Exam Alert: SEC requires issuer disclosure regarding source of certain minerals

The SEC will require issuers that use “conflict minerals” in their manufacturing to disclose details about their origin. Continue reading

The SEC will require issuers that use “conflict minerals” in their manufacturing to disclose details about their origin.  The “conflict minerals” the new rule will apply to are gold, tantalum, tin, and tungsten.  Issuers must disclose whether the materials are from the Democratic Republic of Congo or an adjoining country.  If the materials are from one of those countries, the issuer must attempt to determine whether the purchase of the minerals benefits armed groups and disclose its findings.

The disclosure must be made both with the SEC, through Form SD, and publicly, via a website.  The first disclosure must be made on May 31, 2014 (for the 2013 calendar year) and then annually on May 31 in subsequent years.

Source: SEC Adopts Rule for Disclosing Use of Conflict Minerals (SEC Release 2012-163)

This alert applies to the Series 82, Series 62, and Series 79.

Exam Alert: IRS requires broker-dealers and mutual funds to report cost basis of stocks

Effective January 1, 2011, the IRS requires that when broker-dealers and mutual funds purchase stocks, the cost basis of the stocks must be reported to Continue reading

Effective January 1, 2011, the IRS requires that when broker-dealers and mutual funds purchase stocks, the cost basis of the stocks must be reported to the IRS and to investors.  In 2011, this reporting requirement only applies to most stocks, while in 2012 and beyond, the requirement will apply to all stocks.  In 2011, the rule will not apply to mutual fund shares and shares purchased via dividend reinvestment plans. Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 66 exams.

IRS news release: http://www.irs.gov/newsroom/article/0,,id=228907,00.html

Analysis by the Securities Technology Monitor: http://www.securitiestechnologymonitor.com/photo_gallery/1_36/27400-1.html

Exam Alert: Underwriters must report indications of interest and final allocations to issuers

Effective May 27, 2011, during a new issue, the underwriting manager must report indications of interest and aggregate demand for the security to Continue reading

Effective May 27, 2011, during a new issue, the underwriting manager must report indications of interest and aggregate demand for the security to the issuer.  After the settlement date of the new issue, a report of the final allocation of shares to institutional investors must be provided to the issuer, along with the aggregate sales to retail investors.  This change was made to increase transparency in the book-building process. Relevant to FINRA Series 7, Series 24, Series 62 and the Series 79 Investment Banking Exam.

http://www.finra.org/Industry/Regulation/Notices/2010/P122491