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This paper aims to explain the SEC's new Rule 201 and amended Rule 200(g), which are designed to improve the regulations that address harmful shortselling practices.

The paper summarizes Rule 201, discusses the reasoning behind the “alternative uptick rule”, defines “covered securities” to which Rule 201 applies, explains why the commission chose the national best bid as the basis of the execution of short sales during the circuit breaker period, discusses the SEC's policies and procedures approach, explains conditions under which a broker‐dealer submitting a short‐sale order after the circuit breaker is triggered submitting a short sale order after the circuit breaker is triggered may mark the order “short exempt,” explains the reason an exception for market making activities is not included in the rule, and discusses the implementation period and the need for broker‐dealers to develop new policies and procedures.

Broker‐dealers and other market centers will need to dedicate significant compliance and systems resources to develop the policies and procedures and systems enhancements necessary to comply with the rule.

The paper provides practical guidance from experienced securities lawyers.

The purpose of this paper is to explain three new rules FINRA has proposed as part of the process of developing a consolidated rulebook: Rules 4314 (Securities Loans and Borrowings), Rule 4330 (Customer Protection – Permissible Use of Customer Securities), and Rule 4340 (Callable Securities).

The paper explains Rule 4314, which sets forth the requirements for a member firm that is a party to an agreement for the loan or borrowing of securities; Rule 4330, which governs the borrowing or lending of a customer's margin securities that are eligible to be pledged or loaned; and Rule 4340, which establishes the obligations of a member as to callable securities in its possession or control.

Broker‐dealers engaging in securities lending activities will need to review their agreements, disclosures and recordkeeping procedures in order to comply with the proposed rules upon their adoption, particularly those who may engage in such activities involving fully paid and excess margin securities. As to the proposed new rule on callable securities in their possession and control, broker‐dealers will need to review their recordkeeping procedures and consider whether they want to adopt more flexible procedures on allocations involving partially redeemed or called securities.

The paper provides practical guidance from experienced securities lawyers.

The purpose of this paper is to explain a study released by the Securities and Exchange Commission on January 21, 2011, the “Fiduciary Study,” concerning legal and regulatory standards of care for providing investment advice and recommendations to retail customers.

The paper explains the Fiduciary Study's concern that retail investors do not fully understand the roles played by, and the different standards of care that apply to, investment advisers and broker‐dealers. It summarizes the SEC's core recommendations concerning uniform investment adviser and broker‐dealer standards for conduct, avoidance of conflicts of interest, fiduciary duties, principal trading, duty of care owed to investors, personalized investment advice about securities, and investor education. It summarizes the SEC's recommendations on harmonizing investment adviser and broker‐dealer regulations on advertising and other communications, use of finders and solicitors, supervision, licensing and registration of firms, licensing and continuing education requirements for professionals, and books and records.

The SEC's core recommendations are designed to clarify the respective roles of, and establish uniform standards for, investment advisers and broker‐dealers, so that retail investors will be better informed and protected.

This paper provides a useful summary and practical advice from experienced financial services lawyers.