In March 2023, the Securities and Exchange Commission (“SEC”) released an alert article with some observations that they have seen when examining newly registered firms. Note that these alerts are not rules or regulations of any regulatory authority. However, investment advisory firms and broker dealers can garner many important takeaways that may assist the firm during an examination. It is important for any new firm – whether broker dealer or registered investment advisor – to start communicating and engaging with its regulatory contacts. Having an open line of communication can provide value to investment advisors and/or broker dealers in building Read more about Exam Observations for New Firms[…]
This is a reminder for broker-dealers who provide options services to their clients, that certain disclosure documents are required including the options disclosure document (“ODD”). In May 2022, FINRA provided an information notice to update firms on the options clearing corporation (“OCC”) disclosure document issued in March 2022. Under rule 9b-1 of the Securities Exchange Act broker-dealers are required to deliver the ODD and supplements to customers. FINRA has similar requirements in FINRA Rule 2360(b)(11)(A)(1), which, among other things, requires firms to deliver the current ODD to each customer at or before the time the customer is approved to trade Read more about Options Disclosure Document Update[…]
When creating an outside business activity (“OBA”) disclosure form, it’s important to understand how FINRA defines an outside business activity and what information must be disclosed. Firms can request additional information however it is recommended that Firm’s ensure the required information is collected, reviewed and approved by the Firm’s designated principal. What is an Outside Business Activity? An outside business activity (“OBA”) is defined as a registered person acting as an “employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result Read more about Outside Business Activity Disclosure Form Best Practices[…]
Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 require certain market participants to file reports with the SEC. The reporting obligations under sections 13(d) and 13(g) generally focus on the concept of “beneficial ownership” and depend upon numerous factors, including the class and amount of securities acquired, and the purpose and intent with which the particular position is held. Generally, any person (including any entity) who is the “beneficial owner” of more than 5% of any class of equity securities, as defined in Rule 13d-1(i) of the Exchange Act, is subject to the beneficial ownership reporting requirements of section 13(d) of the Exchange Act.
Previously on our blog we discussed situations where advisers are deemed to have custody, Assessing Custody for Registered Investment Advisers. If your firm has deemed itself to have custody, you need to ensure your firm is compliant with the Custody Rule requirements. If this is the case, consider the following: