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Article
Publication date: 13 June 2008

Charles S. Gittleman and Russell D. Sacks

The purpose of this paper is to describe regulatory activities since the initial regulatory actions between 2001 and 2003 in response to securities firm research analyst conflicts…

744

Abstract

Purpose

The purpose of this paper is to describe regulatory activities since the initial regulatory actions between 2001 and 2003 in response to securities firm research analyst conflicts of interest that were identified after the “internet bubble.”

Design/methodology/approach

The paper describes a number of important regulatory activities, including: interpretive activities, such as the 2004 Second Joint Research Memorandum; establishment of a new licensing requirement for research analysts; additional rulemaking, in the form of 2005 changes to the SRO Rules that are meant to tighten those rules; the December 2005 report of the NASD and NYSE studying the operation and effectiveness of prior regulatory actions, including the SRO Rules; enforcement actions against both firms' and research analysts' behavior; industry sweeps gathering information regarding industry practices in respect of debt research; and rulemaking for purposes of implementing interpretive guidance and Joint Report.

Findings

Following extraordinary and sweeping regulatory actions between 2001 and 2003, securities regulators have continued a high level of activity with respect to securities research. Research regulation stands as a hallmark for the current era of securities regulation for at least three reasons: it has displayed a wide range of regulatory tools including rulemaking, publication of interpretive guidance, “sweep” examinations, licensing, and enforcement, and has been largely “principles‐based” rather than prescriptive in nature; it is marked by complexity: a web of SEC, SRO, and informal or “best practices” regulation now exists covering every aspect of securities research; and it is a cornerstone of an emerging regulatory theme of heightened and more detailed compliance for investment banking operations.

Originality/value

This is a valuable summary and analysis of seven years of regulatory activity on a complex issue by experienced securities lawyers

Details

Journal of Investment Compliance, vol. 9 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 October 2006

Charles S. Gittleman and Russell D. Sacks

This paper aims to describe the NASD's recent proposal modifying NASD Rule 2720, the rule by which underwriting can be conducted where the underwriter and the issuer have a…

175

Abstract

Purpose

This paper aims to describe the NASD's recent proposal modifying NASD Rule 2720, the rule by which underwriting can be conducted where the underwriter and the issuer have a “conflict of interest” as defined by the rules.

Design/methodology/approach

Summarizes and analyzes the proposal.

Findings

On September 14, 2006, the National Association of Securities Dealers, Inc. (“NASD”) published for initial comment proposed amendments to Conduct Rule 2720 (the “Rule”) relating to conflicts of interest that occur between underwriters and issuers in the context of securities distributions (the “Proposal”). The Proposal substantially changes the Rule, and, as such, adjusts certain aspects of the underwriting process including: where the underwriter and the issuer are affiliates; where the underwriter or its affiliates (including venture capital and private equity arms) have an ownership interest in the issuer; and where the purpose of the securities offering is to repay debt owed to the underwriter or its affiliates.

Practical implications

NASD‐member broker‐dealers may seek to monitor the state of the Proposal in order to ensure that firm policies and procedures are consistent with future changes to the Rule. NASD members will also want to consider how the Proposal signals NASD's changes in thinking in respect of how they approach conflicts of interest in their own businesses.

Originality/value

Alerts practitioners and the industry to a new proposal that has significant consequences for underwriting, particularly in an age of increasingly global financial institutions.

Details

Journal of Investment Compliance, vol. 7 no. 4
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 27 February 2014

Charles S. Gittleman, Russell D. Sacks and Jennifer D. Morton

– The purpose of the paper is to describe the recent amendments to FINRA's IPO Allocation Rule that were approved by the US Securities and Exchange Commission.

98

Abstract

Purpose

The purpose of the paper is to describe the recent amendments to FINRA's IPO Allocation Rule that were approved by the US Securities and Exchange Commission.

Design/methodology/approach

The paper provides a description of the IPO Allocation Rule and its operation, followed by a description of the IPO Allocation Rule amendments recently amended.

Findings

On November 27, 2013, the Securities and Exchange Commission approved a change to FINRA's IPO allocation rule 5131 (the “amendment”). The amendment allows a fund of funds or other collective investment account that is investing in an IPO to rely on a written representation from an unaffiliated private fund investor that does not look through to its beneficial owners, provided that such unaffiliated private fund is managed by an investment adviser, has assets greater than $50 million, and meets certain other indicia of independence that are described.

Originality/value

The paper provides practical guidance from experienced regulatory lawyers regarding an amendment to an important rule governing IPO sales and allocation practices.

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Article
Publication date: 14 March 2008

Charles S. Gittleman and Russell D. Sacks

The purpose of this paper is to provide a detailed description of Amendments to Rule 105 of Regulation M adopted by the US Securities and Exchange Commission (the “SEC”) on June…

92

Abstract

Purpose

The purpose of this paper is to provide a detailed description of Amendments to Rule 105 of Regulation M adopted by the US Securities and Exchange Commission (the “SEC”) on June 20, 2007

Design/methodology/approach

Presents a general overview of short sales and the purpose of Regulation M, a rule that prohibits purchases and sales of securities during specified periods close in time to public offerings of securities; and describes the Amendments, including an expansion of the prohibition under the Rule from a prohibition on “covering” to a prohibition on purchases generally and including three exceptions that pertain to “bona fide” purchases, “separate accounts,” and investment companies.

Findings

The Amendments are important because: they expand the scope of the Rule's basic prohibition; they were expanded in part because SEC perceived that circumvention of the Rule was persistent; they permit notable exceptions; and they were adopted close in time to other amendments to the regulation of short sales, including elimination of the price or “tick” tests.

Originality/value

Expert guidance on a recent SEC ruling by experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 9 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 April 2005

Charles S. Gittleman and Russell D. Sacks

To describe and to discuss the implications of the new National Association of Securities Dealers, Inc. (NASD) and New York Stock Exchange (NYSE) uniform branch office definition…

144

Abstract

Purpose

To describe and to discuss the implications of the new National Association of Securities Dealers, Inc. (NASD) and New York Stock Exchange (NYSE) uniform branch office definition for broker‐dealers, approved on September 9, 2005, as found in the definitions of “branch office” found in NASD Conduct Rule 3010(g)(2) and NYSE Rule 342 (the “Adopted Rules.”)

Design/methodology/approach

Summarizes and analyzes the adopted rules.

Findings

The adoption of a single standard by NASD, the NYSE, and state law authorities will be welcome to broker‐dealers that have to date been operating under a number of varying definitions. The Adopted Rules define “branch office” very broadly, but contain important exclusions to the uniform definition such as the primary residence exclusion and exlusions for locations of limited use, locations of convenience, and locations used for other than securities business. Unfortunately, the SEC approval orders contain no discussion of how these rules might apply to the international networks that include US broker dealers.

Originality/value

A useful summary and analysis of the new uniform branch office definition, which comes at a time when US securities regulators are placing increasing emphasis on branch office supervision, control, and inspection.

Details

Journal of Investment Compliance, vol. 6 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 October 2005

Charles S. Gittleman and Russell D. Sacks

To describe and to discuss the implications of the US Department of the Treasury's PATRIOT Act regulations requiring “covered financial institutions” (including broker‐dealers…

339

Abstract

Purpose

To describe and to discuss the implications of the US Department of the Treasury's PATRIOT Act regulations requiring “covered financial institutions” (including broker‐dealers, banks, and mutual funds) to maintain risk‐based procedures to ensure that: correspondent accounts held on behalf of specified non‐US financial institutions; and private banking accounts, are subject to due diligence procedures to ensure that those accounts, and the financial institutions holding those accounts, are not being used for money laundering purposes.

Design/methodology/approach

Summarizes and analyzes the adopted rules.

Findings

Since the passage of the USA PATRIOT Act, regulation relating to anti‐money laundering has been among the highest profile – and highest priority – activity of securities and financial institution regulation. Consequently, anti‐money laundering rules and regulations have become a major aspect of compliance programs at financial institutions such as banks and broker‐dealers. The rules that are the subject of this article are noteworthy in part because they continue the trend of widening the universe of “financial institutions” that are now subject to substantial anti‐money laundering regulation. The rules described in this article add substantially to the complexity of anti‐money laundering regulation at financial institutions for a number of reasons, including: firstly, placing new, broad‐based requirements on financial institutions; secondly, requiring those financial institutions to make judgments regarding both the level of risk posed by certain accounts and the appropriate diligence that may be necessary for each such account; and thirdly, interpretive and implementation challenges.

Originality/value

A summary and analysis of new anti‐money laundering regulation, which comes at a time when US regulators are placing substantial emphasis on anti‐money laundering.

Details

Journal of Investment Compliance, vol. 6 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 3 June 2014

Russell D. Sacks, Thomas Donegan and Charles S. Gittleman

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…

79

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

Practical guidance from experienced securities and financial services lawyers.

Details

Journal of Investment Compliance, vol. 15 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Available. Content available
Article
Publication date: 1 October 2005

Henry A. Davis

187

Abstract

Details

Journal of Investment Compliance, vol. 6 no. 4
Type: Research Article
ISSN: 1528-5812

Available. Content available
Article
Publication date: 3 June 2014

Henry Davis

96

Abstract

Details

Journal of Investment Compliance, vol. 15 no. 2
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 1 March 2011

Heather Wyatt-Nichol

The American Dream functions as a myth within our political discourse by providing hope to citizens and reinforcing beliefs in the protestant work ethic and meritocracy. This…

597

Abstract

The American Dream functions as a myth within our political discourse by providing hope to citizens and reinforcing beliefs in the protestant work ethic and meritocracy. This article examines the myth through categories of mobility, marginalization, and hope. Elite theory and institutional isomorphism are used to explore business privilege within Public Administration. The ability to reframe the American Dream is considered through an examination of select speeches at the 2008 Democratic National Convention. Despite evidence of declining mobility and structural inequality, citizens cling to the myth. One explanation is that marginalization perpetuates the American Dream by crowding out issues of social class through various methods of institutional isomorphism. Another explanation is that the dream endures because it can be re-conceptualized.

Details

International Journal of Organization Theory & Behavior, vol. 14 no. 2
Type: Research Article
ISSN: 1093-4537

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