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Broker-Dealers, Securities Trading and Markets
Key Contacts
K. Susan Grafton
Partner Washington, D.C. +1 202 261 3399
Elliott R. Curzon
Partner Washington, D.C. +1 202 261 3341
Richard Frase
Partner London +44 20 7184 7692
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Wide-ranging legal and regulatory guidance for broker-dealers
Dechert is a leader in providing sophisticated counsel to broker-dealers and national securities exchanges; advising on a range of matters – including regulatory compliance, and regulatory and self-regulatory investigations and examinations – while shaping policy that affects the industry.
Our broker-dealer, securities trading and markets lawyers represent leading full-service broker-dealers, U.S. securities exchanges, equity and fixed income alternative trading systems, banks, investment banking boutiques, institutional-only broker-dealers, and several of the largest U.S. retail broker-dealers and investment advisers. We also assist foreign broker-dealers seeking to do business in the United States and a range of clients seeking to avoid broker-dealer registration.
Integrated practice advising asset management clients
Our broker-dealer, securities trading and markets lawyers are an integral part of our financial services practice, which is one of the largest of any U.S. firm. Dechert represents 24 of the 25 largest global asset managers, and many of their affiliated broker-dealers. In addition to advising on distribution and other sales issues for registered funds, we represent the affiliated placement agents of dozens of private funds. Dechert’s lawyers also work with clients to find solutions for avoiding broker-dealer registration.
Distinguished and experienced team
Our lawyers have a unique combination of regulatory, in-house, and law firm experience. Dechert’s lawyers have decades of experience working with broker-dealers, securities exchanges, and other financial intermediaries. Our team includes former staff of the SEC’s Division of Trading and Markets, Division of Enforcement, and Office of Compliance Inspections and Examinations as well as former counsel to SEC commissioners. Dechert lawyers also have experience as lawyers in the Financial Industry Regulatory Authority’s (FINRA’s) Office of General Counsel and Departments of Member Regulation and Enforcement. Several Dechert lawyers have worked as in-house counsel and compliance officers at broker-dealers.
Dechert is a leader in providing sophisticated counsel to broker-dealers and national securities exchanges; advising on a range of matters – including regulatory compliance, and regulatory and self-regulatory investigations and examinations – while shaping policy that affects the industry.Our broker-dealer, securities trading and markets lawyers represent leading full-service broker-dealers, U.S. securities exchanges, equity and fixed income alternative trading systems, banks, investment banking boutiques, institutional-only broker-dealers, and several of the largest U.S. retail broker-dealers and investment advisers. We also assist foreign broker-dealers seeking to do business in the United States and a range of clients seeking to avoid broker-dealer registration.Integrated practice advising asset management clientsOur broker-dealer, securities trading and markets lawyers are
Multiple with conducting internal reviews of customer non-U.S. broker dealersaccounts to assess compliance with U.S. broker-dealer registration requirements and assisted the clients in implementing chaperoning and other arrangements to comply with U.S. law.A private equity firm as broker-dealer regulatory counsel in the recent acquisition of multiple independent retail broker-dealers and investment advisers.A large multi-service financial institution as broker-dealer regulatory counsel in their acquisition of several broker-dealers.An institutional broker-dealer in a FINRA investigation related to prospectus delivery requirements for transactions in exchange-traded fund shares. The matter was resolved without action.Multiple on U.S. and EU soft dollar broker-dealers and asset managersrequirements, including how to navigate conflicts between the upcoming MiFID II prohibitions on the use of soft dollars and Section 28(e), and investment adviser-status questions for investment banks determining whether to sell their research for hard dollars.A novel fixed income security alternative trading system in obtaining SEC registration and FINRA membership.A large trading venue with conducting a comprehensive review for compliance with Rule 605 of Regulation NMS.A large broker-dealer with conducting a comprehensive review of state and municipal pay-to-play and lobbying requirements.Multiple in a FINRA enforcement investigation involving violations of broker-dealersthe net capital rule, FOCUS reporting, and books and records requirements.A large retail broker-dealer on revising its account agreements.
EXPERIENCE
An international accounting, tax and advisory network with respect to U.S. broker-dealer registration issues raised by the solicitation of potential U.S. buyers in connection with an M&A transaction.Multiple in adjusting their research and soft dollar practices to broker-dealersaddress conflicts between MiFID II and U.S. regulatory requirements.
Dechert handles all aspects of broker-dealer registration and business expansions. We help clients:
Develop business plans and organizational structuresPrepare registration forms and new and continuing membership applicationsCreate written supervisory procedures and compliance policiesDraft anti-money laundering policies and business continuity plansManage FINRA requests and interviewsHandle state notices and approvalsDetermine whether new activities require FINRA approval and assist them with materiality consultations
In addition, we counsel banks on compliance with Regulation R.
Our broker-dealer team has also registered equity and fixed income alternative trading systems, including drafting Forms ATS and applicable policies and procedures.
We also represent clients seeking to acquire or sell broker-dealers. Our team handles all aspects of these transactions, including conducting due diligence, advising on transaction terms, obtaining regulatory approvals, and counseling on post-closing integration.
Importantly, we also counsel Dechert’s fund clients on solutions for avoiding broker-dealer registration, and have assisted many non-U.S. broker-dealers in crafting Rule 15a-6-compliant chaperoning arrangements.
Our broker-dealer team advises clients on the most technical aspects of the net capital, customer protection and margin rules, and has conducted detailed analyses of the application of these rules to various transactions and practices.
We also advise on regulatory issues related to sweep accounts and the transfer of customer accounts from one broker-dealer to another.
Our team drafts and negotiates clearing, prime brokerage and customer agreements, and is assisting clients in preparing for the transition to T+2 settlement.
REGISTRATION, BUSINESS EXPANSIONS AND CHANGES OF CONTROL
FINANCIAL AND OPERATIONS RULES
Our lawyers also advise clients on compliance with record retention requirements, especially in connection with the use of new forms of social media and technology; anti-money laundering rules, confirmation disclosure and delivery requirements, and prospectus and proxy delivery requirements.
Our lawyers are regularly consulted on a wide range of sales and marketing activities, and assist clients with complex questions related to institutional and retail suitability, selling away, and outside business activities.
We also advise clients on compliance with FINRA, Municipal Securities Rulemaking Board (MSRB), state and city lobbying and political contributions (“pay-to-play”) restrictions.
Clients regularly call upon Dechert for assistance in navigating inconsistencies between SEC, Commodity Futures Trading Commission (CFTC) and FINRA requirements in connection with selling registered and unregistered funds. Reflective of our work with the majority of large global asset managers, our broker-dealer lawyers are well regarded for their skill in representing fund distributors and fund distribution activities.
Our lawyers are also regularly consulted on SEC and FINRA requirements related to the publication and distribution of research reports and requirements applicable to U.S. registered broker-dealers as well as foreign broker-dealers.
We regularly counsel clients on a wide range of trading-related issues. Our team is particularly adept at handling time-sensitive trading issues, which often related to short sale marking requirements and compliance with Rule 105 of Regulation M. We assist clients with internal reviews of their algorithmic trading businesses, Rules 605 and 606 reporting protocols, Regulations ATS reporting requirements, and Order Audit Trail System (OATS) reporting. We also work with clients on issues related to fixed income trading, including FINRA and MSRB markup reporting requirements.
Dechert is a go-to resource for sell-and buy-side clients on their soft dollars arrangements, including addressing conflicts between MiFID II and Section 28(e) and the Investment Advisers Act of 1940.
We also advise clients on compliance issues related to 24-hour trading and help desk services, including the activities that can be performed by unregistered personnel.
SALES AND MARKETING ACTIVITIES
TRADING ACTIVITIES
Dechert’s lawyers advise broker-dealers and other clients on diverse regulatory issues related to participation in public and private securities offerings and other transactions.
We frequently respond to questions relating to compliance with Regulation M, including the applicable restricted period and stabilizing requirements. Our team also advises on broker-dealers’ filing requirements related to Regulation M as well as FINRA’s Corporate Finance rules.
We assist buy-and sell-side in determining “restricted person” status under FINRA’s Rules 5130 and 5131. We also advise clients on SEC and SRO prospectus delivery and voting requirements.
Our broker-dealer team works closely with our asset management clients on all manner of fund distribution and private placement issues, including compliance with Regulation D, Rule 144A and Regulation S under the Securities Act of 1933.
We represent broker-dealers and their personnel in enforcement investigations and compliance examinations and inspections by the SEC, FINRA, other SROs and the states.
Clients also look to Dechert for preparation and counsel in connection with SEC and SRO examinations, conducting mock exams and responding effectively to deficiencies identified by regulatory staff. Our team also advises firms and individuals on their disclosure obligations as a result of regulatory investigations and actions and securities litigation, and helps them obtain approval to continue in business. Dechert lawyers also counsel clients on reporting violations to the SEC and FINRA.
Our team is involved in key legislative and regulatory policy issues, including advising buy-and sell-side clients on the conflicts between MiFID II, Section 28(e) and the Investment Advisers Act of 1940, the DOL’s new fiduciary rules, SEC initiatives related to a uniform standard of conduct for broker-dealers and investment advisers, and senior protections initiatives by Congress, the states and FINRA. We participate in several legal groups advising FINRA on its retrospective rule review.
In addition, several of our broker-dealer lawyers are part of Dechert’s Financial Regulatory Reform working group, which advises clients on such legislation as the Financial CHOICE Act and the Dodd-Frank Act implementation and possible rescission.
UNDERWRITING, PRIVATE PLACEMENT AND OTHER CAPITAL MARKETS ACTIVITIES
ENFORCEMENT INVESTIGATIONS AND COMPLIANCE EXAMINATIONS
POLICY LEADERSHIP
We also help individual clients and trade associations with drafting comment letters on SEC and SRO rule proposals, while helping them adapt their business to comply with – and take advantage of – regulatory developments.
Several Decherts lawyers are part of our firm’s FinTech team and advise clients on issues related to developments with Blockchain and bitcoin and other distributed ledger technology.
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WILLIAM J. BIELEFELD
PartnerBroker-Dealers, Securities Trading and Markets(more)Washington, D.C.T +1 202 261 [email protected]
ELLIOTT R. CURZON
PartnerFinancial Services and Investment Management(more)Washington, D.C.T +1 202 261 [email protected]
BRENDAN C. FOX
PartnerInvestment Funds: U.S.(more)Washington, D.C.T +1 202 261 [email protected]
RICHARD FRASE
PartnerFinancial Services and Investment Management(more)LondonT +44 20 7184 [email protected]
JONATHAN H. GAINES
PartnerPrivate Funds(more)New YorkT +1 212 641 [email protected]
K. SUSAN GRAFTON
PartnerBroker-Dealers, Securities Trading and Markets(more)Washington, D.C.T +1 202 261 3399New YorkT +1 212 698 3611
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