Tag: negotiated

Exam Alert: SEC requires broker-dealers to search for lost holders of securities

On December 21, 2012, the SEC approved new rules that require broker-dealers to conduct searches for holders of securities with whom they have lost contact. The new rules also requires “paying agents” (certain issuers, broker-dealers, transfer agents, and other entities) to notify certain persons in writing when the paying agent has sent the person a check that has not been negotiated. Continue reading

On December 21, 2012, the SEC approved new rules that require broker-dealers to conduct searches for holders of securities with whom they have lost contact. Currently, transfer agents are required to conduct such searches – the rule will expand the requirement to broker-dealers.

The new rules also requires “paying agents” (certain issuers, broker-dealers, transfer agents, and other entities) to notify certain persons in writing when the paying agent has sent the person a check that has not been negotiated. This notification is not required if the value of the check is less than $25.

The new rules will become effective 60 days after the date of publication of the release in the Federal Register.

Source: SEC Release 2012-277: SEC Approves New Rules Regarding Lost Holders of Securities

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 62, and Series 99.

Exam Alert: MSRB requires underwriters of municipal securities to provide additional disclosure

Effective August 2, 2012, the Municipal Securities Rulemaking Board (MSRB) will require underwriters of municipal securities to provide additional disclosures to issuers (state and local governments) and abide by other requirements. The changes apply to negotiated underwritings, but not to competitive underwritings. Continue reading

Effective August 2, 2012, the Municipal Securities Rulemaking Board (MSRB) will require underwriters of municipal securities to provide additional disclosures to issuers (state and local governments) and abide by other requirements.  The changes apply to negotiated underwritings, but not to competitive underwritings.  An underwriter must disclose the following:

-Details regarding the underwriter’s role, including that the underwriter has different financial interests than the issuer and that the underwriter does not have a fiduciary duty to the issuer

-The conditions of the underwriter’s compensation

-Any actual or potential material conflicts of interest – the interpretive notice specifically identifies the following potential conflicts of interest: third-party payments, profit-sharing with investors, and credit default swaps

-If recommending complex municipal securities transactions/products, all associated material financial risks, characteristics, incentives, and conflicts of interest

Additional requirements are as follows:

-All representations to the issuer must be accurate, truthful, and complete, with no omission or misrepresentation of material information.

-When drafting any issuer disclosure documents, the underwriter must have a reasonable basis for any representations it makes.

-The underwriter must pay a fair and reasonable price to the issuer.

-The underwriter may not recommend that the issuer not retain a municipal advisor.

This Exam Alert applies to the Series 7 Exam.

Sources:

MSRB Notice 2012-25

MSRB Establishes New Protections for State and Local Governments that Issue Bonds