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Broker-Dealer & Securities Regulation

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The securities, futures and derivatives industries are among the most regulated businesses in the United States and abroad. Within the United States, they are subject to pervasive federal and state laws, as well as the rules and regulations of self-regulatory organizations (SROs) like FINRA and the various securities and futures exchanges (including the NYSE). In recent decades, the industry has come under increasing scrutiny of regulators in all three realms, with criminal sanctions being used more frequently to enforce the law. As the financial markets have truly become "international" in nature, other jurisdictions have implemented comprehensive regulatory schemes as well.

At the same time, professionals in these markets have had to adjust to a business environment transformed and made more competitive by new technologies, where once-reliable businesses suddenly have become unprofitable and novel business models unimagined only a few years ago are vying for competitive footholds and by the globalization of the financial markets.

Duane Morris represents securities, futures and derivatives firms and individual professionals as they meet the dual challenges of increasing regulation and intense competition. Our services are aimed at a broad range of firms catering both to public and institutional customers, and to market-makers, sponsors and operators of electronic communications networks (ECNs), Internet and other online access firms, clearing firms, investment advisors, commodity pool operators, private investment and trading companies and even exchanges themselves. Our clients face a myriad of issues and problems ranging from market fragmentation and internationalization of markets to industry-specific technical matters involving ECNs; quote and order display rules; registration, Security Futures products advertising, books and records concerns, financial responsibility concerns, competing PATRIOT Act and Privacy Act requirements, compliance with new Sarbanes-Oxley requirements; and general securities fraud/litigation and compliance issues. Our attorneys bring decades of accumulated experience to provide a broad range of services.

Litigation and Arbitration

We bring extensive experience in securities industry arbitration, mediation and litigation. We represent broker-dealers, funds, other institutions and investment professionals in the arbitration forums of FINRA, NYSE, NFA, and AAA, as well as handling matters before the state and federal courts.

Since industry participants also regularly face enforcement actions by government agencies and self-regulatory bodies, we also represent clients in all aspects of the enforcement process (including SRO, SEC and state agency investigations, and actions and appeals, both administrative and in court). With many regulatory violations now being treated as criminal offenses, we also represent clients through grand jury investigations and other pre-trial criminal proceedings.

Regulatory Compliance and Enforcement Defense

Concurrent regulation by multiple government agencies, and SROs creates complex and sometimes inconsistent requirements. Our clients - including broker-dealers, exchanges, contract markets, ECNs, futures commission merchants, issuers, underwriters, investment advisors, hedge funds, portfolio managers, commodity pool operators and advisors, floor traders and exchange members - rely on us for advice in:

  • Registration and qualification matters
  • Financial responsibility, books and records and back office requirements
  • Front office and sales practice regulations
  • Marketing and advertising initiatives
  • Disclosure obligations
  • Clearance, prime broker and settlement issues
  • Preparation of Supervisory Procedures
  • Adherence to new regulatory enactments

As a measure of preventive medicine, we conduct Mock Regulatory Audits so our clients can find and correct problems in these and other areas. Such self-correction generally is the "best defense" against a later regulatory enforcement action.

Managed Investment Programs and Products

Pooled investment vehicles continue to proliferate. Many industry participants, who initially entered the field seeking to avoid regulatory strictures, now face new laws and regulations and are likely to face even more in the years to come. We assist clients in developing managed account programs, trading and hedge funds, commodity pools and market-maker organizations. Both domestic and offshore participants look to us in these ventures to structure their capital raising, advisory, brokerage, clearing, underwriting and distribution relationships. Investment advisors and commodity trading advisors are also subject to equally extensive regulation, and we counsel them, as well.

Strategic Business Planning

We bring our experience in today's highly regulated environment to assist firms and individuals entering and participating in both traditional and electronic marketplaces. Financial responsibility, licensing and other pervasive rules and regulations present unique issues for clients buying or selling securities or futures businesses, or introducing new investment trading programs and instruments. Our attorneys can guide clients through the labyrinth of regulation to minimize its impact on their mergers and acquisitions. We also provide experienced counsel in clearing and operations issues, which have been dramatically affected by the advent of electronic markets and trading facilities, as well as the presence of new global markets.

Derivatives Practice

Our broad derivatives practice covers both transactional and regulatory work. We have represented commercial banks, investment banks and structured finance vehicles in transactions involving credit derivatives (including total return swaps, credit default swaps and credit-linked notes), equity derivatives, interest rate, currency and commodity swaps, foreign exchange, forward and option agreements, repurchase agreements, securities lending agreements, prime brokerage agreements and master netting agreements. Our attorneys have drafted and/or negotiated hundreds of ISDA master agreements and other customized forms that govern derivative transactions in addition to credit support documents.

International Markets

Non-U.S. companies increasingly look to U.S. financial markets as an alternative to their domestic markets or as a means to finance U.S. acquisitions. To assist in this process, our attorneys have advised non-U.S. clients regarding listings and capital raising transactions in the U.S. Through our London office, we also assist our domestic clients in complying with European regulatory requirements and in otherwise dealing with the various industry concerns in Europe.

Strategic Practice Group Liaisons

Although professionals and participants in the financial markets and services are subject to pervasive industry-specific regulation, they must also deal with the broad range of legal issues facing businesses generally. These more traditional business law issues can also be impacted by financial market regulation. For example, labor and employment-related disputes, involving claims of wrongful termination or discriminatory employment or hiring practices, are frequently adjudicated in special arbitration forums, rather than in court. The veritable explosion of licensing agreements correlating to the intellectual property underlying the financial industry's front end and trading platforms, back-end account management and clearing and settlement systems, require both a knowledge of the markets and their users, beyond expertise in the licensing of technology.

The banking and insurance industries are subject to equally pervasive regulatory schemes, and experienced professionals within Duane Morris offer them counsel in the broadest range of their needs and concerns.

Our Broker-Dealer & Securities Regulation Group has established liaisons with experienced professionals in other practice groups to ensure that our financial services and markets clients will receive seamless representation from an experienced team of professionals.

We also offer experienced, mature legal representation in the broadest range of transactional matters relating to the capital markets, or from investment and merchant banking and corporate, structured and municipal finance to M&A transactions and institutional lending.

For more information, please contact Loren Schechter, Robert P. Bramnik or any of the lawyers referenced in the Attorney Listing.

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