Articles Posted in The SEC Rule Watch – SEC Rules of Importance to Investors

SEC Order Approving FINRA Rule Change Relative to How Member Firms are Required to Calculate the Value of Unlisted Real Estate Investment Trusts and Direct-Participation Programs:

The Sec has approved FINRA’s plan to overhaul how member firms calculate the value of unlised real estate investment trusts (“REITs”) and direct-participation programs (“DPPs”).  Under the new rules – specifically FINRA Rule 2310 – the firms will be required to include on customer account statements a per-share estimated value for any unlisted REIT and DPP securities that they have reason to believe is reliable.  

Firms also will need to make new disclsoures about the nature of the investment, including that they are not traded on a public securities exchange and that the price that the investor receives may be less than the estimated per-shre value.  


The Securities and Exchange Commission recently voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding.

Crowdfunding describes an evolving method of raising capital that has been used outside of the securities arena to raise funds through the Internet for a variety of projects ranging from innovative product ideas to artistic endeavors like movies or music. Title III of the JOBS Act created an exemption under the securities laws so that this type of funding method can be easily used to offer and sell securities as well. The JOBS Act also established the foundation for a regulatory structure for this funding method.

SEC Approves Registration Rules for Municipal Advisors

The Securities and Exchange Commission recently voted to adopt rules establishing a permanent registration regime for municipal advisors as required by the Dodd-Frank Act.  The rule is currently slated to become effective 60 days after publication in the Federal Register.

The Final Rule:

Rule 506 of Regulation D Recent Amendments Regarding General Solicitation and General Advertising – South Florida Private Placement Fraud and Misrepresentation Litigation and FINRA Arbitration Attorney:

The Securities and Exchange Commission (the “SEC”), on July 10, 2913 by a vote of 4-1, adopted amendments to Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”).1 These amendments, which were required by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), eliminate, subject to certain conditions, the prohibition on general solicitation and general advertising in Rule 506, one of the most commonly relied upon safe harbors from Securities Act registration by private fund issuers. These amendments will become effective 60 days after publication of the Adopting Release in the Federal Register. 

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Adoption of Final Rule for Broker-Dealers Engaging in a Retail Forex Business

The Securities and Exchange Commission (Commission) recently announced the adoption of a final rule (Rule 15b12-1) to permit a registered broker-dealer to engage in a retail forex business, provided that the broker-dealer complies with the Securities Exchange Act of 1934, the rules and regulations thereunder, and the rules of the self-regulatory organization(s) of which the broker-dealer is a member insofar as they are applicable to retail forex transactions. The Commission is adopting Rule 15b12-1 substantially in the form previously adopted as an interim final temporary rule and is providing that the rule will expire on July 31, 2016. 

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SEC Proposes Rules to Implement JOBS Act Provision About General Solicitation and Advertising in Securities Offerings

August, 2012:

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June, 2011:

SEC Approves Proposals to Address Extraordinary Volatility in Individual Stocks and Broader Stock Market

In an attempt to keep investors apprised on changes in the regulatory environment, we have provided a copy a a recent release issued by the Securities and Exchange Commission.  Please keep in mind that this post is being provided for education purposes only and is not designed to be complete in all material respects.  To view a complete copy of the release, please follow the below highlighted link.  Thus, if you have any questions relating to its contents, you should contact a qualified professional 

SEC Proposes Rules to Help Prevent and Detect Identity Theft

The Securities and Exchange Commission recently announced a rule proposal to help protect investors from identity theft by ensuring that broker-dealers, mutual funds, and other SEC-regulated entities create programs to detect and respond appropriately to red flags.

The SEC issued the proposal jointly with the Commodity Futures Trading Commission (CFTC). Section 1088 of the Dodd-Frank Act transferred authority over certain parts of the Fair Credit Reporting Act from the Federal Trade Commission (FTC) to the SEC and CFTC for entities they regulate. The proposed rules are substantially similar to rules adopted in 2007 by the FTC and other federal financial regulatory agencies that were previously required to adopt such rules.

SEC Approves Consolidated FINRA Rules Governing Know-Your-Customer:

Effective October 7, 2011, new consolidated FINRA rules governing your broker/dealer’s and your account executive’s know-your-customer and suitability obligations become effective for the consolidated FINRA rulebook. The new rules are based in part on and replace provisions in the NASD and NYSE rules.

These rules are of critical importance for broker/dealers and customers alike. They form critical standards by which the firm’s can reasonably monitor the activity that is taking place in your account and they provide guidance to you, the customer, to understand your role verses that of your account executive. In order for the protections of these rules to surround the activity in your account, you must, at the start of your relationship with the broker/dealer and your account executive, provide complete information as discussed below. Importantly, if your circumstances change, it is critical that these changes be communicated to your account executive and firm so that they can fulfill their regulatory obligations to you.

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