June 27, 2013
On May 29, 2013, the SEC charged NASDAQ and NASDAQ Execution Services (“NES”), a registered broker-dealer affiliated with the exchange, with violations of securities laws and regulations due to inadequate systems and poor decision-making during the IPO and preliminary secondary market trading of Facebook. Without admitting to or denying SEC findings, NASDAQ has agreed to settle the charges for $10 million—the largest penalty ever imposed on an exchange. NASDAQ has also agreed to implement changes to systems and processes, including technical improvements to its cross systems, additional processes for ensuring compliance with Regulations NMS and SHO, increased oversight for new systems, an enlarged Regulatory Group, an engineering team dedicated to system monitoring and analysis, and improved software for all technology personnel. Pursuant to the settlement order, the SEC has reserved the right to request evidence of the satisfactory completion of these undertakings should it be deemed necessary.
June 26, 2013
On June 11, 2013, FINRA’s Chief Legal Officer, Bob Colby, discussed potential regulatory revisions for limited purpose broker-dealers during an interview series entitled “A Few Minutes with FINRA.” Colby said that an internal review was underway to determine certain categories of broker dealers (i.e. broker-dealers that don’t touch funds or…
June 17, 2013
SEC Grants No-Action Relief Permitting German-based Strategy Consulting Firm to Engage in M&A Activities with U.S. Targets without Registering as Broker-Dealer
The SEC has granted no-action relief to Roland Berger Strategy Consultants (“Roland Berger” or the “Firm”) stating that it would not recommend enforcement action under Section 15(a) of the Exchange Act if Roland Berger were to engage in certain activities without registering as a broker or dealer. Roland Berger is an independent strategy consultancy firm based in Germany that engages in a wide range of services on behalf of non-U.S. clients. The majority of services that Roland Berger provides do not qualify as “broker” activities, but the Firm is occasionally involved in international M&A activities that may require registration as a broker-dealer under the Exchange Act.
June 12, 2013
FINRA Fines Merrill Lynch $1.05 million and orders more than $323,000 in restitution for best execution violations in non-convertible preferred securities transactions
On April 16, 2013, FINRA announced that Merrill Lynch, the brokerage unit of Bank of America, will pay $1.05 million in fines and more than $323,000 in restitution for failure to provide best execution for trades involving non-convertible preferred securities executed on ML BondMarket, one of its proprietary order management systems, and for failure to have an adequate supervisory system and written supervisory procedures in place. Merrill’s Letter of Acceptance, Waiver and Consent, agreed to by FINRA on April 2, 2013, also includes other sanctions due to the violations occurring over nearly five years.