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Paper – SEC Enforcement Actions Against Broker-Dealers

Posted by Jon Eisenberg, K&L Gates LLP, December 26, 2015 – Harvard Law School Forum on Corporate Governance and Financial Regulation: “In its 2015 Financial Report, the SEC repeated its view that one of the two principal purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934 is to ensure that “people who sell and trade securities—brokers, dealers and exchanges—must treat investors fairly and honestly, putting investors’ interests first.” Broker-dealers have been and remain a critical focus of the Commission’s enforcement program. In the first 11 months of 2015, the SEC brought enforcement actions against broker-dealers in approximately two dozen distinct areas, with sanctions ranging from less than $100,000 to nearly $180 million. In the vast majority of these cases, the central theme was that broker-dealers did not put investors’ interests first or otherwise failed to comply with safeguards (such as registration provisions) designed to protect investors. Nevertheless, because broker-dealers engage in such a wide range of activities, the variety of cases is striking. They cover the waterfront of broker-dealer practices. We discuss the more significant cases below under the following categories…”

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