SEC defines the phrase “as part of a regular business” to capture private funds and other market participants that take on liquidity-providing roles.

By Marlon Q. Paz, Stephen P. Wink, Naim Culhaci, and Jessmine Lee

The Securities and Exchange Commission (SEC) adopted new rules that expand the definition of “dealer” and “government securities dealer” under the Securities Exchange Act of 1934 (Exchange Act), requiring registration by market participants that take on significant liquidity-providing roles. The February 6

Form 13F filers will need to file their first Form N-PX covering the period of July 1, 2023, to June 30, 2024, by August 31, 2024.

By Stephen P. Wink, Naim Culhaci, Laura Ferrell, Aaron Gilbride, Matthew Lee, and Jacqueline Marie Rugart

Rule 14Ad1 of the Securities Exchange Act of 1934 (Exchange Act), which was adopted by the US Securities and Exchange Commission (SEC) last fall, and will become effective on July 1, 2024, will institute a new requirement for institutional investment managers that are required to file Form 13F pursuant to Section 13(f) of the Exchange Act (13F Filers) to additionally publicly report how they voted via proxy for certain executive compensation matters on Form N-PX. Previously, the requirement to publicly report proxy voting records through Form N-PX was generally limited to registered investment companies.

The narrower M&A broker exemption supersedes the 2014 M&A broker no-action letter while leaving state-level restrictions and foreign M&A broker relief unaffected.

By Marlon Q. Paz, Stephen P. Wink, Naim Culhaci, Donald Thompson, and Deric Behar

On March 29, 2023, the Securities Exchange Act of 1934 (Exchange Act) was amended to exempt certain “M&A brokers” from registration as broker-dealers with the US Securities and Exchange Commission (SEC). The amendment, Exchange Act Section 15(b)(13), signed into law on December 29, 2022, as part of the Consolidated Appropriations Act (H.R. 2617), largely codifies previously granted SEC Staff no-action relief, albeit with certain limitations. Like the prior no-action relief, the new legislation does not preempt state or territorial laws concerning broker-dealer registration.

Persons previously relying on the M&A broker no-action letter should carefully examine the new exemption and related existing state and foreign relief to determine what, if any, implications the new law poses with regard to continued reliance.

By Laura Ferrell, Marlon Q. Paz, Nabil Sabki, Stephen P. Wink, Naim Culhaci, and Deric Behar

On March 28, 2022, the US Securities and Exchange Commission (SEC) proposed rules (Proposing Release) that would require securities market participants that engage in dealer-like activities — such as a proprietary trading firm that engages in a routine pattern of buying and selling securities that has the effect of providing liquidity to other market participants — to register with the SEC, become a member of a self-regulatory organization (SRO), and comply with federal securities laws and regulatory obligations.

The amended definition could provide a new means for the SEC to regulate crypto platforms.

By Stephen P. Wink, Marlon Q. Paz, Naim Culhaci, Ian Irlander, and Deric Behar

We previously published a blog post on the set of proposed amendments (Proposal) issued on January 26, 2022, by the Securities and Exchange Commission (SEC) regarding the regulation of alternative trading systems (ATSs) that would, among other things, substantially expand the activities covered by the definition of an “exchange” as interpreted by Rule 3b-16 under the Exchange Act to capture “Communication Protocol Systems”. Whereas we previously offered our general views on the proposed expansion of definitions and resulting potential impact on the securities industry, now we turn specifically to the potential impact of the Proposal on platforms trading digital assets.

Updated on May 9, 2022.

The proposal would require certain systems and platforms currently not subject to any registration requirements to register as broker-dealers and ATSs.

By Stephen P. Wink, Marlon Q. Paz, Naim Culhaci, and Deric Behar

On January 26, 2022, the Securities and Exchange Commission (SEC) issued a set of proposed amendments (Proposal) regarding the regulation of alternative trading systems (ATSs) that would, among other things, substantially expand the definition of an “exchange” as interpreted by Rule 3b-16 under the Securities Exchange Act of 1934 (the Exchange Act) to capture “Communication Protocol Systems.” Specifically, Rule 3b-16’s interpretation of the “exchange” definition would be broadened in several meaningful aspects, including by removing the current requirement that a platform needs to bring together “firm orders” to be deemed an “exchange.”

The Proposal would have a significant impact on current practices surrounding the use of Rule 10b5-1 plans by public companies and insiders.

By Joel H. Trotter, Stephen P. Wink, Naim Culhaci, and Deric Behar

On December 15, 2021, the Securities and Exchange Commission (SEC) issued a set of proposed amendments (the Proposal) regarding the adoption of trading plans that qualify for the affirmative defense against liability for trading on the basis of material non-public information (MNPI) under Rule 10b5-1 under the Securities Exchange Act of 1934 (the Exchange Act). These proposed changes would impose additional requirements on public companies and insiders.

Significantly, the Proposal would require a waiting period or “cooling off period” of 120 days for the director or officer of a company (or 30 days for the company itself) between the adoption of a plan or an amendment to the plan and the effecting of trades under such plan. Moreover, the Proposal would prohibit the use of multiple overlapping plans. The Proposal would also introduce additional disclosure requirements regarding 10b5-1 plans and the charitable gifting of securities by insiders. In explaining its rationale for issuing the Proposal, the SEC stated that it aims “to address apparent loopholes in the [current] rule that allow corporate insiders to unfairly exploit informational asymmetries.”

This post provides a high-level summary of some of the changes that are being proposed.

The changes will have implications for the growing secondary market for non-listed securities.

By Stephen P. Wink, Naim Culhaci, and Deric Behar

On September 16, 2020, the US Securities and Exchange Commission (SEC) adopted amendments to Rule 15c2-11 (the amended Rule) of the Securities Exchange Act of 1934 (Exchange Act). Rule 15c2-11 sets forth requirements regarding the publication or submission by broker-dealers of quotations for over-the-counter (OTC) equity securities. Subject to limited exceptions, the Rule requires broker-dealers to obtain and review for reliability and accuracy certain basic information, including financial information, for each issuer before publishing or submitting a quotation for OTC securities. With respect to issuers subject to existing public reporting requirements, broker-dealers are required to obtain and review the issuer’s existing public disclosures. For issuers that are not subject to such requirements (“catch-all issuers”), broker-dealers are required to specifically obtain, review, and make available to investors specified types of information. With these amendments, the SEC seeks to modernize the Rule (which was last amended nearly 30 years ago) in line with the increased availability of information in today’s world and to generally provide greater transparency about OTC securities issuers to the investing public.