) issued a new Risk Alert (available here) related to the use of outsourced chief compliance officers (CCOs) by SEC-registered investment advisers and investment companies (Registrants). The Risk Alert shares staff observations of Registrants who outsource their … Continue Reading

SEC Permits Companies to Sell Securities Through Crowdfunding

The SEC has adopted new rules which would permit companies to offer and sell securities through online crowdfunding. Crowdfunding is a method of raising capital by monetary contributions from a large number of people, usually through the Internet. The new rules will allow small businesses and entrepreneurs to more easily raise capital, and will permit average citizens … Continue Reading

Pete Michaels Speaks at SIFMA Compliance and Legal Society Regional Seminar

Greenberg Traurig’s Pete Michaels, shareholder in the Financial Regulatory and Compliance and Securities Litigation practices, will be participating in the SIFMA Compliance and Legal Society (C&L) Regional Seminar, Sept. 28, 2015, in Charlotte, North Carolina. Michaels will be a panelist in the session titled “Chief Compliance Officer (CCO) Roundtable,” moderated by Dana S Alligood, Enterprise … Continue Reading
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