Purpose -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.Design/methodology/approach -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.Findings -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.Originality/value -The paper provides practical guidance from experienced securities lawyers.
Purpose -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).Design/methodology/approach -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.Findings -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.Originality/value -The paper provides practical guidance from experienced securities lawyers.
PurposeThe purpose of this paper is to explain amendments to the Investment Advisers Act custody rule, that recently became effective, which are intended to provide advisory clients with additional protections when a registered investment adviser has access to client assets.Design/methodology/approachThe paper explains changes to the custody rule related to the definition of custody, delivery of account statements, surprise examinations, exemptions related to pooled investment vehicles, required internal control reports for advisers who maintain client assets themselves, the surprise examination requirement for privately offered securities, and amendments to Form ADV. It also explains effective and compliance dates.FindingsAdvisers should consider how to revise and tailor their written policies and procedures relating to custody; whether to continue the use of affiliated custodians; how to allocate the expenses for compliance with the new requirements, including accountants' fees for surprise examinations, internal control reports and liquidation audits; and whether to amend fund disclosure documents or separate account agreements to address expense allocation or other issues arising as a result of the new requirements.Originality/valueThe paper provides practical guidance from experienced securities lawyers.
2015),"SEC touts whistleblower award to a compliance professional -use care in responding to reports of potential If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
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