Editor column

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 23 November 2010



Davis, H.A. (2010), "Editor column", Journal of Investment Compliance, Vol. 11 No. 4. https://doi.org/10.1108/joic.2010.31311daa.001



Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

Editor column

Article Type: Editor column From: Journal of Investment Compliance, Volume 11, Issue 4

We begin this issue with a summary of an annual analysis of all of FINRA’s 2009 Notices and Releases by Deborah G, Heilizer, Brian L. Rubin and Shanyn L. Gillespie, in which they highlight the areas in which FINRA has focused and try to predict where FINRA may be going in the coming year. Then we have four articles that discuss different aspects of the far-reaching Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Thomas John Holton, Paul B. Raymond, and Curtis Stefanak explain certain SEC and state registration, disclosure, and recordkeeping requirements for US and non-US investment advisers and fund managers. Anne Marie Godfrey and Messrs. Holton, Raymond and Stefanak summarise Advisers Act registration implications for non-US advisers that now rely on the “private adviser” exemption from Advisers Act registration and summarise the principal changes affecting investors in funds managed by non-US advisers contained in the Dodd-Frank Act. David B.H. Martin and Brandon K. Gay summarise and explain selected investor-protection and other related enhancements to securities regulation contained in the Dodd-Frank Act. David Bayless and David L. Kornblau summarise key provisions in the Dodd-Frank Act affecting SEC and CFTC enforcement.

Harry Frischer, Charles E. Dropkin, Partner, Jennifer R. Scullion, and Richard L. Spinogatti explain the 24 June 2010 decision of the US Supreme Court in Morrison v. Natl. Australia Bank Ltd. concerning the territorial scope of the Securities Exchange Act of 1934. Betty Santangelo and Amber Stokes describe guidance issued by the Financial Crimes Enforcement Network (“FinCEN”), the Federal Banking Regulators and the Securities and Exchange Commission on obtaining beneficial ownership information for certain accounts and customer relationships. Nathan Greene explains the SEC’s proposal to establish a new framework for mutual fund distribution charges by replacing Rule 12b-1 with a new Rule 12b-2 combined with an amended Rule 6c-10. (Goodwin Procter authors to be designated) explain SEC Rule 202(4)-5 under the Investment Advisers Act of 1940 concerning the curtailment of “pay to play” practices by investment advisers. William K. Dodds and Brian S. Vargo explain a February 2010 US Second Circuit Court decision in Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Management LLC that:

  • supported fund investor plaintiffs who alleged that fund advisors accepted undisclosed compensation from a transfer agent to the funds; but

  • affirmed a district court dismissal of a shareholder claim alleging breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940.

We conclude the issue with our usual summary of selected FINRA notices and disciplinary actions. The notices this time concern amendments to FINRA dispute resolution by-laws, changes to expand the information released through FINRA BrokerCheck, amendments to standardised options exercise procedures and extension of the contrary exercise advice cut-off time, amendments to establish Regulation NMS-principled rules in the market for OTC equity securities, and single-stock circuit breakers and potentially erroneous trades. The disciplinary actions concern negligent misrepresentations related to subprime securitisations; transactions in unit investment trusts (UITs), closed-end funds (CEFs), and mutual funds deemed unsuitable for the customers to whom they were sold; improper communications about customers’ interdealer brokerage rate negotiations; and stock price manipulation.

Henry A. Davis

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