George Carlin was one of the best. Not only did he help Alex Winter and Keanu Reeves save the world, but also put together the authority on what makes baseball different from football. (“Baseball begins in the spring, the season of new life. Football begins in the fall, when everything’s dying.”) He also memorialized his – uh – unique perspective in his book Brain Droppings. As Amazon puts it, “filled with thoughts, musings, questions, lists, beliefs, curiosities, monologues, assertions, assumptions, and other verbal ordeals, Brain Droppings is infectiously funny.”
Like Carlin, I offer my thoughts and assertions for the world, but in my LinkedIn feed. Unlike him, I am not infectiously funny. Or funny at all. I mean, this is a law blog. So, with apologies and due respect to Carlin, below I offer some of my recent “brain droppings”:
Many are focusing on the SEC’s revisions to Rule 206(4)-1 (the “Marketing Rule”) as the compliance date is just a few weeks away. However, it is helpful to remember that certain fundamental principles have applied – and will continue to do so. One of which is promoters must disclose their financial interest in the investment they are endorsing.
FINRA posted new Sanctions Guidelines. Practitioners, note that the regulator separated the guidelines applicable to broker-dealers from those applicable to individuals.
When I first got into the securities business (my kids will tell you it was not long after the dinosaurs went extinct), faxes, not e-mail, was cutting edge tech and you knew where anyone was working if you knew their business phone number.
Of course, much has changed – especially in the last couple of years. The ease with which we can communicate with one another helped make this possible. However, this did not come without a cost as seen in the SEC’s recent actions against Wall Street.
Broker-dealers, RIAs and any other businesses subject to recordkeeping requirements are well served to take stock of their communication platforms and procedures. $1.1B is a substantial number.
An advisor’s departure from a broker-dealer can sometimes be contentious. I have had to litigate a few of these issues myself. However, I cannot recall hearing of a matter in which corporate counsel was squarely in the broker-dealer’s crosshairs. This serves a reminder that all sorts of responses are possible when an advisor or an advisory team makes a change. Seeking experienced securities counsel to “watch your six” in such a situation is rarely a bad idea.
Quite a bit of attention is paid to SEC and FINRA enforcement actions. And rightfully so. These can provide securities practitioners with some insight on current regulatory priorities or flesh out some of the contours of the applicable regulatory standards. However, broker-dealers and RIAs should not forget that there is another cop on the beat – the states. NASAA just posted its 2022 Enforcement Report in which it noted, among other statistics, that in 2021 its members worked on over 7,000 investigations and reported nearly 1,700 enforcement actions. With apologies to Mrs. Duhamel for the double negative, that volume is not nothing.