Rules and Regulations Archives

This is a summary of the key findings of the SEC's charges regarding electronic communications.

Electronic and Technology Takeaways from SEC’s Billion Dollar Penalties

Posted on December 5, 2022 by SCM Communications

On September 22, 2022, the Securities and Exchange Commission announced charges against 15 wall street broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications during January 2018 through September 2021 review period. You can read the commissions summary and links for all 15 orders here. Below are some of the key finding and takeaways. Attestations Alone Don’t Protect the Firm What’s key about these charges is that many of the Firm’s had procedures, training and even attestations in place for all Associated Persons to document and Read more about Electronic and Technology Takeaways from SEC’s Billion Dollar Penalties[…]

Key Steps for Starting a Broker-Dealer

Posted on November 15, 2022 by SCM Communications

Individuals and companies desire to start a broker-dealer for many reasons including to facilitate sales, create an entry point for foreign financial institutions, or be a part of a larger financial plan. Some of the benefits to starting a broker-dealer (vs. purchasing an existing one) include saving money on due diligence, having no prior regulatory or financial issues, and the ability to customize it to fit your desired products and business lines. If you are looking for more pros and cons to starting vs. Buying a broker-dealer, read one of our recent posts on the topic “here”. If you decide Read more about Key Steps for Starting a Broker-Dealer[…]

What’s ‘New’ about the SEC’s New Marketing Rule for Investment Advisers?

Posted on July 29, 2022 by admin

Marketing and advertising in the mid-20th Century was very different then what exists in today’s world of social media. Marketing and advertising are constantly evolving. Today’s social media influencers, hashtags, comments, likes, and posts can all be used for marketing purposes. With this in mind, it makes sense that regulations should evolve as well and not be stuck in the past. In December 2020, the SEC adapted regulations to better align with the 21st Century’s marketing environment. The 1961 Advertising Rule 206(4)-1 2021 combined with the Cash Solicitation Rule206(4)-3 will now be regulated under a single rule referred to as Read more about What’s ‘New’ about the SEC’s New Marketing Rule for Investment Advisers?[…]

SEC Rule 17f-2: Fingerprinting Of Securities Industry Personnel

Posted on February 25, 2022 by admin

Under SEC Rule 17F-2, every member of a national securities exchange, broker, dealer, registered transfer agent and registered clearing agency, and national securities association (as well as others), shall require that each of its partners, directors, officers, and employees be fingerprinted and submit appropriate and complete fingerprint cards to FINRA. FINRA then transmits these fingerprints and identifying information to the FBI to identify and process, consistent with protocols and requirements established by the Attorney General. Who is Required to be Fingerprinted? SEC Rule 17f-2 requires that the following associated persons be fingerprinted: Persons applying for registration. A fingerprint card must Read more about SEC Rule 17f-2: Fingerprinting Of Securities Industry Personnel[…]

Reporting And Inquiry for Lost, Counterfeit, Missing, and Stolen Securities

Posted on February 18, 2022February 18, 2022 by admin

SEC Rule 17f-1 calls for the SEC or its designee, currently the Securities Information Center (SIC), to maintain records of lost, counterfeit, missing, or stolen securities. This rule was created in an effort to reduce trafficking in lost, stolen, missing, and counterfeit securities. The database of securities maintained by the SIC can only be accessed by registered BDs and other financial institutions to ascertain if securities that have come into their possession have been reported as lost, stolen, missing, or counterfeit. No Criminal Action Suspected Upon discovery of the likely loss of a security, if no criminal action is suspected, Read more about Reporting And Inquiry for Lost, Counterfeit, Missing, and Stolen Securities[…]

Rule 147 Offerings

Posted on January 21, 2022 by admin

Rule 147, also known as the intrastate offering exemption, allows for firms to avoid registration with the SEC for intrastate offerings under certain conditions. This exemption seeks to facilitate the financing of local business operations for companies that are organized in the state where it is offering the securities, carry out a significant amount of its business in that state, and make offers and sales only to residents of that state. The Rule 147 exemption is available only if the entire issue is offered and sold exclusively to residents of that single state. If any sales take place to non-residents, Read more about Rule 147 Offerings[…]