FINRA RN 11-12 March 18, 2011 FINRA published a regulatory notice to remind firms of their obligations under the Foreign Corrupt Practices Act (FCPA). The notice advises firms to review their business practices to ensure compliance with the FCPA, and notes that a failure to comply with the FCPA would be deemed a violation of FINRA Rule 2010 (standards of commercial honor and principles of trade). The notice provides a general overview of FCPA requirements and to what extent they apply to different types of broker-dealers. Cross References Exchange Act § 13(b) FINRA Rule 2010 CWT CF Memo, SEC

Financial Services Authority March 21, 2011 The FSA feels that the high number of unsuitable investment selections seen in the pensions and investment markets is a significant concern, and is a specific risk to their consumer protection objective. As a result, the FSA has published a report considering: how firms establish and check the level of investment risk that retail customers are willing and able to take (in the wider context of the overall suitability assessment); the potential causes of failures to provide investment selections that meet the risk a customer is willing and able to take

SEC Release No. IA-3175 March 14, 2011 The SEC published a settled administrative action against an investment advisor relating to (1) the firm's failure to disclose to advisory clients certain financial benefits that its affiliated broker-dealer received; (2) the firm's failure to provide prior written disclosure to clients that it would engage in fixed income transactions on a riskless principal basis ( i.e. rather than as agent); and (3) for failing to adopt and implement policies and procedures designed to prevent violations of the Advisers Act and for failing to maintain and enforce a

FINRA News Release March 22, 2011 FINRA announced a $650K fine against a Texas-based clearing broker dealer for deficiencies in due diligence, risk assessment, and written supervisory procedures that led to one of its correspondent firms creating excessive risk through the entry of improper short sales. The action alleges that the clearing firm allowed the correspondent firm to establish a 2.5 million net short position in a security, which it was unable to meet and which left the clearing firm with an unsecured debit balance of $6.3 million. In connection with the action, FINRA required the

SEC Release No. 34-64087 March 17, 2011 The SEC published a proposal to "readopt" certain provisions of Exchange Act Rules 13d-3 and 16a-1 in order to clarify that persons who purchase or sell security-based swaps will be within the scope of those rules after the effective date of new Exchange Act § 13(o) (July 16, 2011). The SEC notes that this proposal is only intended to "preserve the existing application of the beneficial ownership rules as they relate to security-based swaps." However, the SEC adds that the staff is also engaged in a project to "modernize" the reporting rules under