SEC Release NO. 33-10648 Auditor Independence With Respect to Certain Loans or Debtor-Creditor Relationships
The SECis adopting amendments to its auditor independence rules to refocus the analysis that must be conducted to determine whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client at any time during an audit or professional engagement period. The amendments focus the analysis on beneficial ownership rather than on both record and beneficial ownership; replace the existing 10 percent bright-line shareholder ownership test with a “significant influence” test; add a “known through reasonable inquiry” standard with respect to identifying beneficial owners of the audit client’s equity securities; and exclude from the definition of “audit client,” for a fund under audit, any other funds, that otherwise would be considered affiliates of the audit client under the rules for certain lending relationships. The amendments will more effectively identify debtor-creditor relationships that could impair an auditor’s objectivity and impartiality, as opposed to certain more attenuated relationships that are unlikely to pose such threats, and thus will focus the analysis on those borrowing relationships that are important to investors.
The Commission is adopting an amendment to an exemptive provision in the broker-dealer annual reporting rule under the Securities Exchange Act of 1934 (“Exchange Act”). The exemption provides that a broker-dealer is not required to engage an independent public accountant to certify the broker-dealer’s annual reports filed with the Commission if, among other things, the securities business of the broker-dealer has been limited to acting as broker (agent) for a single issuer in soliciting subscriptions for securities of that issuer.
Pursuant to industry regulations, the Exchanges are each required to establish standards for the designation of those participants that the respective Exchange reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of the Exchange’s business continuity and disaster recovery plans and designate participants pursuant to those standards. Designated Members and Designated Trading Permit Holders (“Designated Participants”) are required to participate in testing of the respective Exchange’s business continuity and disaster recovery plans. Periodically the Exchanges announce mandatory testing dates. The next mandatory test is October 26, 2019.
The SEC is adopting a new rule, establishing a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities. Regulation Best Interest enhances the brokerdealer standard of conduct beyond existing suitability obligations, and aligns the standard of conduct with retail customers’ reasonable expectations by requiring broker-dealers, among other things, to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where we have determined that disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict. The standard of conduct established by Regulation Best Interest cannot be satisfied through disclosure alone. The standard of conduct draws from key principles underlying fiduciary obligations, including those that apply to investment advisers under the Investment Advisers Act of 1940. Importantly, regardless of whether a retail investor chooses a broker-dealer or an investment adviser (or both), the retail investor will be entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that is in the best interest of the retail investor and that does not place the interests of the firm or the financial professional ahead of the interests of the retail investor.
Cboe Exchange, Inc. is issuing this Regulatory Circular to inform Trading Permit Holders that the Exchanges will be discontinuing access to Market Replay as outlined in further in the Regulatory Circular.
SEC File No. SR-NYSE-2019-28 Notice of Filing of Proposed Rule Change Amending Section 303A.08 of the Listed Company Manual Relating to Shareholder Approval of Equity Compensation Plans
The Exchange proposes to amend Section 303A.08 of the Listed Company Manual to clarify the circumstances under which certain sales of a listed company’s securities will not be deemed to be equity compensation for purposes of that rule and to make a clarifying change in Section 312.04. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room
SEC File No. File No. File No. SR-NYSE-2019-26 Notice of Filing and Immediate Effectiveness of Proposed Rule Change of New Rule 7.44 to Operate Its Retail Liquidity Program on Pillar, the Exchange’s New Technology Trading Platform
The Exchange proposes new Rule 7.44 to operate its Retail Liquidity Program on Pillar, the Exchange’s new technology trading platform. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room.
FINRA is issuing this Notice to remind firms they must register with FINRA CAT, LLC (FINRA CAT) for reporting to the Consolidated Audit Trail (CAT). CAT registration commenced on March 18, 2019, and will run through June 27, 2019. All Industry Members, as defined under the CAT NMS Plan, that will have a CAT reporting obligation must register during this window. All questions regarding CAT registration should be directed to the FINRA CAT Helpdesk at (888) 696-3348 or email@example.com.
Cboe RG19-019 Elimination of On-Floor Position Transfer Procedures under Rule 6.49A Amendment to Presidential Exemption Related to Off-Floor Position Transfer Procedures
A rule change amending Cboe Options, Inc. (“Cboe Options”) Rule 6.49A, Transfer of Positions, has become effective and is now operative. Rule 6.49A had previously specified circumstances under which Trading Permit Holders (“TPHs”) may effect transfers of positions, both on and off the trading floor. As described in more detail in the rule filing and below, Rule 6.49A was amended to: (i) delete provisions related to the on-floor position transfer process; and (ii) amend provisions regarding the presidential exemption as it relates to off-floor position transfers.
MSRB Regulatory notice 2019-13 Request for Comment on MSRB Rule G-23 on Activities of Dealers Acting as Financial Advisors
The MSRB is seeking comment on MSRB Rule G-23, on activities of financial advisors, in connection with its ongoing retrospective review of MSRB rules and guidance. This request for comment is intended to elicit input on whether Rule G-23’s requirements on brokers, dealers and municipal securities dealers (together, “dealers”) acting in a financial advisor capacity to issuers with respect to the issuance of municipal securities, and related MSRB interpretive guidance, continue to achieve the rule’s intended purpose and reflect current practices in the municipal securities market. The MSRB invites all interested parties to submit comments in response to this request, along with any other information they believe would be useful. Comments should be submitted no later than August 19, 2019 and may be submitted in electronic or paper form.
- Industry News
- By Date
- By Topic
- Register for Email Alerts
- Subscribe to RSS Feeds