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What's New At The Securities Law Home Page

At SECLaw.com, we strive to provide our visitors with the most up to date news, information and commentary from the self-regulatory agencies, the government, and securities firms and attorneys.

Here is the information that was most recently added to the site:

Updated December 02, 2006


The Perils of Paulson
While Wall Street, public companies and many investors praise Treasury Secretary Paulson's recent remarks on over-regulation and the negative impact on our economy and markets, Matthew Goldstein of TheStreet.com raises questions from the other side.

Remarks by Treasury Secretary Henry M. Paulson on the Competitiveness of U.S. Capital Markets
Treasury Secretary Paulson has been beating the drum for a decrease in regulations in the financial markets area. His comments are significant, as he acknowledges the decline in the US IPO market because of regulatory issues, and the issue we have been pounding for years - an ever-expanding rulebook in which multiple regulators impose rule upon rule upon rule. New rules are not the answer. There are plenty of rules, and virtually every fraud in the securities markets that has occurred in the past 20 years was a violation of an existing rule, yet regulators continue to create more rules. Those rules are a public relations ploy, which is now coming back to haunt us. Will Paulson get the job done? We'll be watching

Broker-Dealer Examination and Compliance Developments Remarks Before the National Society of Compliance Professionals 2006 NSCP National Membership Meeting
This speech by Mary Ann Gadziala of the SEC provides an overview of the examination process, and some insight into potential areas of interest for the Commission. She points out supervision, in particular supervision of branch offices, supervision of outsourced functions, suitability, disclosure, in particular in the case of senior citizens. She notes that there have been over 90 suitability examinations in Florida, California, Texas, Arizona, North Carolina and Alabama - states with large retirement communities. Also on the list, 529 plans, variable annuities and sales of illiquid securities. The ever popular mutual fund breakpoint is still on the list.

Guide To Broker-Dealer Registration
Complete overview and information regarding the process to become a registered broker-dealer. Who needs to register, how to register, the effects of registration, etc. An SECLaw.com update to an SEC release

Thomas Sandell's Execution Problem
Hedge fund manager Thomas Sandell is bracing for a fight with securities regulators over allegations that his $4 billion fund broke the rules on short-selling in a bid to cash in on the havoc wrought by Hurricane Katrina

Morgan Tinkers with Grid; Wants FAs to Aim High
In a broadcast Thursday afternoon to the firm’s U.S. financial advisors, retail head James Gorman announced the rollout of a new compensation program for 2007—one that will increase the firm’s spending on compensation by tens of millions of dollars. But, in an effort to get reps to think big, accounts below $50,000 will no longer generate any compensation for the rep (unless they are in certain favored accounts).

Money Managers Don’t Get RIA Market
A large number of money managers still haven’t figured out how to tap the registered investment advisor (RIA) market to sell their funds…

NASD Sets Sights on Crooks Who Scam the Elderly
Scammers beware. The NASD'S new chief executive, Mary L. Schapiro, has vowed to send her enforcement unit after those who dupe seniors.

Enforcement Actions

NASD Fines EKN Financial Services, Suspends Principals for Securities Registration Violations in PIPE Deals
NASD has imposed a $200,000 fine against EKN Financial Services Inc. of Woodbury, NY - along with its CEO. Presidenty, Head Trader, and FINOP - for engaging in improper short selling in connection with three unregistered securities offerings, commonly referred to as PIPE (Private Investment in Public Equity) deals, and other violations. As part of the settlement, EKN will be suspended for six months from engaging in any PIPE transactions.

Information and Lists

New Surveys Show Attorneys Favor Use of Alternative Dispute Resolution
The National Arbitration Forum recently collaborated with both the General Practice Solo and Small Firm Division (GPSolo) and the Tort Trial & Insurance Practice Section (TIPS) of the American Bar Association (ABA) to conduct surveys to assess the usage and preferences regarding negotiation, mediation and other forms of alternative dispute resolution (ADR). Survey respondents from both ABA member groups report an increasing support of ADR.

NASDR Notices to Members

06-68 SEC Approves Amendments to Rule 2340 to Allow DVP/RVP Customers to Elect Not to Receive Account Statements
The Securities and Exchange Commission (SEC) has approved amendments to Rule 2340 that permit customers whose accounts are carried solely for the purpose of execution on a DVP/RVP (delivery versus payment/receive versus payment) basis to opt out of receiving customer account statements

06-67 SEC Approves Amendments to NASD Rules to Align Them with Regulation NMS
On September 28, 2006, the Securities and Exchange Commission (Commission or SEC) approved amendments to NASD Rules, including the rules governing the Alternative Display Facility (ADF),1 in order to align them with Regulation NMS.2 In addition, the SEC approved amendments to rules governing quoting, trade reporting, and clearing applicable to the ADF and extended this functionality to all NMS stocks, including stocks listed on the New York Stock Exchange (NYSE), American Stock Exchange (Amex), and certain other exchanges. Furthermore, the amendments reorganize ADF trade reporting rules and make changes to ADF rules to enhance their clarity. The SEC also approved changes to the ADF Trading Center Certification Record, which became effective upon SEC approval on September 28, 2006.

06-65 Securities Industry/Regulatory Council on Continuing Education Issues Firm Element Advisory
The Securities Industry/Regulatory Council on Continuing Education (Council) has issued the annual Firm Element Advisory, a guide for firms to use when developing their continuing education Firm Element training plans. The Council suggests that firms use the Firm Element Advisory as part of the Firm Element Needs Analysis to help identify relevant training topics for all covered persons, including supervisors. Among the subjects you should consider for inclusion in Firm Element training are new rules and regulations, such as supervisory control amendments, business continuity plans and any new products or services the firm plans to offer.

06-64 SEC Approves Amendments to Rule 10308 Regarding the Classification of Arbitrators
The Securities and Exchange Commission has approved amendments to the arbitrator classification criteria set forth in Rule 10308 of the NASD Code of Arbitration Procedure (Code) to ensure that individuals with significant ties to the securities industry may not serve as public arbitrators in NASD arbitrations

06-63 Amendments to Registration Rules Extending the Date by which Eligible Registrants must Complete Continuing Education Program before Engaging in Security Futures Activities
Amendments to Registration Rules Extending the Date by which Eligible Registrants must Complete Continuing Education Program before Engaging in Security Futures Activities; Effective Date: November 15, 2006 On October 16, 2006, NASD filed with the Securities and Exchange Commission (SEC) for immediate effectiveness a rule change to amend Rule 1022 (Categories of Principal Registration) and Rule 1032 (Categories of Representative Registration) to extend to December 31, 2009 the date by which all eligible registrants must complete a firm- element continuing education program to qualify to engage in security futures activities

06-62 SEC Approves Rule 3160 Regarding Submission and Reporting Requirement for Regulation T and SEC Rule 15c3-3 Extension of Time Requests
the Securities and Exchange Commission (SEC) approved new NASD Rule 3160 that requires: (1) all clearing firm members for which NASD is the designated examining authority (DEA) pursuant to Rule 17d-1 under the Securities Exchange Act of 1934 (Exchange Act) to submit to NASD requests for extensions of time under Regulation T promulgated by the Federal Reserve Board (FRB) or pursuant to Rule 15c3-3(n) under the Exchange Act; and (2) each clearing firm member for which NASD is the DEA to file a monthly report with NASD indicating all broker-dealers for which it clears that have overall ratios of requested extensions of time to total transactions for the month that exceed 2%.

06-61 SEC Approves Rule 3170 Requiring Members to Electronically File with or Otherwise Submit to NASD Specified Regulatory Notices or Other Documents
The Securities and Exchange Commission (SEC) has approved the adoption of NASD Rule 3170 (Mandatory Electronic Filing Requirements), which gives NASD the authority to require firms to file or submit electronically any regulatory notice or other document that a member is required to file with (or otherwise submit to) NASD. This Notice also advises firms that NASD will require certain notices required under the Securities Exchange Act of 1934 to be filed electronically starting on January 1, 2007.

News Items

SEC Announces Emergency Action to Halt Ongoing Fraud Against Senior Citizens
The Securities and Exchange Commission today filed an emergency enforcement action against an individual and two of his corporations to halt an ongoing fraud in which the SEC claims the defendants have obtained over $2 million from at least seven investors, most of them senior citizens. The Commission's complaint, filed in the Eastern District of New York in Brooklyn, charges the defendants, Peter J. Dawson, BMG Advisory Services, Inc., and Ethan Thomas Co., Inc., with making fraudulent solicitations and misappropriating investor funds. The Commission seeks temporary restraining orders freezing the defendants' assets, requiring them to provide accountings and prohibiting them from committing future violations of the federal securities laws. The Commission's complaint also seeks a final judgment assessing civil penalties and ordering the defendants to disgorge thei gains.

Statement by SEC Chairman Cox at News Conference on Self Regulation Consolidation
SEC Chairman's comments on the regulatory merger. - "This single regulator approach would also completely eliminate today's duplicate member rulebooks, and the possibility of conflicting interpretations of those rules. At the same time, it would retain one of the fundamental precepts that has characterized the SRO model since its inception in 1930s: the notion that regulation of the markets works best when the front- line regulator is close to the markets."

Department of Labor to Brokers: No Overtime Pay for You
Here is a new twist in the broker overtime pay lawsuits: The Department of Labor (DOL) says brokers are not entitled to overtime pay after all. Well, that is, unless the DOL is wrong, which it allowed could be the case. (No kidding.)

Merrill Lynch to Pay National Overtime Settlement
Merrill Lynch has decided to consolidate the numerous overtime lawsuits that have been filed against the firm and settle nationally with its brokers. It is the third securities firm to do so—earlier this year, both UBS and Smith Barney settled nationally with brokers in similar overtime lawsuits.

N.Y. Pols Argue for Business Reforms
New York City could lose its position as the world's financial capital if steps aren't taken to reduce regulation and litigation, Mayor Michael Bloomberg and Sen. Charles Schumer wrote Wednesday in a call for business reforms.

SEC Files Settled Charges Against Eight Former Officers and Directors of Spiegel, Inc.
Former Officers Charged With Overstating Performance of Credit Card Receivables Portfolio; Former Chairman, Directors and CEO Charged for Decision to Withhold Filing of Spiegel's Required Financial Reports


Copyright 2003, VGIS Communications. All Rights Reserved.

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.