FINRA has issued a regulatory notice (RN 16-18) regarding new Rule 2273, which requires member firms, when hiring a new broker from the competition, to send an “educational communication” to
Continue Reading FINRA Announces Rule 2273, Requiring Broker’s New Firm to Send “Educational Communication” to Broker’s Customers Before Transfer of the Customer’s Assets to the New Firm

The Office of the Comptroller of the Currency (“OCC”) recently released new guidance on the process it uses when considering enforcement actions against banking institutions and individuals for potential non-compliance with Bank Secrecy Act (“BSA”) compliance program requirements and anti-money laundering (“AML”) rules.  At the same time, the OCC also issued a revised policy for assessing civil monetary penalties against both institutions and individuals for compliance violations. The revised policy makes clear that the OCC intends to use the threat of monetary penalties to hold individuals – compliance officers, managers, executives, directors, or any employee of a banking institution – accountable for compliance violations. Compliance with BSA/AML programs is not simply an institutional or bank-only issue; responsibility for ensuring compliance with these programs rests with Boards of Directors, management and individual compliance personnel. Additionally, compliance is not merely a regulatory concern; the recent OCC guidance also makes clear that the OCC will notify criminal law enforcement authorities (including FinCEN, the Financial Crimes Enforcement Network) of “all formal and informal enforcement actions” pursued by the regulators.

The OCC has a statutory mandate to issue a cease-and-desist order when problems or weaknesses in a bank’s compliance systems and controls rise to the level of noncompliance with BSA requirements or result in repeat or uncorrected compliance issues. In addition to a mandatory cease-and-desist order, the OCC may also pursue civil monetary penalties (“CMP”).  The OCC’s process generally allows notice and an opportunity to respond within 15 days of written notice of noncompliance to either an institution or individual. The OCC’s new guidance sets forth the process by which a bank or an individual may respond to a notice of noncompliance.


Continue Reading OCC Issues New Guidance and Policies on Enforcement Actions and Civil Monetary Penalties Against Institutions and Individuals

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 to invest in startups and early stage businesses. Companies are no longer required to offer securities only to accredited investors; now, anyone can participate in an equity offering, subject to certain investment limits. The new rules were enabled by the 2012 JOBS Act, which created an exemption to the existing securities laws to make equity crowdfunding possible. The SEC has been working on crafting new rules since that time. (These new crowdfunding rules should not be confused with, and do not replace, other rules adopted pursuant to the JOBS Act several years ago that expanded the ability of issuers to raise capital using Rule 506 0f Regulation D.)
Continue Reading SEC Permits Companies to Sell Securities Through Crowdfunding

FINRA has proposed new rules to protect senior investors and other vulnerable adults from financial exploitation. The proposed rules would require member firms to make reasonable efforts, at the time of account opening for a senior investor, to obtain the name and contact information of a trusted contact person. The proposed rules would also allow firms to place a temporary hold on a disbursement of funds or securities from the accounts of investors aged 65 or older, and to notify the designated “trusted contact,” when the firm has a reasonable belief that financial exploitation is or might be occurring. The same rule would also apply to any investor, aged 18 or older, with a mental or physical impairment that might render the investor unable to protect his or her own interests. According to FINRA, the rule would not create a duty, but rather a safe harbor for firms when they exercise discretion in placing a temporary hold on disbursements. FINRA plans to issue a Regulatory Notice seeking comment on the proposal.
Continue Reading FINRA Announces Proposed New Rules to Protect Senior Investors