Overview
Federal regulatory scrutiny of the financial markets has never been higher. Sparked by the 2008 financial crisis, the SEC and CFTC have committed themselves to tougher regulatory enforcement. The SEC, for example, has embarked on a “broken windows” enforcement philosophy under which no violation is deemed too small to pursue. The CFTC has been following a similar approach. The agencies have received increased regulatory authority from Congress, giving sharper teeth to their more aggressive approach to enforcement.
The consequences have been dramatic. The aggregate annual dollar amount of the CFTC’s enforcement fines essentially doubled from 2012 to 2013 and doubled again by 2014. In that year, the SEC and CFTC each collected annual fines that exceeded $3 billion.
In this harsher regulatory climate, it is imperative for financial markets professionals to “get it right” when it comes to regulatory compliance. Attention to regulatory compliance and adequate training on the front end are the best protection. When the regulators do bring enforcement actions, engineering a successful outcome is critical. Fines have never been larger, and the legal right to remain in business often hangs in the balance. Also, potentially devastating class actions may be the next shoe to drop after an enforcement case is announced.
Our team is dedicated to effectively guiding our clients through these regulatory rapids, preventing problems before they arise and solving them when they appear.
Preventing Regulatory Problems
Our first mission is to prevent regulatory problems through compliance counseling. We advise every type of professional in the securities, futures and other-the-counter markets, including:
- Broker-dealers
- Futures commission merchants
- Introducing brokers
- Investment advisers
- Commodity trading advisers
- Mutual funds, including exchange traded funds
- Alternative trading systems (“dark pools”)
- Private funds
- Commodity pools
- Exchanges
- Clearing agencies
We advise these clients on all compliance aspects of the Securities Exchange Act of 1934, the Commodity Exchange Act, the Investment Advisers Act of 1940, and the Investment Company Act of 1940, including:
- Broker-dealer, investment adviser, and investment company status
- Broker-dealer, investment adviser, and investment company mergers, acquisitions and changes in control
- Broker-dealer and investment adviser supervisory programs
- Broker-dealer confirmation delivery, books and records, and broker-dealer custody of assets
- Commission sharing, soft dollar and directed brokerage/commission rebate arrangements
- Oversight duties of independent mutual fund directors
- Listing and trading shares in ETFs
- Bank securities activities
- Applicability of swap rules under the Dodd-Frank Act
- Clearing agreements for exchange-traded derivatives
- ISDA master agreements for OTC derivatives
Solving Regulatory Enforcement Problems
When regulatory problems cannot be prevented, we step in to protect our clients from the resulting enforcement actions. We handle cases brought by the federal agencies (the SEC or the CFTC) and by the industry regulators (FINRA and NFA and the securities and futures exchanges). The stakes in this litigation can be high, because firms and individuals often face bans and restrictions that effectively would put them out of business. In solving the problems these cases present, we tap other firm capabilities to control the risks of collateral litigation, including:
- White collar lawyers to resolve criminal investigations triggered by enforcement cases, including former Assistant U.S. Attorneys
- Class action lawyers to defend class actions that piggyback on enforcement actions
Protecting Innovation In The Financial Markets
Innovation is critically important to firms active in the financial markets. Our intellectual property lawyers have deep experience protecting statutory and contractual rights in innovative financial technology and methods — and in challenging claims where no protection is appropriate. Our work includes:
- Index licensing agreements
- Patent litigation over technology and methods for trading or clearing
- Trading data dissemination agreements
- Litigation over misappropriation of property rights in innovative products