THE UPWARD TREND IN MUNCIPAL SECURITIES CASE ENFORCEMENT

The past two weeks has seen the SEC’s continued ratchet upward the number of enforcement actions against municipal securities participants for disclosure violations. These enforcement actions also continue to ensnare an array of players in municipal securities transactions, that include underlying obligors, their chief executive officers, national and regional investment banks, the heads of public finance departments at several investment banks, as well as individual investment bankers … Read more

Time For Quarterly Transaction Reports

A reminder to advisers,  the code of ethics you adopted probably requires quarterly reports to be prepared for all personal securities transactions made by access persons.  If it doesn’t there are two possible reasons (1) chances are you haven’t read it, or (2) you don’t have one — in which case you need to first read Rule 204A-1 of the … Read more

The Consequences For Untimely Producing Records to Regulators

A recent SEC enforcement case illustrates again how an investment adviser’s  failure to  timely respond to SEC requests for books and records during an inspections and examinations can turn into an enforcement action.  The outcome should not surprise.  With the limited facts available, one wonders why the SEC’s restraint in bringing an action lasted as long as it did.  There are, however, a few important takeaways for advisers and their … Read more

The Employee versus Independent Contractor Saga Continues

Last week, in the ever-evolving ”employee versus independent contractor” battle, Judge Anthony Battaglia of the U.S. District Court for the Southern California in a decision added additional fuel in a decision in the broker-dealer/registered representative arena.  Battaglia upheld Waddell & Reed’s classification of its reps as independent contractors, ruling against two brokers who claimed that they should have been treated as employees.  Earlier, in … Read more

Big Firms Fare Better in SEC Enforcement Actions

So says a study conducted by Berkeley Law School professor, Stavros Gadinis.  The article appears in The Business Lawyer, published in the May 2012 issue  (Volume 67, Number 3)  by the American Bar Association. The study covers SEC enforcement actions against investment banks and brokerage houses during a period just before the 2007-2008 economic crisis (the dataset covers … Read more

FINRA Expected to Bring Record Breaking Enforcement Cases in 2012

The Financial Industry Regulatory Authority (FINRA) is on pace to bring a record breaking number of enforcement cases this year compared to 2011.  Last year, FINRA brought approximately 1,500 cases in which 33% of large firms were faced with an enforcement action while less than 5% of smaller firms faced an action.  According to AdvisorOne, Sutherland Asbill & Brennan’s annual FINRA Sanctions Survey, released in … Read more