- Sutherland

Securities Regulatory, Enforcement and White Collar

Sutherland has one of the most dynamic and experienced securities regulatory, enforcement and white collar practice groups in the country. Our team includes former senior attorneys of the U.S. Securities and Exchange Commission, Financial Industry Regulatory Authority and the Department of Justice. Our leading national financial services practice provides expertise in all areas involving regulated entities. Together, the Sutherland team provides a full range of services, from advice and support during compliance and regulatory examinations, to internal investigations, to defense and guidance during civil and/or criminal investigations, and to vigorous litigation in self-regulatory, administrative, civil, and criminal enforcement proceedings, trial, and, if necessary, appeals.

Enforcement

Sutherland represents broker-dealers, investment advisers, other financial service providers, public companies, and individuals confronted with examinations, investigations, and disciplinary or administrative proceedings brought by the SEC, federal or state prosecutors, self-regulatory organizations such as FINRA, CBOE, and MSRB, and state securities commissions.

Our investigative and enforcement experience includes matters in the areas of:

Variable products;
Financial reporting and accounting;
Suitability;
Market timing and late trading investigations;
Sales practice issues (including churning and unauthorized trading);
Insider trading;
Books and records;
Failure to supervise;
Gifts and gratuities;
Non-cash compensation;
529 Plans;
Selling away;
Directed brokerage/revenue sharing;
Non-cash compensation;
Municipal securities;
Unregistered offerings; and
Market manipulation.

Because we are involved in enforcement matters every day, and we have experience with all divisions of the SEC and FINRA, we know the rules and “hot issues” on the minds of the regulators. Our regulatory experience enables us to understand the dynamics within each regulatory agency and helps us devise the strategies that lead to efficient resolution. One of the strengths of our practice is our ability and willingness to litigate with the regulators when reasonable solutions are not possible. In the last several years, we have:

Successfully defended a broker-dealer and its president in an administrative proceeding brought by the SEC for failing to supervise the activities of registered representatives who were charged with fraudulently selling B-share mutual funds;
Successfully defended the chief legal and compliance officer of a major brokerage entity in an administrative proceeding brought by the SEC for failure to supervise the activities of a registered principal engaged in mutual fund switching;
Successfully defended a national accounting firm in connection with allegations of negligent misrepresentations;
Represented an investment adviser in an SEC proceeding in connection with charges of breach of fiduciary duty; and
Successfully appealed an NYSE disciplinary sanction to the SEC and obtained a dismissal based on the NYSE’s delay in filing charges.

Interfacing with Regulators

We regularly assist clients in responding to direct inquiries from federal, state and SRO regulators. For example, we assist with SEC, FINRA and state sweeps covering issues such as best execution, cash and non-cash compensation, directed brokerage, soft dollars, pension consultants, books and records, Form U4/U5 filings, revenue sharing, market timing, late trading and disclosure issues. We also prepare responses to deficiency or examination letters. If needed, we also provide clients a seamless transition to the defense of their practices.

Internal Investigations

Sutherland has developed a team of securities and white collar professionals to assist registrants and others with internal investigations. Our experienced attorneys assist clients with developing a thorough understanding of the factual and legal terrain applicable to pertinent issues, and prepare appropriate reports for regulators and counsel with respect to any resulting or accompanying issues or events, such as criminal investigations and class action lawsuits. Some of the types of matters in which we provide assistance include Foreign Corrupt Practice Act investigations, accounting practices and issues arising from examination letters.

Regulatory and Compliance Advice

Based on more than 30 years of experience representing broker-dealers, investment advisers, and other financial service providers, Sutherland combines a comprehensive understanding of the regulatory landscape with an appreciation of our clients’ businesses. We assist clients in keeping abreast of trends and developments by frequently interacting with FINRA’s senior attorneys in all departments. We regularly counsel clients on matters such as supervisory policies and procedures, compensation, sales and trading practices, website content, securities lending and credit activities, best execution, advertising, communications with the public, disclosure and development of new securities products and services, financial operations matters, anti-money laundering privacy and reporting obligations. We also advise clients on suitability issues involving fee-based accounts, electronic communications, share classes and sub-accounts.

We have experience in assisting clients with developing written supervisory procedures in these areas. Recently, we devised novel templates for developing and implementing supervisory control policies and procedures and conducting gap analyses required by NASD Conduct Rule 3012. In addition, we have developed written supervisory procedures and continuing education programs as well as the content for annual compliance meetings.

We often counsel clients on other regulatory issues, including mark-up and mark-down issues, confirmation practices, net capital requirements, revenue sharing, Forms BD and BDW, networking and other referral arrangements, Forms U4 and U5, point-of-sale disclosure, and books and records. We have requested exemptive and “no-action” relief on behalf of many clients regarding novel issues and the creation and distribution of proposed products and services, including wrap fee programs and separately managed accounts. We also provide advice concerning the effects of new regulations and interpretations of existing regulations on clients’ businesses, processes and compliance procedures.

Securities Distribution

Sutherland actively represents a number of large broker-dealers in the offer and sale of proprietary and non-proprietary mutual funds, closed-end and interval funds, 529 Plans, variable insurance products (both registered and unregistered), advisory products and hedge fund products in the United States and off shore. This work includes structuring brokerage and advisory programs through which these securities are offered, drafting and filing regulatory and disclosure documents, and negotiating and drafting the accompanying contractual arrangements. We are often called upon to assist with developing related websites and Internet-based offering documents. Over the past few years, we have represented over one-third of the primary distributors of 529 Plans in the country. Sutherland also represents virtually every major insurance affiliated broker-dealer in the country and has been instrumental in helping our clients develop and/or distribute innovative variable insurance products that invest in hedge funds and off shore funds as well as closed-end and interval funds.

Internal Audits

We are frequently asked to conduct compliance or other audits to assess the design and implementation of clients’ policies and procedures. We also have significant experience in conducting “for cause” and “mock-SEC” audits of our clients’ operations. Generally, we are asked to prepare, review and update compliance and supervisory manuals and/or conduct training sessions to implement new systems. Our clients’ goals in these matters are usually to assess and fix suspected problems and, if warranted, to make appropriate disclosures to regulators. Because many of our attorneys have extensive regulatory experience, we are well-positioned to help our clients address these issues proactively and in a manner acceptable to regulators. We have conducted audits or investigations for full-service brokerage firms, insurance affiliated broker-dealers, bank-affiliated broker-dealers, investment advisers and public companies, coordinating closely with general counsel and corporate management in these matters. Finally, we have experience in serving as independent consultants in compliance reviews mandated by the SEC, FINRA and state settlements with broker-dealers.

Securities Arbitration & Litigation

Sutherland’s arbitration and litigation attorneys represent brokers, broker-dealers and brokerage firms in numerous arbitrations and class actions.