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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.

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.

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.

Expert guidance from experienced securities lawyers.

The purpose of this paper is to summarize the SEC's recent approval of amendments to its net capital, customer protection, books and records, notification and reporting requirements for broker-dealers, in an effort to enhance financial responsibility and investor asset safekeeping obligations.

The paper summarizes new requirements for broker-dealers relating to custody, reporting, and Rules 15c3-3 (customer protection rule), 15c3-1 (net capital rule), 17a-3 and 17a-4 (books and records rules) and 17a-11 (notification rule) under the Securities Exchange Act of 1934; explains that several of the amendments approved codify long-standing SEC staff interpretations of the rules and accounting standards that govern these requirements; clarifies whether the requirements apply to broker-dealers that carry customer accounts on their books (commonly referred to as “carrying brokers”) and/or to limited-purpose broker-dealers that do not carry customer accounts on their books.

Although certain of the amendments codify long-standing SEC staff interpretations of the rules and accounting standards, broker-dealers will be subject to additional legal and regulatory requirements resulting from the amendments commencing in October 2013.

Broker-dealers should begin to consider whether changes to operations, policies and procedures, and reporting obligations will be required as a result of the amendments.

The paper provides practical explanation by experienced financial services lawyers.

The purpose of this paper is to summarize the significant responses of the staff of the SEC to 16 frequently asked questions (FAQs) which supplement prior guidance on Rule 15a‐6 under the Securities Exchange Act of 1934.

The paper lists Rule 15a‐6 activities, refers to prior guidance on the rule, and summarizes the following issues, among others, covered in the FAQs: transactions between a foreign broker‐dealer and a person temporarily in the USA, distribution by a foreign broker‐dealer of research reports to major US institutional investors, activities of foreign broker‐dealers taken with unaffiliated registered broker‐dealers, boundaries to the definition of “solicitation” by a foreign broker‐dealer of a US investor, and minimum net capital requirements for a registered broker‐dealer in a chaperoning arrangement with a foreign broker‐dealer.

This guidance does not break new ground and may be supplemented in the future. An amendment of Rule 15a‐6 is still necessary to address its fundamental limitations.

The paper provides practical explanation by experienced financial services lawyers.

To alert financial market participants to rules jointly proposed by the US Securities and Exchange Commission (SEC) and US Federal Deposit Insurance Corporation (FDIC) regarding orderly liquidation of certain large broker-dealers as mandated in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank).

Explains how typical broker-dealer liquidations are generally effected, the alternative of determining a broker-dealer to be a “covered broker-dealer” to be liquidated through an orderly liquidation proceeding under Title II of Dodd-Frank, the appointment of the FDIC as receiver and Securities Investor Protection Corporation (SIPC) as trustee, the requirement for the SIPC to file a protective decree with a federal district court, the possible use of “bridge broker-dealers” to facilitate an orderly liquidation, the FDIC’s procedures for settling claims of customers and other creditors against covered broker-dealers, and additional proposed provisions for administrative expenses and unsecured claims.

Counterparties of broker-dealers that could be subject to an orderly liquidation proceeding should evaluate the proposal and consider whether, if adopted, the rules would require any changes to credit risk or other internal procedures. Large broker-dealers that could be the subject of such an orderly liquidation proceeding should do the same. Although the formal comment period has closed regarding the proposal, market participants that did not submit comments but who still wish to influence final rule making should still consider submitting written comments to the SEC and FDIC or otherwise advocating before them.

Practical guidance from experienced securities and financial services lawyers.

To explain how the U.S. Securities and Exchange Commission (SEC), in its Digital Asset Securities Release, issued on December 23, 2020, laid out its vision for how broker-dealers can comply with the custody requirements of Rule 15c3-3 under the Exchange Act (the Customer Protection Rule) for investments in digital asset securities.

Explains the current regulatory uncertainty for broker-dealers doing a business in digital asset securities and developing systems and procedures that result in compliance with the custody requirements of the Customer Protection Rule; seven minimum steps that broker-dealers can take and nine terms and conditions with which they can comply to protect against SEC enforcement action; and the SEC’s request for comment in response to its position statement.

A broker-dealer operating pursuant to the terms and conditions of the position statement articulated in the Release will not be subject to SEC enforcement action on the basis that the broker-dealer deems itself to have obtained and maintained physical possession or control of customer fully paid and excess margin digital asset securities for the purposes of paragraph (b)(1) of the Customer Protection Rule.

Practical guidance from experienced financial services, broker-dealer and securities lawyer.

In the Spring 2003 issue of this Journal, I addressed the regulatory uncertainty surrounding the treatment of broker‐dealers’ expense‐sharing arrangements. As pointed out in that article, in 2002 the National Association of Securities Dealers, Inc. (NASD) conducted a comprehensive “sweep” examination of member‐firms’ financial reporting procedures, with special attention to the treatment of expenses and liabilities. The results of the sweep confirmed that many broker‐dealers, particularly small firms, relied on parents and affiliates to pay for part or all of their expenses. The results of this regulatory audit raised the NASD’s concern that many broker‐dealers failed to adhere to the financial responsibility rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In large part, this was due to an inherent conflict between the general accounting standards governing the recording of expenses and liabilities and the requirements imposed on broker‐dealers to accrue and book expenses and liabilities under the Exchange Act’s financial reporting rules. Following the sweep, the NASD wrote to certain member firms that did not appear to be following the financial responsibility rules. These letters asked the firms to explain their failure to report expenses that were paid, or subject to payment by, affiliated parties and to justify their procedures on expense and liability reporting. Some broker‐dealers responded that it was not possible to coordinate the accounting of expense‐sharing arrangements with the reporting requirements set forth under the Exchange Act’s rules.

To explain a No-Action letter recently issued by the USA Securities and Exchange Commission (SEC) permitting persons who qualify as “M&A Brokers” to facilitate the sale of private companies without registering with the SEC as broker-dealers, subject to a number of restrictions.

Explains how persons engaged in merger and acquisition activity have historically been required to register with the SEC, summarizes the conditions to the relief for the newly defined M&A Broker, explains what an M&A Broker can and cannot do, lists 10 criteria an M&A Broker must meet to obtain relief from registration, recommends policies and procedures for companies planning on taking advantage of the exemption from registration, and explains comparable UK legislation that applies to financial advisers advising on investments or arranging deals for M&A transactions.

While many questions and considerations remain, including how this guidance will play out in respect of various state law regimes, the M&A Broker designation has the potential to relieve some of the burdens of registration for advisors specializing in private business combinations.

Practical guidance from experienced securities and financial services lawyers.

Although markets are intensely social, stock markets are peculiar in that they are normatively anonymous spaces. Anonymity is a difficult-to-achieve social accomplishment in which material identity information is successfully stripped from participants. The academic literature is conflicted regarding the degree to which equity markets are anonymous and how this influences traders’ behavior.

Based on focused, tape-recorded ethnographic interviews, this chapter investigates the work practices of professional investors and brokers to describe the conditions under which brokers veil or reveal investors’ identities to their competitors, and thereby shed light on how anonymity is socially produced (or eroded) in global stock markets.

The social structure of brokered financial markets places brokers in the awkward situation of sitting in an information-poor structural location for so-called “fundamental information” while being paid to share information with professional investors who sit in an information-rich structural location. A resolution to this material and social dilemma is that brokers can erode the market’s anonymity by gifting identity information (“order flow”) – the previous, prospective, or pending trades of their clients’ competitors – thereby providing traders a competitive advantage. They share identity information in three types of performances: transparent relationships, masked relationships, and the transformation of illicit material identity information into licit and sharable “fundamental” information. Each performance partly erodes transaction-level and market-level anonymity while simultaneously partially supporting anonymity.

Laws and regulations requiring brokers’ confidentiality of their clients’ trades are easily and systematically eluded. Policy makers and regulators may opt to respond by increasing surveillance and mechanization of brokers’ work so as to promote a normatively anonymous market. Alternatively, they may opt to question the value of promoting and policing anonymity in financial markets by revising insider trading regulations.

Even well-regulated markets are semi-anonymous spaces due to the systematic exposure of investors’ identities to competitors by their shared brokers on a daily basis. This finding provides an additional explanation for how professional investors can imitate one another (“herd”) as well as why subpopulations of investors often trade so similarly to one another.

The purpose of this paper is to analyze if gained trust is intrinsically motivating and whether it is correlated to subjective person-job fit and occupational turnover intentions among Swedish real estate brokers.

The empirical data was gathered via a survey targeting all real estate brokers in Sweden and analyzed using structural equation modeling.

The results indicated that brokers are motivated by gained trust from their sellers and that gained trust is a vital part of person-job fit among brokers. In addition, the results show that higher levels of person-job fit reduce the occupational turnover intentions among brokers.

Being a real estate broker in Sweden might differ from being a broker in many other otherwise comparable countries. Another limitation is the lack of measurements of job satisfaction and/or intrinsic motivation connected to other job characteristics besides customer relations and gained trust. The high mean values of person-job fit, and intrinsic motivation connected to gained trust from customers are contributing to a more nuanced description of brokerage.

This study gives insights about intrinsic motivation and its connection to person-job fit. Awareness of what drives brokes can be used by both workers and managers to reduce occupational turnover.

This study is interesting from a person-job fit theory advancement perspective since the focus is given to the connection between specific situational work characteristics and person-job fit.

Despite the importance of brokers in creative projects, limited attention has been devoted to the micro-interactions by which brokers induce others’ collaboration while simultaneously retaining some control over creative production. Building on an interactionist perspective, we develop the concept of brokerage style – i.e., a recognizable pattern in the ways in which a broker interacts with others. By using different brokerage styles in different phases of a creative project, brokers can orient the social interactions among project participants, “charging” those interactions with different types of emotional energy and mutual attention, eventually inducing collective collaboration and limiting participants’ expectations of control. We illustrate our interactionist model of brokerage styles with examples from the music and TV industries.