2009 Year in Review: SEC and SRO Selected Enforcement Cases and Developments Regarding Broker-Dealers

January 2010

This outline highlights selected U.S. Securities and Exchange Commission (the “SEC” or the “Commission”), Financial Industry Regulatory Authority (“FINRA”), and NYSE Regulation enforcement actions and developments regarding broker-dealers during 2009.

The economic crisis of 2008 and the Ponzi scheme of Bernard Madoff led government officials, the public and the media to call for an increase in securities enforcement activity. As a result, 2009 was a year of change at the SEC and FINRA.

The SEC installed new leadership who perceived a mandate to restore investor confidence by aggressively pursuing companies and individuals who engage in wrongdoing affecting the securities markets. The Commission’s new leaders instituted a number of organizational and policy changes intended to make its Division of Enforcement more efficient and effective. Many of the metrics used to measure SEC enforcement activity reflect a significant increase compared to 2008.

With its own new CEO in place, FINRA also looked to make changes in its structure and enforcement processes. It did so last year, but perhaps in less noticeable and transformative ways. In 2009, FINRA’s caseload increased; it also brought several actions with large fines, in stark contrast to the prior year.

Consistent with its more focused mandate, NYSE Regulation concentrated on trading and transaction reporting in its major cases and instituted fewer actions than the SEC and FINRA.

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