关键词：Securities

About The Clinic
The Securities Law Clinic provides students with an opportunity to develop fundamental investigatory and advocacy skills in the context of the substantive laws governing investments.

The Securities Law Clinic fills a need in the largely rural “Southern Tier” region of upstate New York, where the public does not generally have access to an extensive private bar with experience in investor rights. A focus of the Securities Law Clinic is representation of public investors in disputes subject to arbitration at the Financial Industry Regulatory Authority.

As part of its community outreach, the Securities Law Clinic also provides public education as to investment fraud, with particular attention to investment schemes targeting the elderly and retirees. Substantive legal topics covered in the clinic include the scope and nature of binding arbitration under the Federal Arbitration Act and New York law, and the legal and regulatory remedies available to defrauded investors. Coursework includes training in skills such as interviewing potential clients, evaluating potential claims, preparing pleadings, conducting discovery, representing clients at hearings, and negotiating settlements.

Students will have the opportunity under faculty supervision to:

Represent aggrieved investors
Provide public education to community groups as to investment fraud
Draft comment letters to regulatory authorities on pending rule making
Prepare amicus briefs on investment and arbitration law in pending court cases
Engage in research on securities laws and investment products
Interact with attorneys and regulators on issues related to investor protection
Classwork includes coverage of investment products, and presentations by nationally-recognized experts on topics applicable to evaluation of investments, including:

Excessive trading and “churning”
Suitability
Misrepresentation and fraud
Breach of fiduciary duty
Products such as variable annuities and equity-indexed annuities
Securities Law Clinic I is the introductory course. Securities Law Clinic II is an optional second semester course for students who have completed Securities Law Clinic I and who seek to further hone their advocacy and investor representation skills.

Wall Street Trader Charged With Fraud For Spreading False RumorThe U.S. Securities and Exchange Commission today filed a settled civil action in the United States District Court for the Southern District of New York, charging Paul S. Berliner, a Wall Street trader formerly associated with Schottenfeld Group, LLC, with securities fraud and market manipulation for intentionally disseminating a false rumor concerning The Blackstone Group's acquisition of Alliance Data Systems Corp.

The Commission's complaint alleges that on November 29, 2007 — approximately six months after Blackstone entered into an agreement to acquire ADS at $81.75 per share — Berliner drafted and disseminated a false rumor that ADS's board of directors was meeting to consider a revised proposal from Blackstone to acquire ADS at a significantly lower price of $70 per share. The Commission alleges that this false rumor caused the price of ADS stock to plummet, and that Berliner profited by short selling ADS stock and covering those sales as the false rumor caused the price of ADS stock to fall.

According to the complaint, Berliner disseminated the false rumor through instant messages to traders at brokerage firms and hedge funds. Shortly thereafter, the news media picked up the "story." As alleged in the complaint, heavy trading in ADS stock ensued, and within thirty minutes the false rumor had caused the price of ADS stock, which had been trading at approximately $77 per share, to plummet to an intraday low of $63.65 per share — a 17% decline in the share price.

According to the complaint, the false rumor had such a significant impact on trading in the securities of ADS that day that the New York Stock Exchange temporarily halted trading in ADS stock. Later in the day, ADS issued a press release announcing that the rumor was false and by the close of trading, the price of ADS stock had recovered. Over 33,000,000 shares of ADS were traded that day — more than twenty times the previous day's trading volume. By engaging in the foregoing conduct, the complaint alleges, Berliner violated Section 17(a) of the Securities Act of 1933, Sections 9(a)(4) and 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

Without admitting or denying the allegations in the Commission's complaint, Berliner agreed to settle the charges against him by consenting to entry of a final judgment that (i) enjoins him from future violations of the antifraud and antimanipulation provisions of the federal securities laws, (ii) orders him to disgorge $26,129 in illicit trading profits and prejudgment interest, and (iii) orders him to pay a third-tier civil penalty of $130,000. Berliner also consented to entry of a Commission Order barring him from association with any broker or dealer.  http://www.sec.gov/litigation/litreleases/2008/lr20537.htm

 


Securities Law Research Guide

Introductions and Research Guides

Federal Regulatory Directory (Congressional Quarterly, 1997) pp.250-271

Findlaw Securities Law Outline 

Introduction to the Securities Laws by Mark J. Astanita

NYU EDGAR sponsored by the Stern Business School

"Securities Regulation," by K. Todd in Specialized Legal Research, L. Chanin, ed.  (Little,Brown) pp. 1.1- 1.27

The U.S. Securities and Exchange Commission: A Research and Information Guide, by J. W. Graham (Garland, 1993)

United States Securities and Exchange Commission 

Statutory Authority (selected)

Securities Act of 1933 (48 Stat. 74, 15 U.S.C. 77a-77mm)

Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 78a-78kk)

Investment Advisors Act of 1940 (54 Stat. 847, 15 U.S.C. 80b-1 - 80b-2)

Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. 80a-1 - 80a-64)

Insider Trading Sanctions Act of 1984 (98 Stat. 1264, 15 U.S.C. 78a note)

Securities Enforcement Remedies & Penny Stock Reform Act of 1990 (104 Stat. 931, 15 U.S.C. 78a)

Legislative History Sources

Congressional Information Services (CIS) -- reports and hearings

Federal Securities Laws: Legislative History, 1933-1982

Legislative History of the Securities Act of 1933 and Securities Exchange Act of 1934 by J. Ellenberger and E. Mahar

LEXIS -- FEDSEC library, LEGIS file --  reports only

United States Code Congressional and Administrative News -- reports only

WESTLAW -- FSEC-LH & INSIDER-LH

Government Publications: Primary Sources

Decisions and Reports, Securities and Exchange Commission (1934--)

EDGAR (Electronic Data Gathering, Analysis & Retrieval system) filings

Index to Commission Decisions

Securities and Exchange Commission Annual Report to Congress

Code of Federal Regulations, Title 17 (updated annually) (LEXIS : FEDSEC;CFR ; WESTLAW : FSEC-CFR)

Federal Register  (updates CFR) (LEXIS : FEDSEC; FEDREG ; WESTLAW : FSEC-FR)   

SEC Docket (LEXIS : FEDSEC; SECREL )

SEC News Digest 

United States Code

EDGAR Filings

LEXIS : FEDSEC;EDGARP

NYU EDGAR

SEC's EDGAR homepage 

WESTLAW: EDGAR

SEC Rules

FSEC-RULES in WESTLAW 

SEC's Rulemaking homepage

University of Cincinnati's Center for Corporate Law 1933 Act Rules

University of Cincinnati's Center for Corporate Law 1934 Act Rules

SEC Forms

NYU EDGAR's SEC Guide to Forms   

University of Cincinnati's Center for Corporate Law 1933 Act Forms

University of Cincinnati's Center for Corporate Law 1934 Act Forms

Looseleaf Publications

American Stock Exchange Company Guide (American Stock Exchange)

Blue Sky Reporter (CCH)

Corporate Practice Series (Bureau of National Affairs)

Federal Securities Law Reporter (CCH)

NASD Manual (CCH) (in LEXIS -- FEDSEC; NASD)

New York Stock Exchange Guide (CCH)

SEC Accounting and Reporting Manual (Warren, Gorham & Lamont)

Securities Fraud and Commodities Fraud, Blomberg & Lowenfels, eds. (Shepard's McGraw-Hill)

Securities Regulation (Prentice-Hall)

Securities Regulation & Law Report (BNA) (LEXIS : FEDSEC; SECREG; WESTLAW :  BNA-SRLR)

Takeovers and Freezeouts (Law Journal-Seminars Press)

U. S. Regulation of the International Securities and Derivatives Markets (Aspen Law & Business) 

Treatises

Blomberg & Lowenfels on Securities Fraud: Litigating Under Rule 10b-5 by A. Blomberg & L. Lowenfels

Business Organizations, Volumes 11, 11A

Federal Securities Code (American Law Institute)

Fundamentals of Securities Regulation by L. Loss (LEXIS : FEDSEC; LOSS)

Key SEC No-Action Letters by R. Haft

Painter on Close Corporations: Corporate, Securities and Tax Aspects by W. Painter

Securities: Public and Private Offerings by W. Prifiti

Securities Regulation in a Nutshell by D. Ratner

Securities Regulation by T. Hazen (hornbook)

SEC Regulation of Public Companies by A. Afterman

Journals and Institutes

Annual Institute on Securities Regulation (PLI)

Business Lawyer (ABA) (WESTLAW: BUSLAW, 1984-  ; LEXIS: NEWS, ASAPII, 1992-  )

Fordham Corporate Law Institute (Standard & Poor's)

Review of Securities and Commodities Regulation

Securities and Federal Corporate Law Report (Clark Boardman)

Securities Enforcement Institute (PLI)

WESTLAW: SEC-TP (Securities and Blue Sky Texts and Periodicals) (date coverage varies)

Internet Sources

American Stock Exchange  official website

Blue Sky Law  Collection of regulation and research information from the University of Maryland Thurgood Marshall Law Library

Center for Corporate Law Comprehensive site from the University of Cincinnati School of Law

Forbes Reference Pages Includes Forbes 500 Companies information, Guide to Mutual Funds, etc.

NASDAQ official website

New York Stock Exchange  official website

NYU Stern Business School's EDGAR Project

Ohio State University's Virtual Finance Library  Comprehensive website sponsored by Ohio State University's Department of Finance, includes Journal of Finance webpage

Resources for Economists on the Internet  A Washington University sponsored comprehensive website, breaks down into topics including Finance & Financial Markets, Economic Consulting & Forecasting Services, Working Papers

Securities Class Action Clearinghouse  A Stanford Law School sponsored clearinghouse of complaints, motions, and decisions in major securities fraud class actions

Securities Exchange Commission  official website

Indices

Business A.R.T.S. (WESTLAW: BUS-ARTS, 1976-  )

Economic Literature Index (WESTLAW : ECONLIT)

Index to Legal Periodicals (LEXIS : LAWREV; ILP, 1981- ;WESTLAW: ILP, 1981- )

Legal Resources Index  (LEXIS: LAWREV, LGLIND, 1981 - WESTLAW: LRI,

Directories

Federal Regulatory Directory (Congressional Quarterly, 1997)

Federal Yellow Book (Washington Monitor, published quarterly)

LEXIS : FEDSEC; MHSEC (Martindale-Hubbell Securities listings)

United States Government Manual (GPO, annual)

WESTLAW : WLDSEC (West's Legal Directory -- Securities)

Prepared by Gretchen Feltes, Preservation/Reference Librarian, New York University Law Library. 



http://www.law.nyu.edu/library/secsourc.html

Introduction

The history of the securities regulation arena are well beyond the scope of this work, and the reader is commended to any one of a number of books in the area. One of the best known, and often cited treatise on the topic is Loss and Seligman, Securities Regulation, a multi-volume treatise on the subject, published by Little Brown & Co in New York City. A single volume version is also available, and can be ordered online.

For purposes of this work, it is sufficient to note that there is a myriad of regulations affecting the securities professional - depending on the specifics of his business, a securities professional can be subjected to rules and regulations of 55 different regulatory agencies, including the Securities Commission in each of the Fifty States, the District of Columbia and Puerto Rico, as well as the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., and any of the regional exchanges of which he or his firm is a member.

While this regulatory morass is in reality a series of similar, and overlapping, regulations, the vast number of regulatory agencies is pointed out as a reminder that there are thousands of regulatory persons in the United States who are watching the industry, some more diligently than others, but the mere size of the regulatory bodies is often enough to cause problems for the securities professional, as noted throughout this work.

Leaving the specifics of the regulations to later chapters, it is sufficient to note that the vast majority of securities regulations are aimed at one goal - to promote fair and full disclosure of all material information relating to the markets, and to specific securities transactions, including all aspects of market trading, as well as the financing and financial reporting by public companies. While it may seem at times that specific regulations go well beyond such goals, that is the true goal of the regulatory scheme, and an underlying principle that should guide every market professional in his dealings with the industry, and the public, for, while no simple method of compliance is guaranteed, a policy of full disclosure will prevent most regulatory mishaps, certainly on the retail side of the business.
 
 

Federal Securities Laws

The Federal Securities Laws are comprised of a series of statutes, which in turn authorize a series of regulations promulgated by the government agency with general oversight responsibility for the securities industry, the Securities and Exchange Commission.

The two main statutes involved in the Federal Securities laws are the The Securities Act of 1933 and the The Securities Exchange Act of 1934. Generally speaking, the '33 Act governs the issuance of securities by companies, and the '34 Act governs the trading, purchase and sale of those securities. Each has a wealth of regulations promulgated by the Securities and Exchange Commission, as well as regulations adopted by the National Association of Securities Dealers, Inc. and the various stock exchanges.

Those of you searching for the law are well advised to start by reading a treatise on the subject, rather than the statutes themselves, since the statues are only the start of the climb into the securities laws. For those brave souls who wish to jump right into it, the regulations under each Act are on the Web, at the Center for Corporate Law, which has the text of the rules promulgated under the Securities Act of 1933 as well as the text of the forms promulgated under the Securities Act of 1933. The Center for Corporate Law also maintains the rules promulgated under the Securities Exchange Act of 1934. As stated elsewhere, be sure to consult an attorney before relying on those rules, and the text, and the interpretations of those rules are in a constant state of flux.
 
 

Section 10b-5 and Rule 10b-5

The most well known securities regulation is Rule 10b-5, promulgated pursuant to Section 10b of the '34 Act.3 The Rule is the most often used Rule in the area of securities law, and most every securities fraud case involves, in one way or another, Rule 10b-5.

And for that reason alone, Section 10(b) demands a full quotation herein:
 
 

15 USC Sec. 78j

Sec. 78j. Manipulative and deceptive devices

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange -

(a) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security registered on a national securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Rule 10b-5, and Section 10b are known as the Anti-Fraud provisions of the 34 Act, and most regulations flow from this rule. The rule has been the subject of extensive litigation, and later revisions to this article will address some of the significant aspects of those matters, including insider trading, market manipulation, fraud in connection with public offerings and takeovers, and fraud in connection with dealings with customers.
 
 

State Securities Laws

While the SEC directly, and through its oversight of the NASD and the various Exchanges, is the main enforcer of the nation's securities laws, each individual state has its own securities regulatory body, typically known as the state Securities Commissioner. A list of state securities commissioners, and their addresses, is available in our Guide to State Securities Regulators.

Most states have left the anti-fraud regulations to the SEC and the various SROs, but do in fact have the power and authority to bring actions against securities violators pursuant to state law. Further, each state has its own securities act, which governs, at least, the registration and reporting requirements for broker-dealers and stock brokers doing business, sometimes even indirectly, in the state.

The various state securities regulators have most of their impact in the area of registration of securities brokers and dealers, and in the registration of securities transactions. For futher information on the state regulatory scheme, and its impact on market participants, see Introduction to the Blue Sky Laws.
 
 

Common Law and the Securities Markets

In addition to the varied securities rules and regulations enacted by statute, there is a large body of case law, decisions by judges, which impact severly on the securities industry. Briefly, there is the concept of common law fraud, and in theory, if perchance a particular act did not fall within the scope of the federal securities laws, the actor may still be subject to a fraud claim under the common law. In some states, and in certain circumstances stock brokers may be considered to be fiduciaries to their customers. That is, they are expected to conduct themselves with a higher degree of care than would the ordinary person. Additionally, the common law notions of contract and negligence also find their way into the securities laws, for each purchase and sale of a security is in reality a contract, and each transaction between market participants, whether in the financing of an IPO, or in the customary stock purchase with a broker, can involve issues of negligence law. For an example of how the common law interfaces with the securities laws and securities transactions, see, Customer Disputes.

Federal Securities Law Violations

Later versions of this document will include a discussion of the various types of securities law violations that occur under federal law, including insider trading, market manipulation, fraudulent financial statements, and similiar topics.

If you have any suggestions for topic to be included, please contact the author.



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Louis Loss has long been the top authors in the area of securities regulations. Loss' multiseries treatise is a staple in every securities attorney's library. His single volume version, Fundamentals of Securities Regulation is an excellent resource for the layman, as well as for the attorney who does not practice securities law every day. Follow the link, and you can order it online, at a discount, from Amazon.com.

 

Securities Laws, Rules, Regulation and Information
The Securities Statutes, Rules, Regulations and Proposals, State and Federal

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Federal Law | Commentary | State Law | 
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When you need a quick answer to a securities question, turn to Fundamentals of Securities Regulation. The book is a securities law "must have." This version is the distillation of the authoritative 11-volume treatise, Securities Regulation, in one convenient volume, offering expert analysis of every significant aspect of securities law, including: Primary liability under 10(b); Insider trading; Sanctions; Disclosure requirements; Rules and forms for offerings; SEC reporting; Forward-looking statements; Class action suits; Bespeaks caution cases; ADR in securities disputes.
The Federal Rules and Regulations
The Securities Act of 1933
The Securities Act of 1933
The '33 Act governs the initial issuance and registration of securities, as opposed to the Securities Exchange Act of 1934 which governs financial reporting, and he registration of people involved with the sale of securities.The full text of the Securities Act of 1933

Rules promulgated under the Securities Act of 1933 
The Securities and Exchange Commission regulations, pursuant to the '33 Act.

Regulation A

Regulation D / Rule 504 /Rule 505 /Rule 506

Regulation S-B, Integrated Disclosure System for Small Business Issuers
The complete text of Regulation S-B, which must be read in conjunction with Regulation S-T, for documents that must be filed electronically.

Regulation S-K, Integrated Disclosure System
The complete text of Regulation S-K.

Regulation S-T, General Rules and Regulations for Electronic Filings.
The complete text of Regulation S-T, for electronic filings, including EDGAR.
Regulation S-X, Accounting Rules.
The complete text of Regulation S-X. 

Forms promulgated under the Securities Act of 1933
From the SEC, outlines of the forms and instructions for filing them. Not for use by a novice, but provides good background material.


The Securities Exchange Act of 1934
The Securities Exchange Act of 1934.
The full text of the 1934 Act, which primarily governs the purchase and sale of securities, securities brokerage firms and securities exchanges.

Rules promulgated under the Securities Exchange Act of 1934.
The text of the rules promulgated under the '34 Act.
Selected Forms Prescribed for Use under the Securities Exchange Act of 1934.
As of July, 1996, this site was still underconstruction, but it has samples of many of the required '34 Act forms.

 
The Investment Company Act
Investment Company Act
The full text of the Investment Company Act, which governs the creation and operation of mutual funds.

Rules promulgated under the Investment Company Act.

The Investment Advisers Act of 1940
Investment Adviser's Act of 1940
The statute which governs the operation of Investment Advisors. 

Rules promulgated under the Investment Advisers Act of 1940


The Securities Investor Protection Act of 1970
Securities Investor Protection Act of 1970
Governs the operation of the SIPC, and related activity. 



The Public Utilities Holding Company Act
Public Utilities Holding Company Act

 
The National Securities Markets Improvement Act of 1996 (NSMIA)
National Securities Markets Improvement Act of 1996 
Recent Securities Law Opinions. 
Links to recent opinions of the federal courts, regarding the securities laws. Not too helpful for general research, since the only links are to names of cases. See Securities Law Court Decisions for a more useful set of links. Copyright 2001 Mark J. Astarita. astarita@seclaw.com
 
Court Decisions 
Links to the caselaw that has developed the federal securities laws.
 
Supreme Court Securities Law Opinions 
From Cornell University, all of the recent Supreme Court Decisions relating to the federal securities laws. Available by FTP only; these are not HTML documents.


The State Blue Sky Laws
In addition to the federal securities laws, each state has its own securities laws. For an overview, please read Introduction to the Blue Sky Laws. We maintain a complete list of their snailmail and email addresses, as well as links to the rules and regulations that are available on line in our Guide to State Securities Administrators. 


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To learn more about the securities rules and regulations, try any of the print publications at our Bookstore

Securities Law News
This page has moved here

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Updated April 27, 2008

NASDR Notices to Members


08-20 FINRA Requests Comments on Proposed Changes to Forms U4 and U5
FINRA requests comment on proposed changes to Forms U4 and U5. The proposed changes, which were developed by a working group composed of regulators and industry participants (the Working Group), are intended to benefit regulators, investors and the industry. Proposed revisions, among other things, would require firms to report, as customer complaints, allegations of sales practice violations made in arbitration claims and civil lawsuits against registered persons who are not named as parties in those proceedings. The proposals also include revisions to Forms U4 and U5 designed to ease, clarify or facilitate reporting requirements and other technical and/or conforming changes


08-18 Sound Practices for Preventing and Detecting Unauthorized Proprietary Trading
FINRA requests comment on proposed changes to Forms U4 and U5. The proposed changes, which were developed by a working group composed of regulators and industry participants (the Working Group), are intended to benefit regulators, investors and the industry. Proposed revisions, among other things, would require firms to report, as customer complaints, allegations of sales practice violations made in arbitration claims and civil lawsuits against registered persons who are not named as parties in those proceedings. The proposals also include revisions to Forms U4 and U5 designed to ease, clarify or facilitate reporting requirements and other technical and/or conforming changes.


08-17 Reporting of Customer Complaints Relating to Auction Rate Securities
FINRA has added three new product categories for use by member firms in reporting customer complaints relating to auction rate securities. NASD Rule 3070(c) and incorporated NYSE Rule 351(d) require all members and member organizations to report, on a quarterly basis, statistical information regarding customer complaints. This information is required to be filed by the fifteenth calendar day of the month following the end of the quarter.


08-16 Member Firm Disclosure and Supervisory Review Obligations
Effective April 7, 2008, an amendment to revise NASD Rule 2711(h)(13) and Incorporated NYSE Rule 472(k)(4) modifies a member’s disclosure and supervisory review obligations when it distributes or makes available third-party research reports. The rule change creates a category of "independent third-party research" and eliminates certain supervisory review requirements when a member distributes or makes available such research.


08-15 Foreign Research Analyst Exemption from the Research Analyst Qualification Examination
Effective April 7, 2008, certain research analysts employed by a member firm’s foreign affiliate who contribute to the preparation of a member firm’s research reports are exempt from the Research Analyst Qualification Examination per NASD Rule 1050 and Incorporated NYSE Rule 344. The rule change supersedes an existing exemption that applies only to research analysts who are employed by foreign affiliates in certain FINRA-approved jurisdictions


08-12 SEC Approves Amendment to NASD Rule 2210 to Create an Exception to the Principal Approval Requirements for Certain Filed Sales Material
Effective March 26, 2008, principal approval is no longer required for certain previously filed sales material. The amendment to NASD Rule 2210 also codifies FINRA staff's interpretation that a firm must maintain records of advertisements, sales literature and independently prepared reprints for a period beginning on the date of first use and ending three years after the date of last use.


08-11 Q&A on Electronic Filing Requirements of NASD Rule 3170
This Notice provides answers to frequently asked questions FINRA has received on the electronic filing requirements under NASD Rule 3170 that became effective January 2007.


08-08 FINRA Temporarily Increases Margin Maintenance Requirements on Auction Rate Securities Backed by Fixed Income Products
FINRA is temporarily increasing the maintenance margin requirements for auction rate securities pursuant to NYSE Rule 431(f)(8)(A) and NASD Rule 2520(f)(8)(A). Effective immediately, all auction rate securities that are backed by fixed income products (e.g., municipal bonds, collateralized debt obligations, etc.) will have a 25 percent maintenance requirement. Increased maintenance requirements coupled with devaluation by some brokerage firms is going to spell trouble for investors holding these securities. When a margin call is generated in the account, either by the increased margin requirement or the decline in other securities in the portfolio, investors will have to sell other securities, not their ARS, to meet the call.

News Items


FINRA Hearing Panel Dismisses 2004 Sales Practices Complaint Against H&R Block Financial Advisors
In a decision that is surely causing concern at FINRA, a FINRA Hearing Panel dismissed a complaint against H&R Block Financial Advisors alleging sales practices and supervisory violations relating to sales of Enron Corporation bonds during the one-month period immediately preceding Enron's filing for bankruptcy protection on Dec. 2, 2001.

The panel ruled that FINRA's Department of Enforcement failed to show by a preponderance of evidence that H&R Block registered representatives misrepresented or omitted material facts in connection with sales of Enron bonds, or that the firm failed to implement adequate supervisory systems and procedures. Specifically, the Panel "found no evidence" that the firm "engaged in other wrongful conduct."

A FINRA hearing panel finds "no evidence" to support FINRA charges against a BD? While this raises a number of concerns regarding the quality of the investigative process at FINRA and its decision making process in commencing litigation, the proceeding was undoubtedly a significant expense for the respondents, as the hearings consumed 24 days of testimony.

We are seeing an increasing number of hearing panels dismissing all or parts of enforcement cases. FINRA needs to examine the quality of its investigative procedures, and to re-examine its perception of brokers and brokerage firms, which may be clouding its collective judgment in commencing cases where there is no evidence of any wrongdoing.

The panel issued a detailed, 54- page decision.


Nuveen struggles to cash out its ARS holders
Fund giant looking to liquefy $15 billion in preferred auction-rate securities; investors may have to wait months


SEC Announces $30 Million Fair Fund Distribution to Investors Affected by Undisclosed Market Timing in RS Investments Mutual Funds
The SEC announced the distribution of approximately $30.6 million to more than 250,000 investors who were affected by undisclosed market timing in certain RS Investments mutual funds.

The Fair Fund distribution includes $25 million in disgorgement and penalties paid by RS Investment Management, Inc. and RS Investment Management, L.P. (RS Investments) in an SEC enforcement action, approximately $3.3 million in disgorgement and penalties from Banc of America Capital Management LLC, BACAP Distributors LLC, and Banc of America Securities LLC related to a separate unlawful market timing matter that affected RS Investments investors, and accumulated interest.


Congressmen question fund companies’ treatment of ARS holders
Letter to SEC's Cox labels resistance to cashing out closed- end ARS funds an 'apparent conflict'


SEC settles with Wall Streeter accused of spreading rumors about Alliance Data
Trader allegedly profited from text messaging lies about LBO offer; 'info' was soon picked up by media outlets


SEC Charges Wall Street Short-Seller With Spreading False Rumors
The SEC has charged Paul S. Berliner, a Wall Street trader formerly associated with Schottenfeld Group LLC, with securities fraud and market manipulation for intentionally spreading false rumors about The Blackstone Group's acquisition of Alliance Data Systems while selling ADS short.The SEC alleges that five months ago, Berliner disseminated the false rumor through instant messages to numerous individuals, including traders at brokerage firms and hedge funds. The false rumor also was picked up by the media.

Heavy trading in ADS stock ensued, and within 30 minutes the false rumor had caused the price of ADS stock, trading at approximately $77 per share, to plummet to an intraday low of $63.65 per share - a 17 percent decline. In response to the unusual trading activity, the New York Stock Exchange temporarily halted trading in ADS stock. Later in the day, ADS issued a press release announcing that the rumor was false. By the close of trading, the price of ADS stock recovered to its pre-rumor price of approximately $77 per share. Berliner profited by short selling ADS stock during its precipitous decline


Merrill files claim against Nat City over First Franklin
Claim arises from i-bank’s purchase of subprime mortgage originator from Nat City in 2006


UBS puts its investment banking unit on a tight leash
Private bank will no longer fund i-bank; capital 'must be generated under its own steam'


BlackRock bails out its auction-rate holders
Second-largest closed-end fund manager considers adding a put to $1.9 billion worth of frozen securities to make them more salable


SEC and PAUSE help to warn investors of securities fraud
The SEC is stepping in to protect investors against fraudulent sales pitches and other investment related scams. Their new initiative, "PAUSE," which stands for Public Alert: Unregistered Soliciting Entities, aims to educate investors about current company complaints, questionable activities, boiler room fraud, phone solicitations, and other shady practices being used by money hungry scam artists.

PAUSE currently lists 56 unregistered soliciting entities and phone agencies that investors should avoid. The SEC plans to update the list regularly, and hopes that individuals will visit the site before making any investment decisions.



Ex-Brookstreet brokers file $36M claim
According to InvestmentNews, five brokers at the center of the collapse of Brookstreet Securities Corp. have filed a $36 million arbitration complaint against Brookstreet’s former clearing firm, National Financial Services LLC, alleging that hundreds of millions of dollars that clients lost in highly leveraged collateralized mortgage obligations were directly attributable to National Financial Services’wrongful conduct.


Bear Stearns, Deloitte Sued Over Hedge Fund
The problems for Bear Stearns seem to keep on coming. After its fire sale to JP Morgan, today's news is that the liquidators of two of its hedge funds that collapsed last year, have filed suit against the company and its auditor, Deloitte & Touche seeking to recover over $1 billion in losses.


Melvyn Weiss Pleads Guilty in Class Action Kickback Scheme
Melvyn I. Weiss, co-founder of a prominent New York law firm, pleaded guilty Wednesday to a racketeering conspiracy charge in a kickback scheme. Mr. Weiss, 72, entered his plea under an agreement with prosecutors. He has been ordered to pay nearly $10 million in fines and forfeiture penalties, and could be sentenced to up to 33 months in prison at a later hearing.


Fed Monitoring Brokerage Firms
According to the Wall Street Journal, the Federal Reserve has set up shop inside brokerages to monitor their financial condition, perhaps the beginning of an expanded role for the central bank and additional regulation for Wall Street. Reuters adds that the Fed has its personnel inside brokerages including Goldman Sachs and Bear Stearns to monitor their financial state.


FINRA Issues Guidance to Investors Caught in ARS Auction Failures
The Financial Industry Regulatory Authority (FINRA) today spelled out the options available to investors holding unexpectedly illiquid auction rate securities (ARS) because of recent developments in the credit market that have resulted in many ARS auctions failures.


Self-Regulators Warn Against Spreading False Rumors and Other Abusive Market Activity
The SROs are coordinating efforts to heighten the monitoring and investigation of trading activity in issuers that may be subject to credit market- related volatility.
The regulators are reminding brokers of the prohibitions in NYSE Rule 435(5) and NASD Rule 5120(e) against the circulation in any manner of sensational rumors that might reasonably be expected to affect market conditions, as well as their obligations under NASD Rule 2110 and NYSE Rule 476 to refrain from any conduct or activity inconsistent with just and equitable principles of trade.


Investors tap retirement savings to make real estate bets
Amid housing woes, use of self-directed IRAs is on the rise


Statement of FINRA CEO Mary L. Schapiro Regarding Treasury Secretary's Blueprint on Revamping Financial Services Regulation
Why bother to even put out a press release - the standard FINRA footer is longer than the statement itself.


SEC, FINRA Announce 14 Regional CCOutreach BD Seminars
The SEC and FINRA announced the dates and locations of 14 regional CCOutreach BD seminars that will be held throughout the country in 2008. The program is designed to further promote strong compliance practices for the protection of investors. At the regional seminars, SEC and FINRA staff will address the examination process and examination priorities, as well as highlights from relevant topics.


Unregistered BD Defrauds Day Traders
The SEC has announced that it obtained an emergency court order against an unregistered securities day- trading firm in La Jolla, Calif. Not only was the firm unregistered, it was diverting assets from day traders to cover losses of other day traders


SEC Warns Public Pension Funds About Inadequate Compliance Procedures
The Securities and Exchange Commission today issued a report reminding public pension funds of their responsibilities under the federal securities laws, and warning them that they assume a greater risk of running afoul of anti-fraud and other provisions if they do not have adequate compliance policies and procedures in place to prevent wrongdoing in their money management functions.


SEC Charges Three Promoters for Victimizing Military Families in Real Estate Investment Scheme
The Securities and Exchange Commission today charged three promoters who targeted military families in a multi-million dollar investment scheme that forced victims into personal bankruptcy and their homes into foreclosure. The scam also targeted other affinity groups, including the Southern California Filipino community and fellow church members.


FINRA Settles with Five Firms for Supervisory Failures, Improper Mutual Fund Sales to More than 5,300 Households; Tens of Millions of Dollars to be Returned to Customers
FINRA announced today that it has settled cases against five firms for mutual fund sales and supervisory violations - including improper sales of Class B and Class C mutual fund shares and failure to have supervisory systems designed to provide all eligible investors with the opportunity to purchase Class A mutual fund shares at net asset value (NAV) through NAV transfer programs.
To resolve the NAV violations, Merrill Lynch, Prudential Securities, UBS and Wells Fargo agreed to remediation plans for eligible customers who qualified for, but did not receive, the benefit of NAV transfer programs. It is estimated that total remediation to customers will exceed $25 million.
For the share class sales violations, FINRA imposed an $800,000 fine against Prudential Securities and a $750,000 fine against UBS Financial Services, Inc. for improper sales of Class B and Class C mutual fund shares. A $100,000 fine was imposed against Pruco Securities for improper sales of Class B shares. In resolving the Class B and Class C share matters, these firms also agreed to remediation plans that will address over 27,000 fund transactions in the accounts of 5,300 households.


 

 



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Copyright 2005, Mark J. Astarita. All Rights Reserved. Mark J. Astarita, Esq. is a partner in the law firm of Beam & Astarita, LLC, and represents financial professionals and firms nationwide, in a wide variety of matters. He can be reached at (212) 509-6544 or by e-mail at astarita@seclaw.com.

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There are also a collection of links to articles written by various professionals of interest to securities and commodities brokers, as well as links to caselaw, statutes and regulations that affect the securities and commodities professional.

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Press Conference of the CSRC on the Promulgation of Administrative Measures on the Split Share Structure Reform of Listed Companies

Circular on Promulgating the Administrative Measures on the Split Share Structure Reform of Listed Companies


Our Ref: No. 86 [2005] CSRC



September 4, 2005



To: all listed companies and their shareholders, all sponsors



With a view to further enforcing the spirit of the Guidelines of the State Council for Promoting the Reform and Opening-up and Sustained Development of the Capital Market and the Guidance Opinions on the Split Share Structure Reform of Listed Companies, standardizing the split share structure reform of listed companies, boosting the reform and opening-up and steady growth of the capital market, and safeguarding the legitimate interests of investors, the China Securities Regulatory Commission has enacted the Administrative Measures on the Split Share Structure Reform of Listed Companies, which is hereby promulgated and shall be duly put into practice.



The China Securities Regulatory Commission



(This English version by Shenzhen Securities Information Co., Ltd. is for your reference only. In case any discrepancy exists between the Chinese and English context, the Chinese version shall prevail.)