Harry Frischer
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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
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
The SEC recently settled an enforcement action against an investment advisor, Parallax Investments LLC, its owner and its Chief Compliance Officer, finding that metadata in the CCO’s annual compliance memorandum contradicted the CCO’s statement to the SEC staff about his compliance review.… Continue Reading
The broad definition of a “swap” in the Dodd-Frank Act, read literally, would encompass many transactions that Congress never intended to cover, so the SEC and the CFTC have jointly promulgated regulations that provide that many of those transactions are not treated as swaps. However, a recent SEC Investor Alert, stating that fantasy stock trading … Continue Reading
Yesterday, the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the SEC and the CFTC issued a Joint Staff Report analyzing the significant volatility in the U.S. Treasury market on October 15, 2014. The analysis, however, “did not reveal a clear, single cause … Continue Reading
Returning to an enforcement priority repeatedly articulated over the years (for example, here, here and here), the SEC recently imposed sanctions on a registered investment advisory firm and two principals arising out of an alleged scheme to inflate the valuations of illiquid mortgage-backed securities held by private investment funds managed by the adviser. The SEC … Continue Reading
Relying on a data-driven statistical analysis conducted by the Division of Economic and Risk Analysis (DERA), the SEC recently commenced administrative proceedings against an investment advisor, Welhouse & Associates, Inc., and its principal, charging them with improperly allocating profitable options trades to the principal’s own accounts while allocating unprofitable trades to the firm’s clients. The … Continue Reading
Concluding a year-long review, UK regulators issued the final report of the Fair and Effective Markets Review Committee last week, making a number of recommendations intended to restore confidence in the trading markets for fixed income, currency and commodities (“FICC”) in the wake of past misconduct. The report noted the substantial fines that have been … Continue Reading
Last week, Richard Ketchum, Chairman and CEO of the Financial Industry Regulatory Authority (“FINRA”), doubled-down on his recent criticism of the U.S. Department of Labor’s (“DOL”) proposed regulation addressing the standard of care for broker-dealers providing retirement investment advice. Speaking at FINRA’s annual conference, Chairman Ketchum said that, while he supports a “best interests of … Continue Reading
Senator Elizabeth Warren recently released a letter to SEC Chair Mary Jo White, complaining that her leadership of the SEC over the past two years has been “extremely disappointing.” The Senator opined that the nation’s largest financial institutions are “mounting an aggressive effort to repeal, postpone, and dilute” the laws enacted by Congress following the … Continue Reading
FINRA recently released updated and revised Sanction Guidelines and an accompanying Regulatory Notice that, among other things, call for stricter penalties against broker-dealers who commit fraud or violate suitability rules. The revisions are effective as of May 12, 2015. The Sanction Guidelines, first published in 1993, are intended to assist FINRA’s adjudicators in determining the … Continue Reading
On March 25, 2015, the SEC proposed an amendment to Rule 15b9-1 that would require high-frequency trading firms to register with FINRA. According to the SEC, the proposed amendment will better align the scope of Rule 15b9-1 with today’s market structure. Rule 15b9-1, as presently written, exempts certain market participants from the requirement under the … Continue Reading
In the latest regulatory action addressing high frequency and other algorithmic trading, a recent FINRA Regulatory Notice seeks comment on a proposed rule change under which persons associated with a member firm would be required to register as Equity Traders under Rule 1032(f) if they are primarily responsible for the design, development or significant modification … Continue Reading
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
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 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
Over the last five years, the U.S. Attorney for the Southern District of New York, Preet Bharara, has aggressively pursued insider-trading cases against a broad spectrum of defendants. As a result, insider trading remains a topic of public interest—especially in the compliance community. On December 23, 2014, Compliance Week published an article on the Second … Continue Reading
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
At the recent Columbia Law School Conference, “Hot Topics: Leading Current Issues in Securities Regulation and Enforcement,” SEC Commissioner Kara M. Stein’s keynote address focused on a number of transparency and disclosure issues regarding municipal securities, private equity and exchange traded funds. Municipal Securities Commissioner Stein highlighted the importance of municipal finance to the growth of … Continue Reading
Like Prince Charming searching for the foot that fit the glass slipper, Justice Scalia recently issued a statement advising that he and Justice Thomas would be receptive to granting certiorari to a petition properly presenting the issue of whether, in a criminal context, a court should grant deference to an administrative agency’s statutory interpretation. And, … Continue Reading
In a recent case arising from the Facebook IPO, NASDAQ OMX Group v. UBS Securities, LLC, No. 13-Civ. 2657 (2d Cir. October 31, 2014), the Second Circuit determined that the federal courts had jurisdiction to enjoin an arbitration against NASDAQ, finding that the case implicated important federal issues regarding the regulation of an orderly securities … Continue Reading
Originally published as a Proskauer Client Alert. On October 23, 2014, the New York Court of Appeals held for the first time that, under New York law, the “separate entity” rule prevents a court from ordering a foreign bank operating branches in New York from restraining a judgment debtor’s assets held in foreign branches of the bank. Motorola … Continue Reading
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
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
Big Loss For Plaintiffs In High Frequency Trading Cases
By Brian Friedman, Boris Zeldin and Harry Frischer on Posted in Financial Services, Securities Regulatory
SEC Sanctions Dark Pool Operator and Affiliated High Frequency Trader
By Alyse F. Stach, Brian Friedman and Harry Frischer on Posted in SEC Enforcement, Securities Law, Securities Regulatory
SEC Finds Metadata Contradicts CCO’s Statement In Examination
By Alyse F. Stach and Harry Frischer on Posted in Financial Services, SEC Enforcement
SEC Flexes Its Enforcement Muscle For Securities-Based Swaps
By Harry Frischer on Posted in Financial Services, Securities Regulatory
Regulators Fail To Identify Cause Of Abnormal US Treasury Trading on October 15, 2014
By Harry Frischer on Posted in Financial Services, Securities Regulatory
SEC Sanctions Hedge Fund Advisory Firm For Improper Valuations of Illiquid Securities
By Harry Frischer and Rachel Wolkinson on Posted in Private Investment Funds, SEC Enforcement
SEC’s Data-Driven Analysis Identifies Allegedly Improper Trade Allocations by Investment Advisor
By Harry Frischer and Rachel Wolkinson on Posted in Financial Services, SEC Enforcement
UK Regulators Address Manipulation of Trading Benchmarks and Other Misconduct
By Harry Frischer and Philip Arnold on Posted in Financial Services, Securities Regulatory
FINRA CEO Criticizes DOL Fiduciary Proposal (Again)
By David Picon, Edward Canter, Harry Frischer and Philip Arnold on Posted in Financial Services, Securities Regulatory
Senator Warren’s Letter to the SEC Chair Calls for More Aggressive Enforcement
By Alexandra Skellet and Harry Frischer on Posted in SEC Enforcement, Securities Regulatory
FINRA Introduces Revised Sanction Guidelines
By Daniel Nelson, Harry Frischer and Philip Arnold on Posted in Financial Services, Securities Regulatory
SEC Rule Change Would Require High-Frequency Traders to Register with FINRA
By Edward Canter and Harry Frischer on Posted in Financial Services, Securities Law, Securities Regulatory
Proposed FINRA Rule Would Require Associated Persons Who Develop Algorithmic Trading Strategies To Register as Equity Traders
By Edward Canter and Harry Frischer on Posted in Financial Services, Securities Law, Securities Regulatory
New York AG May Face A Tough Road In High Frequency Trading Case Against Barclays
By Brian Friedman, Celia Cohen, Harry Frischer and Stephen Ratner on Posted in Financial Services, Securities Law, Securities Regulatory
SEC Sanctions Two Exchanges for Failing to Accurately Describe Order Types and Making Preferential Disclosure to High Frequency Traders
By Brian Friedman, Boris Zeldin, Harry Frischer and Stephen Ratner on Posted in Financial Services, Securities Regulatory
FINRA’s 2015 Examination Priorities Zero In On Abusive Trading Algorithms and Other Issues Involving Trading Technology
By Brian Friedman, Harry Frischer, Michael R. Hackett and Stephen Ratner on Posted in Financial Services, Securities Regulatory
Compliance Week: Insider-Trading Gets More Complicated
By Edward Canter and Harry Frischer on Posted in Securities Law, White Collar
SEC Working Papers Suggest Market Benefits From Certain Types of High-Frequency and Low-Latency Trading
By Brian Friedman, Edward Canter, Harry Frischer and Stephen Ratner on Posted in Financial Services, Securities Regulatory
SEC Focus on Disclosure Issues for Municipal Securities, Private Equity and ETFs
By Harry Frischer and Massiel Pedreira on Posted in Corporate Governance, Private Investment Funds, SEC Enforcement, Securities Regulatory
Justices Scalia and Thomas Amenable to Reexamining Deference to SEC Statutory Interpretations
By Harry Frischer and Massiel Pedreira on Posted in Securities Law, White Collar
Second Circuit Extends Scope of Federal Jurisdiction In Litigation Arising From The Facebook IPO
By Harry Frischer on Posted in Financial Services, Securities Litigation
Recent Appellate Decisions Limit Access To Customer Assets Held At Foreign Bank Branches
By Harry Frischer, Jessica Fisher and Philip Arnold on Posted in Financial Services
Regulators Continue To Address High-Frequency Trading
By Brian Friedman, Boris Zeldin, Harry Frischer and Stephen Ratner on Posted in Financial Services, Securities Regulatory
Second Circuit Rules That Derivatives Counterparty Is Not A “Customer” of Broker-Dealer Under FINRA Rules
By Brian Friedman, Harry Frischer and Philip Arnold on Posted in Securities Regulatory
