Corporate Defense and Disputes

Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds

Brian Friedman

Brian Friedman

Senior Counsel

Brian L. Friedman is a senior counsel in the Litigation Department and a member of the Financial Services Group and Securities Litigation Group.

Brian regularly represents clients in a variety of complex matters, including litigations, investigations and enforcement proceedings in the financial services area, contract disputes, business torts, and construction matters. His practice includes matters in state and federal courts, and in domestic and international arbitrations.

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SEC’s 2016 Examination Priorities Focus on Retail Investors, Market Wide Risk and Use of Data Analytics

The recently issued Examination Priorities for 2016 reveals that the SEC’s priorities are organized around the same three thematic areas as last year: (i) retail investors, including retirement investments; (ii) market-wide risks; and (iii) the SEC’s increasing analysis of data to identify problematic activity.… Continue Reading

FINRA’s 2016 Examination Priorities Identifies New Initiatives on Market Integrity and Firm Culture and Further Concern on Supervision and Controls

The recently issued 2016 Regulatory and Examination Priorities Letter discloses FINRA’s new initiatives on market integrity and firm culture and reflects a focus on firms’ supervision regarding conflicts of interest and technology. Regulatory concern over many of these issues has been previously reported in this blog here, here, here and here.… Continue Reading

FINRA Arbitration Task Force Fails To Reach Consensus On Many Major Issues

The FINRA Dispute Resolution Task Force issued its final report last week, making certain recommendations designed to improve the arbitration process. More notably, however, the Task Force reported that it was unable to reach agreement on a number of more controversial issues, reflecting deep divisions among practitioners in this area.… Continue Reading

SEC Proposal Would Limit Investment In Derivatives By Investment Companies

Recognizing the substantial risks inherent in many derivatives transactions, and the substantial leverage that is often imbedded in derivatives, the SEC last week announced its proposed new rules that would impose limits on the exposure to derivatives for investment companies, which include mutual funds, exchange-traded funds and closed-end funds, and create other regulatory requirements. Exposure … Continue Reading

CFTC Proposes New Regulations For Algorithmic Trading

On November 24, 2015, the CFTC announced the new proposed Regulation Automated Trading (“Reg. AT”), which contains a variety of measures designed to prevent potential market disruptions arising from algorithmic trading.   Among other things, Reg. AT proposes certain pre-trade risk and order management controls, the implementation of policies and procedures governing algorithmic trading, and additional … Continue Reading

SEC Proposes Rules To Enhance Transparency And Oversight Of Alternative Trading Systems

The SEC announced this week its proposal to substantially overhaul the rules regarding alternative trading systems (“ATS”), often referred to as dark pools. The proposed rules would require firms operating ATSs to make additional disclosure about business activities that may present conflicts of interest between firms and ATS subscribers, and considerable information as to how … Continue Reading

SEC Director of the Division of Enforcement Discusses Market Structure Enforcement

On November 2, 2015, the Director of the SEC Division of Enforcement Andrew Ceresney spoke at the “SIFMA Compliance & Legal Society New York Regional Seminar” and outlined the SEC’s enforcement priorities with respect to market structure issues.  This is yet another response by regulators to the growth of algorithmic trading and alternative trading venues, … Continue Reading

CFTC Chair Discusses the CFTC’s Response to Algorithmic Trading

On October 21, 2015, CFTC Chair Timothy Massad spoke at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York.  His remarks came the day after SEC Chair Mary Jo White’s comments, which we blogged about here, and follow this summer’s … Continue Reading

SEC Chair Calls for Reexamination of Treasury Market Regulations in Light of High Speed Electronic Trading

On October 20, 2015, SEC Chair Mary Jo White gave the keynote address at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York. The conference and speech follow this summer’s Joint Staff Report analyzing the significant volatility that the U.S. … Continue Reading

CFTC Accuses Firm Manually Entering Orders Of Spoofing Scheme That Fooled Algorithmic Traders

Potentially abusive trading algorithms, such as algorithms that purportedly engage in “spoofing” or “layering” are the subject of considerable regulatory interest.  However, in an interesting complaint filed on October 19, 2015, the CFTC alleged that a firm manually entering futures orders engaged in illegal spoofing that appears to have lured algorithmic traders into the market. … Continue Reading

Coding Errors Lead To SEC Sanctions for High-Frequency Trading Firm

Mistakes in computer coding by a high frequency trading firm that went undetected for approximately four years were responsible for approximately 12.6 million orders that violated Reg NMS, according to an Order settling an enforcement proceeding with Latour Trading LLC, announced by the SEC on September 30.  These noncompliant orders involved more than $4.6 billion … Continue Reading

Big Loss For Plaintiffs In High Frequency Trading Cases

Last week, SDNY Judge Jesse Furman issued a 51 page decision in In Re: Barclays Liquidity Cross and High Frequency Trading Litigation dismissing all of the cases consolidated under the MDL.  In these cases, investor plaintiffs asserted  federal securities law claims under Section 10(b) and 6(b) of the Exchange Act against seven stock exchanges, Barclays … Continue Reading

SEC Sanctions Dark Pool Operator and Affiliated High Frequency Trader

In the latest round of regulatory action involving high frequency trading and dark pools, the SEC announced yesterday that it reached a settlement with ITG, Inc., and its affiliate Alternet Securities, Inc., imposing a $20.3 million sanction based on ITG’s misuse of confidential order information to benefit the firm’s proprietary high-frequency trading.… Continue Reading

New York AG May Face A Tough Road In High Frequency Trading Case Against Barclays

Ruling on Barclays’ motion to dismiss the action brought by the New York Attorney General regarding Barclays’ alternative trading system (“ATS”), Justice Shirley Kornreich suggested that the AG may face substantial hurdles in proving its case, although the Court narrowly upheld the Martin Act claim as a matter of law. The AG based its claim … Continue Reading

SEC Sanctions Two Exchanges for Failing to Accurately Describe Order Types and Making Preferential Disclosure to High Frequency Traders

On January 12, 2015, the Securities and Exchange Commission announced that it had obtained a $14 million settlement against two exchanges formerly owned by Direct Edge Holdings, EDGA and EDGX (the “Respondent Exchanges”) for their failure to file Exchange Rules that accurately described the order types they offered, and for providing preferential disclosure to certain … Continue Reading

FINRA’s 2015 Examination Priorities Zero In On Abusive Trading Algorithms and Other Issues Involving Trading Technology

FINRA’s recently-released Regulatory and Examinations Priorities Letter for 2015 reflects substantial regulatory interest in high-frequency trading and other issues arising from trading technology.  Regulatory concern over these issues has been previously reported on this blog here and here. The 2015 Letter states that FINRA has adapted its surveillance program to identify potentially violative conduct such … Continue Reading

SEC Working Papers Suggest Market Benefits From Certain Types of High-Frequency and Low-Latency Trading

Bringing quantitative analyses to the debate over high-frequency trading, two working papers recently made available by the SEC’s Division of Economic and Risk Analysis present economic models suggesting that there are market benefits from certain forms of high-frequency and low-latency trading.   In light of the on-going interest in high-frequency trading among various regulators, the recognition of … Continue Reading

Regulators Continue To Address High-Frequency Trading

Regulators across markets continue to show interest in high frequency trading and algorithmic trading generally. Recent developments in this area include: On October, 16, 2014, the SEC imposed a $1 million sanction on a high frequency trading firm, Athena Capital Research, which allegedly placed large numbers of rapid-fire orders in the final two seconds of … Continue Reading

Second Circuit Rules That Derivatives Counterparty Is Not A “Customer” of Broker-Dealer Under FINRA Rules

In the recent case Citigroup Global Markets Inc. v. Ghazi Abdullah Abbar, et al., 13 Civ. 2172 (2d Cir. Aug. 1, 2014), the Second Circuit held that, under FINRA rules, an investor who purchased an over-the-counter derivative from a financial institution was not a “customer” of the financial institution’s affiliated broker-dealer, notwithstanding the broker-dealer’s involvement … Continue Reading
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