Serving Investors and Advisors Nationwide
The Securities and Exchange Commission today announced that starting on May 14, 2022, the fee rates applicable to most securities transactions will be set at $22.90 per $1 million. Consequently, each SRO will continue to pay the Commission a rate… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The Securities and Exchange Commission today voted to propose changes that would remove the references to credit rating agencies from existing exceptions provided in Rule 101 and Rule 102 of Regulation M, a set of rules designed to preserve market… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The SEC is attempting to gain regulatory oversight of cryptocurrency products and platforms that may be engaging in the sale and offering of securities. Securities are strictly regulated and require detailed disclosures to inform investors of potential risks. Since the first cryptocurrency (Bitcoin) launched in 2009, the question of how exactly to fit the components of this new, decentralized financial ecosystem into traditional categories has been widely debated. The SEC has long held that an “investment contract” is the basic definition of a security. But tokens are not investment contracts. The difficulty in answering the question is the fact that not all cryptocurrencies are the same. But since terms like “coin,” “token,” “currency,” and “asset” are regularly used interchangeably to describe the thousands of products under the “cryptocurrency” umbrella, we can’t categorize them based on nomenclature alone. Instead, one must look at function. We discussed the various definitions of a “security” in our What is a Security article. The basic definition is “an investment of money in a common enterprise with profits to come solely from the efforts of others; and, if that test be satisfied, it is immaterial whether the enterprise is speculative or non-speculative, or whether there is a sale of property with or without intrinsic value”. SEC v. Howey Co., 328 U.S. 293 (1946) The SEC has stated that cryptocurrencies like bitcoin are not securities. This includes cryptocurrencies such as Bitcoin, Ether, and Litecoin. However, the SEC Chair Gary Gensler said, in August 2021, that the SEC considers many cryptocurrency coins and tokens to be securities under the Howey Test, saying, “If somebody is raising money selling a token and the buyer is anticipating profits based on the efforts of that group to sponsor the seller, that fits into something that’s a security.” Of course, now we are mixing the concept of the actual token as a security with the manner in which the token is marketed, but this will all shake out. Unfortunately, we will get clarity in the worst possible way. Rather than propose regulations, the SEC has decided to create regulation by litigation, exposing market participants to lawsuits, and the expense of time and money for conduct which was not a violation when conducted. The Securities and Exchange Commission today charged Melville ten Cate, a U.S. citizen residing abroad, with fraud stemming from his allegedly phony offer to purchase Textron – a large U.S.-listed aircraft, defense, and industrial company. The SEC… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. A Wells Fargo broker who traded a client’s account after he died was fired and sanctioned by FINRA. According to FINRA, the broker was terminated from Wells Fargo “after internal review revealed that advisor entered stop loss orders in account of deceased customer, per prior discussion, not knowing client was deceased.” FINRA found that doing so violates FINRA Rule 2010, requires associated persons, in the conduct of business, to “observe high standards of commercial honor and just and equitable principles of trade.” Of course, unauthorized trading is a serious violation, and one which merits investigation and when proven, significant sanctions. However, in this case, according to the consent order, the broker was placing stop loss orders, in a managed account. A stop-loss is designed to limit an investor’s loss on a security position that makes an unfavorable move. Once the stock’s price hits the set price, the order converts to a market order. Stop loss orders are accepted and widely used orders. While there was no financial gain for the broker in entering the unauthorized trades, the fact that he entered false information into the firm’s customer note system, and then altered that false information later, should be a serious violation. Plus, entering trades in a client’s account without speaking to him is simply foolish. The broker was suspended for three months. No fine was imposed, since he had filed for bankruptcy. The AWC (the consent order) is here. The Securities and Exchange Commission’s Division of Examinations today announced its 2022 examination priorities, including several significant areas of focus and many perennial risk areas. The Division will focus on private funds, environmental, social… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. We are investigating claims for Morgan Stanley advisors who were denied their deferred compensaton payments when they left the firm. There is a proposed class action pending, but individual advisors may be better served by bringing their individual claims as FINRA arbitrations. We are reviewing claims for a number of former Morgan Stanley advisors, and are interested in speaking to others who have been denied compensation. The U.S. Securities and Exchange Commission is hosting a free virtual outreach event entitled, Safeguarding the Golden Years: Avoiding Financial Fraud, on Thursday, March 31, 2022 to help educate older adults and their caregivers on the unique challenges… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The Securities and Exchange Commission today proposed two rules that would require market participants, such as proprietary (or principal) trading firms, who assume certain dealer functions, in particular those who as act as liquidity providers in the… Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
Tag Archives: securities lawyer
Fee Rate Advisory #1 for Fiscal Year 2022
SEC Proposes Amendments to Remove References to Credit Ratings from Regulation M
SEC Examing Crypto as Securities
Are Cryptocurrencies Securities?
SEC: Takeover Bid of Fortune 500 Company was a Sham
Broker Didn’t Know His Client Died
FINRA Rule 2010
Unauthorized Stop Loss Orders
So, there is no financial motivation for the broker, and the only reason he would be doing this is to protect his customer’s positions.
Falsifing Firm Records
Making matters worse, FINRA also found that on April 8, 2019, he entered a note in the firm’s electronic customer note system falsely indicating that he had spoken with the customer in connection with the stop loss orders. This was not possible as the customer had died in March. On May 15, 2019, after learning of the customer’s death, he edited the original note to inaccurately state that his conversation had occurred in January 2019. Therefore, he violated FINRA Rules 2010 and 4511 in that he falsified firm records.
FINRA Rule 4511
FINRA Rule 4511 requires member firms and associated persons to “make and preserve books and records as required under the FINRA rules, the Exchange Act and the applicable Exchange Act rules.” Inherent in that obligation is the requirement that the books and records be accurate. A registered representative who falsifies firm records causes the firm to maintain inaccurate books and records in violation of FINRA Rules 4511 and 2010.
No Gain, Lots of Pain
SEC Division of Examinations Announces 2022 Examination Priorities
Morgan Stanley Deferred Comp Claims
Give me a call at 212-509-6544, we represent advisors in all 50 states.
SEC to Host Free Virtual Outreach Event to Help Older Adults and Their Caregivers Avoid Financial Fraud
SEC Charges Seven California Residents in Insider Trading Ring
SEC Proposes Rules to Include Certain Significant Market Participants as “Dealers” or “Government Securities Dealers”