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We guide broker-dealers through every aspect of their businesses. From formation, federal and state registration, and Financial Industry Regulatory Authority (FINRA) membership to transaction advice and day-to-day compliance matters, our broker-dealer lawyers provide comprehensive solutions for both U.S. and non-U.S. broker-dealers.
We are proactive in our advice, providing real-time regulatory updates whenever changes are on the horizon as well as concrete suggestions for compliance and implementation.
In Securities and Exchange Commission (SEC) and FINRA examinations, federal and state regulatory actions, and a wide variety of other enforcement matters, our broker-dealer lawyers, in conjunction with our leading enforcement defense litigators, prepare and defend clients to achieve effective solutions with minimal disruption to their businesses.
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Regulation Best Interest Resources
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Christopher W. Gerold's new role as partner in the firm’s Securities Litigation group was reported by Law.com, Law360, Bloomberg Law, ROI-NJ, Spot on New Jersey, and NJBIZ. Gerold tells Law.com that “Regulators are still responding to [the cryptocurrency market]. I expect that will be a large part of my practice, as well as the more traditional securities cases.”
In an HFM article on the increasing popularity of hybrid public/private funds, partner Benjamin Kozinn of the Investment Management group discusses how to structure these funds and their fees, as well as how to mitigate compliance risks. “One approach is to have opt-in opt-out structures where the investor elects whether they want to allocate a portion of their capital (e.g., 10%, 20%) to privates. In the opt-in/out model, whether you actually invest in privates becomes a function of how many people opted in or opted out,” Kozinn says. He adds that one common approach with these funds is to charge a lower management fee and a higher incentive fee: “Maybe you don’t have to worry about portfolio risk management every day as you would with public markets, but the costs and the complexity of private investments can be higher than public investments.” Kozinn also warns of possible MNPI (Material Nonpublic Information) issues with these structures: “If a private company you are invested in is getting bought by a public company, or it is entering into a significant commercial arrangement with a public company, the manager is potentially walking into MNPI problems if you don’t have a physical separation and appropriate information barriers between the private and public investment teams.” (subscription required to access article)
In The Hill, Ethan L. Silver addresses the patchwork of federal regulation of cryptocurrency, where the Treasury Department oversees its taxation and compliance with anti-money laundering rules, the SEC and the Commodity Futures Trading Commission each has jurisdiction over different investment offerings, and no federal agency at all regulates the spot cryptocurrency exchange rate. “While it’s novel, it’s incumbent on those regulators to understand it because this stuff is not going away,” he says.
Hedge Fund Law Report interviews Boris Liberman, partner in Lowenstein’s Investment Management group, about his recent move to the firm from AQR Capital Management LLC, where he served as Senior Counsel. Liberman brings to Lowenstein his deep experience advising U.S. and international hedge funds, mutual funds, managed accounts, sovereign wealth funds, and other asset owners on all aspects of implementing their investment and trading strategies. He predicts that in the next two years, “a much larger number of buy-side entities will be in scope of the (regulatory initial margin) framework and will need to be in compliance if they want to continue with their OTC trading activity.”
Ethan L. Silver, Chair of the firm's Broker-Dealer practice, comments in Law360 on the Securities & Exchange Commission’s (SEC) proposed exemptions that would allow unregistered “finders” to be compensated for private fundraising activities. Silver says that finders not subject to broker-dealer compliance regulations might be difficult to manage, while “registered broker-dealers, on the other hand, are expected to behave in compliance with regulations because of the threat of an exam, the regulator coming in and examining you, or a supervisor or manager holding you accountable for your behavior.”
Boris Liberman's arrival to Lowenstein Sandler as a partner in the Investment Management group is noted in Bloomberg Law, General Counsel News, The Daily Docket, and Law.com (New York Law Journal). View Lowenstein's news announcement about Liberman's arrival to the firm.
Benjamin Kozinn recently participated in a webinar on valuation presented by the Hedge Fund Law Report; its points are summarized in this article. Kozinn comments on valuation challenges; valuation frequency, processes, and governance; valuation committees and third-party valuation agents; and the impacts of the coronavirus pandemic on valuation. He notes that “the effect of the coronavirus pandemic has been relatively mild [on asset valuation]. … Market disruptions have been fairly short-lived. Advisers have been revisiting their valuation policies and speaking with their auditors.”
Ethan L. Silver comments in Regulatory Compliance Watch on the SEC’s Form CRS, including the importance of documenting date of delivery, as well as the focus of the responses. The article recommends Lowenstein’s “Form CRS Drafting Guide and Template” as a source of further information. (subscription required to access article)
William Brannan is quoted in Law360 and cryptonews, where he provides an analysis of Telegram’s $1.7 billion digital token sale of Grams and the need for regulatory clarity for early stage companies in the digital asset and blockchain space. (subscription required to access article)
Ethan L. Silver is quoted in The Wall Street Journal discussing concerns by the Securities and Exchange Commission surrounding digital-securities firms and their ability to safeguard investors’ funds and assets. (subscription required to access article)
Ethan L. Silver was featured in both American Banker and Interactive Investor, commenting on the US Securities and Exchange Commission’s (SEC) reticence to approve new cryptocurrency, despite encouraging more discussion. Silver states that: “the practical realities are that there has been a lot of meetings and discussions that have yielded little progress." He agrees with SEC Commissioner Hester Peirce that the Howey Test – used by US regulators to determine what should be considered a security – is “overly broad.” Silver asserts that until the SEC provides clarity on how digital assets should be custodied under its existing rules, a bitcoin exchange-traded fund (ETF) will never be approved.
Ethan L. Silver is quoted in CoinDesk, CoinWire, Invest in Blockchain, and XBT.net regarding the U.S. government shutdown’s effect on cryptocurrency progress on Wall Street. Silver anticipates that, should the shutdown continue, any remaining staffers would most likely reject the rule change proposal for the highly anticipated exchange-traded fund, in lieu of allowing it to be approved on a technicality.
Ethan L. Silver is quoted in InvestmentNews addressing cryptocurrency market manipulation and custody as it relates to the possibility of a crypto-ETF entering the market in 2019. Silver states that the challenge for the SEC is how to integrate this new technology into the existing SEC rules.
