This settlement is important for several reasons. Most notably, the penalty is significant ($35 million), the firm admitted wrongdoing, and the firm's CEO was personally charged. More broadly, a number of compliance lessons may be learned from this settlement with respect to the presentation of past performance information:

Firms should be mindful that principal trades with advisory clients continue to be an area of focus for SEC examination and enforcement actions. Specifically, the (the "Release") noted that "the staff has examined and will continue to examine firms that engage in principal transactions and will take appropriate action to help ensure that firms are complying with section 206(3) or rule 206(3)-3T (as applicable), including possible enforcement action." The Release also cited a number of…

This settlement highlights the importance of robust compliance procedures governing the interaction between research analysts and investment banking personnel, particularly during the "solicitation period," in which an issuer determines which firms to include in the underwriting syndicate. The FINRA settlement agreements contain some useful insights into how FINRA interprets the applicable provisions of Rule 2711 and include the following:

Prohibition on participation by research…

By reopening comment on the issue of position limits, Chairman Massad is taking on an important issue of substance; one that matters both for the economy and for the reputation of the CFTC as an agency.

Before Chairman Massad took over, the CFTC had been inclined to adopt very burdensome position limit rules, despite the costs of compliance and even in the absence of substantive evidence that such rules would benefit the economy. The steadily rising price of energy provided popular…