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Practicing at the intersection of financial regulation and technological innovation, Valerie Dahiya advises financial services clients on complex compliance, regulatory, and transactional matters arising under U.S. Securities and Exchange Commission (SEC) and Financial Institution Regulatory Authority (FINRA) jurisdiction.

FINRA and the CFTC each issued recent advisories on commodity-linked exchange traded products. Directed at retail investors and broker-dealers, the advisories each highlighted certain issues unique to commodity-linked exchange traded products that were recently demonstrated by market reactions to fluctuating oil prices caused by the COVID-19 pandemic. The advisories provided guidance on relevant considerations in

In the midst of the COVID-19 pandemic, the financial markets have experienced significant volatility. During the course of this volatility, exchanges have halted trading multiple times after declines in trading trigged circuit breakers. In addition, trading floors are transitioning to electronic trading in efforts to prevent the transmission of COVID-19 on physical trading floors. With

On March 9, 2020, FINRA released Regulatory Notice 20-08 (the “Regulatory Notice”) providing guidance and limited relief to its member broker-dealers during the COVID-19 pandemic. In particular, the Regulatory Notice requests that broker-dealers evaluate their compliance with FINRA Rule 4370, which requires broker-dealers to create, maintain, and update upon any material change, BCPs (Business Continuity Plans) identifying procedures relating to emergency or significant business disruption.
Continue Reading FINRA Issues Notice Regarding Business Continuity Planning During COVID-19 Outbreak

Both the SEC and FINRA recently released their 2019 Examination priorities, (available here and here) highlighting primary areas of focus for 2019.  While there are no surprises, there are some items that have a unique twist that warrant attention.  In this post we provide an overview of the regulators focus on Reg SHO and short selling.

Both regulators will continue to focus on aspects of Reg SHO compliance.  FINRA will be focused on the exception to the netting required in Rule 200(c).  Rule 200(c) states that a person shall be deemed to own securities only to the extent that he has a net long position in such securities.  Rule 200(f) grants an exception to the netting requirement by allowing broker-dealers to break into independent aggregation units for purposes of determining the trading unit’s net position.  To take advantage of the exception, broker-dealers must demonstrate four criteria to establish separateness and independence.  Of note, only broker-dealers can rely on 200(f).  During the adoption of Reg SHO Rule 200, commenters requested that the SEC extend the relief beyond broker-dealers, and the SEC declined to do so, stating that the lack of oversight by a self-regulatory organization might facilitate the creation of units that are not truly independent or separate. The SEC will be looking at Reg SHO compliance more broadly in the context of microcap securities. 
Continue Reading 2019 Priorities: Reg SHO/Short Selling