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1 – 10 of over 39000The purpose of this paper is to provide an overview of how the Employee Retirement Income Security Act (“ERISA”) of 1974, as amended , applies to securities professionals such as…
Abstract
Purpose
The purpose of this paper is to provide an overview of how the Employee Retirement Income Security Act (“ERISA”) of 1974, as amended , applies to securities professionals such as registered investment advisers, registered broker‐dealers and individual registered representatives and financial planners who advise, manage, or trade for investment portfolios of private employee benefit plans and individual retirement accounts.
Design/methodology/approach
The paper is designed as a primer to familiarize securities professionals with the terminology, scope and subject‐matter of ERISA as it applies to benefit plan investment transactions. When appropriate, the regulatory framework of ERISA is compared and contrasted with the more familiar securities law regulatory scheme.
Findings
The various Federal laws loosely known as “ERISA” significantly impact securities professionals in connection with the marketing of financial products and services to employee benefit plans, including IRAs, and it is critical that securities professionals have a general overview of how they do so.
Research limitations/implications
The research set out is only a broad summary, and covers an area of law that is rapidly developing. It should not be considered a definitive summary of the law but a starting‐point for further, in‐depth inquiry.
Practical implications
Any financial professional seeking to develop or market financial products and services to benefit plans can use the paper to become familiar with the framework and terminology of ERISA.
Originality/value
This is a reprint of a paper first published in 2004, with extensive revisions to reflect sweeping changes in the law and new developments in the financial marketplace, plus an overview of “hot topics”.
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The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in September…
Abstract
Purpose
The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in September, October, and November 2009 and a sample of disciplinary actions during that period.
Design/methodology/approach
The paper provides excerpts from FINRA Regulatory Notice 09‐57, September 2009, Trade Reporting and Compliance Engine (TRACE); Regulatory Notice 09‐58, October 2009, Best Execution and Interpositioning; and Regulatory Notice 09‐66, November 2009, FINRA BrokerCheck. It also summarizes three disciplinary actions.
Findings
(09‐57) Effective March 1, 2010, firms must begin reporting transactions in Agency Debt Securities and primary market transactions and otherwise comply with all other requirements in the TRACE Rules, as amended, and amended FINRA Rule 7730. (09‐58) NASD Rule 2320(a) requires firms and their associated persons to use reasonable diligence to ascertain the best market for a security when handling transactions for or with a customer or a customer of another broker‐dealer. The amendments delete the requirement that, if a firm interposes a third party, the total costs and proceeds of the transaction must be better than the prevailing market and replace it with a specific obligation to apply the factors enumerated in Rule 2320(a) when a firm interjects a third party between the firm and the best available market. (09‐66) The primary purpose of BrokerCheck is to help investors make informed choices about the individuals and firms with which they do business.
Originality/value
These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff are aware of this summary but have neither reviewed nor edited it. For further details as well as other useful information, the reader should visit www.finra.org
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Ramnath K. Chellappa and Paul A. Pavlou
Electronic commerce (EC) transactions are subject to multiple information security threats. Proposes that consumer trust in EC transactions is influenced by perceived information…
Abstract
Electronic commerce (EC) transactions are subject to multiple information security threats. Proposes that consumer trust in EC transactions is influenced by perceived information security and distinguishes it from the objective assessment of security threats. Proposes mechanisms of encryption, protection, authentication, and verification as antecedents of perceived information security. These mechanisms are derived from technological solutions to security threats that are visible to consumers and hence contribute to actual consumer perceptions. Tests propositions in a study of 179 consumers and shows a significant relationship between consumers’ perceived information security and trust in EC transactions. Explores the role of limited financial liability as a surrogate for perceived security. However, the findings show that there is a minimal effect of financial liability on consumers’ trust in EC. Engenders several new insights regarding the role of perceived security in EC transactions.
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Henry Kahn, Robert Welp and Richard Parrino
To review the M&A Brokers “no-action” letter issued in February 2014 by the staff of the USA Securities and Exchange Commission that clarifies the circumstances in which…
Abstract
Purpose
To review the M&A Brokers “no-action” letter issued in February 2014 by the staff of the USA Securities and Exchange Commission that clarifies the circumstances in which intermediaries (M&A brokers) may receive transaction-based compensation for services provided in connection with sales of private companies without having to register and be regulated by the SEC as broker-dealers under the USA Securities Exchange Act of 1934.
Design/methodology/approach
Examines the new SEC staff interpretative guidance on activities of M&A brokers in light of USA federal securities laws and previous staff no-action letters that address the application of broker-dealer registration requirements to such intermediaries when they render services in connection with purchases and sales of privately-held companies. Summarizes the manner in which the SEC staff’s new position expands the types of private M&A transactions on which intermediaries may advise and broadens the scope of services they may provide without subjecting themselves to Exchange Act registration.
Findings
The M&A Brokers letter dispels much of the uncertainty existing under earlier SEC staff no-action letters about the scope of permissible activities in which unregistered intermediaries may engage in private M&A transactions. By broadening the scope of those activities under the federal statutory regime governing broker-dealers, the new staff guidance should facilitate the expansion of services provided by M&A brokers without registration and permit greater flexibility for M&A brokers and their clients to structure compensation arrangements. The paper cautions that, absent reform of more restrictive regulation under the securities laws of some states, the prospects for expanded involvement by unregistered intermediaries in private M&A transactions may not be fully realized.
Originality/value
Expert guidance from experienced securities lawyers.
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Roger D. Blanc, Daniel Schloendorn, Howard L. Kramer, Martin R. Miller and Matthew B. Comstock
The purpose of this article is to inform the various securities market participants about new Exchange Act Rule 13h‐1, its specifics and the requirements it may impose.
Abstract
Purpose
The purpose of this article is to inform the various securities market participants about new Exchange Act Rule 13h‐1, its specifics and the requirements it may impose.
Design/methodology/approach
The paper outlines the various requirements of the Rule and additional background information and some clarifications based on the SEC adopting release.
Findings
The Rule requires “large traders”, as defined in the Rule, to self‐identify to the SEC and to obtain from the SEC a large trader identification number (“LTID”) and provide the LTID to each US‐registered broker‐dealer through which it effects transactions in NMS securities. The Rule also requires US‐registered broker‐dealers to provide to the SEC, on request, data on large traders' transactions in NMS securities by the morning after the transactions are effected; and it requires US‐registered broker‐dealers to maintain books and records, and perform certain monitoring functions, with respect to these transactions. The SEC has also adopted Form 13H under Exchange Act Section 13(h). A large trader must submit to the SEC Form 13H as an “Initial Filing” to receive its LTID and file various periodic amendments thereafter.
Originality/value
The paper provides practical guidance from experienced securities lawyers. The authors hope the discussion in the paper will enable affected market participants, which include US‐ registered broker‐dealers as well as other persons within the Rule's definition of large trader, to be informed about and to prepare for compliance with the Rule.
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TERRANCE J. O'MALLEY and THOMAS J. SMITH
This article outlines, in a very practical manner, the various methods available to investment advisors when trying to effect securities transactions for their clients. The…
Abstract
This article outlines, in a very practical manner, the various methods available to investment advisors when trying to effect securities transactions for their clients. The authors examine several different ways the transactions may take place while describing in detail the pitfalls and concerns that must be considered by the careful practitioner. It also contains helpful illustrations to understand the transactions.
The following is an overview of how the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applies to securities professionals such as registered investment…
Abstract
The following is an overview of how the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applies to securities professionals such as registered investment advisers (“RIAs”) and registered broker‐dealers who advise, manage, or trade for investment portfolios of employee benefit plans subject to ERISA. The principal focus of this outline is on securities registered under the Securities Act of 1933 (the “1933 Act”) and the Securities Exchange Act of 1934 (the “1934 Act”), and securities of investment companies registered under the Investment Company Act of 1940. Many of these principles also will apply directly to unregistered securities, as well as to other investments offered by banks, insurance companies, commodity trading advisers and real estate advisers, though there may be some variation.
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The purpose of this paper is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notes issued in July and August 2008.
Abstract
Purpose
The purpose of this paper is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notes issued in July and August 2008.
Design/methodology/approach
The paper provides excerpts from the June 2008 Supplement to the Options Disclosure Document; Regulatory Notice 08‐38, SEC Emergency Orders on Short Selling; Regulatory Notice 08‐39, Variable Insurance Products; Regulatory Not ice 08‐41, Portfolio Margin Program; Regulatory Notice 08‐42, SEC Rule 144 and TRACE Eligibility; and Regulatory Notice 08‐43, Trade Reporting and Compliance Engine (TRACE)
Findings
The Orders and Guidance in Regulatory Notice 08‐38 address the naked short selling of the securities of 19 public companies. Through Regulatory Notice 08‐39, FINRA proposes to update and consolidate the rules governing member firm communications with the public about variable insurance products. Regulatory Notice 08‐41 addresses margin requirements based on projected loss scenarios, and also discusses concentrated equity positions and day trading. Regulatory Notice 08‐42 notes that once a security meets the definition of “TRACE‐eligible security”, all secondary market transactions in such securities are “reportable TRACE transactions”. Regulatory Notice 08‐43 describes additional data elements in real‐time TRACE data that will identify transactions as either inter‐dealer or customer transactions and, in customer transactions, whether the dealer is on the buy or sell side.
Originality/value
These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff is aware of this summary but has neither reviewed nor edited it. For further detail as well as other useful information, the reader should visit www.finra.org
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Sharifah Zubaidah Syed Abdul Kader and Nor Asiah Mohamad
Legal and Sharīʿah issues abound in creating security to finance waqf property development in Malaysia, for it involves integrating the Sharīʿah concept of waqf with requirements…
Abstract
Legal and Sharīʿah issues abound in creating security to finance waqf property development in Malaysia, for it involves integrating the Sharīʿah concept of waqf with requirements of Malaysian land law as well as the requirements of modern finance under civil law. Banks and financial institutions will not generally finance property development without any form of security for the loan. The best type of security transaction under Malaysian land law is to create a charge on the land under the National Land Code 1965, rendering the land liable as a security which upon default of the chargor, would entitle the chargee to seek statutory remedies including sale of the land. Such may not be feasible for waqf properties due to the inalienable nature of such properties. Due to the remedy of sale of the land upon default, the same issues would arise in regard to other types of securities like a lien and a loan agreement cum assignment. There is therefore a need to diversify the available options in creating security over waqf property. What are the existing Sharīʿah restrictions on waqf property? Do these restrictions affect the creation of security over waqf lands under conventional Malaysian land law? What are the legal and Sharīʿah issues relating to creating a charge over waqf lands? What are some feasible options? Initial findings are that creating a charge on a lease of waqf land as well as resorting to a hybrid form of a traditional security transaction in Malaysia, called ‘Jualjanji’, may hold some answers. Through doctrinal legal research and content analysis, this chapter explores these issues and recommends feasible solutions.
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Latif Cem Osken, Ceylan Onay and Gözde Unal
This paper aims to analyze the dynamics of the security lending process and lending markets to identify the market-wide variables reflecting the characteristics of the stock…
Abstract
Purpose
This paper aims to analyze the dynamics of the security lending process and lending markets to identify the market-wide variables reflecting the characteristics of the stock borrowed and to measure the credit risk arising from lending contracts.
Design/methodology/approach
Using the data provided by Istanbul Settlement and Custody Bank on the equity lending contracts of Securities Lending and Borrowing Market between 2010 and 2012 and the data provided by Borsa Istanbul on Equity Market transactions for the same timeframe, this paper analyzes whether stock price volatility, stock returns, return per unit amount of risk and relative liquidity of lending market and equity market affect the defaults of lending contracts by using both linear regression and ordinary least squares regression for robustness and proxying the concepts of relative liquidity, volatility and return constructs by more than variable to correlate findings.
Findings
The results illustrate a statistically significant relationship between volatility and the default state of the lending contracts but fail to establish a connection between default states and stock returns or relative liquidity of markets.
Research limitations/implications
With the increasing pressure for clearing security lending contracts in central counterparties, it is imperative for both central counterparties and regulators to be able to precisely measure the risk exposure due to security lending transactions. The results gained from a limited set of lending transactions merit further studies to identify non-borrower and non-systemic credit risk determinants.
Originality/value
This is the first study to analyze the non-borrower and non-systemic credit risk determinants in security lending markets.
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