Menu

Securities & Investment Companies


Overview

Carlton Fields serves the securities industry’s regulatory, enforcement, litigation, corporate finance and corporate services needs. We have developed a strong and broad national practice, servicing publicly-held corporations as well as the broker-dealer, investment adviser, and investment company components of the securities industry.

Our attorneys have advised clients in all areas affecting the securities business. We have worked closely with client management and professional, compliance, technical and administrative staffs, and represented clients before the Securities and Exchange Commission, FINRA, the New York Stock Exchange, securities regulators in 50 states and other regulatory agencies. Our attorneys have experience with diverse, cutting edge issues that arise from sales and distribution, compliance, and securities litigation. We excel in applying securities laws to the distribution of all financial products and services, and counsel clients on the most complex and challenging issues facing the industry.

We serve our securities industry clients with an integrated approach that draws on the collective experience of our business, regulatory, and litigation attorneys. These attorneys, who include former SEC officials, have worked both in and for the securities industry, giving us an insider’s perspective on the business practices and objectives of market professionals. In addition, our attorneys have been very active in the American Bar Association, State Bar Associations, and various industry groups. We have also lectured and written extensively on securities, corporate, insurance, tax and other matters. As a result, our advice on individual issues contemplates, and contributes to, the client’s broader business, regulatory, and litigation goals. Our firm received a national ranking for securities law in the 2017 Best Lawyers “Best Law Firms.”

  • Securities Industry Counseling

    Our clients include national and regional broker-dealers, mutual fund complexes, investment advisers, and persons associated with such firms. We provide ongoing regulatory, compliance, and transactional legal services relating to all aspects of the securities industry. The services we provide include counseling clients about the effect of federal and state laws and regulations on: 

    • securities and corporate transactions, 
    • business arrangements, 
    • product distribution, 
    • development of industry best practices, 
    • structuring arrangements between securities issuers and banks, brokerage firms and marketing organizations, 
    • administrative and operational compliance, and 
    • regulatory and internal examinations.


    Our regulatory and compliance advice draws on insights that our litigation attorneys frequently develop regarding positions taken by plaintiffs and regulators in adversarial judicial and administrative proceedings.

    Our attorneys are experienced in the formation of financial services entities including broker-dealers and investment advisers. We guide clients through every phase of the formation and regulatory approval process. We also provide a full-service, regulatory and compliance counseling practice.

    Our services to the securities industry also involve a broad range of matters arising from the Dodd-Frank Wall Street Reform and Consumer Protection Act. These include the SEC’s whistleblower procedures, the harmonization of the regulation of broker-dealers and investment advisers, the Volcker Rule, the regulatory scheme for swaps and security-based swaps, the regulation of systemically risky, non-bank financial companies and executive compensation matters.
     

  • Securities Transactions and Compliance

    We represent securities industry clients in matters related to mergers and acquisitions, business organizations, corporate finance issues, and compliance with regulations of the SEC, state securities commissioners, and other regulatory bodies. We represent our clients in their offer and sale of common and preferred stock, secured and unsecured debt instruments, limited partnership interests, and other investments in both private placement and public offerings. We
    also counsel clients regarding compliance with the DOL’s fiduciary rule.

    Our attorneys, who have extensive knowledge of SEC regulations, blue sky laws, and stock exchange and FINRA rules, handle initial and secondary public offerings from the perspective of both the issuer and underwriter. Additionally, we represent businesses in all aspects of mergers and acquisitions transactions, exchange offers, tender offers, takeovers, and sales of stocks and assets.

  • Investment Companies and Advisers

    Our attorneys have specialized expertise in investment company and investment adviser work. We provide investment companies and advisers a full range of corporate, regulatory, and litigation services. Our clients include registered and private investment companies, their sponsors, and investment advisers. Our attorneys counsel clients on new financial product designs and related regulatory compliance matters and on complex litigation matters, including class action defense. We also advise clients on significant regulatory and legislative developments, and serve as a client resource for identifying emerging regulatory and litigation risks. Our attorneys provide practical advice and insights based on decades of experience counseling and providing litigation services to clients.

    We represent mutual funds and investment advisers throughout the country on a full range of matters. Many of our client funds are offered through variable insurance products and qualified retirement plans. Our attorneys have decades of experience handling the complex interdisciplinary legal and regulatory issues that arise in the development, marketing, and distribution of financial products in these markets. We also represent independent directors of mutual funds as independent legal counsel.

  • Hedge Funds and Other Private Investment Companies
    We counsel hedge fund managers and other sponsors of private investment companies on a full range of matters with respect to the formation and operation of their private fund offerings. We advise on matters such as compliance with federal and state securities and investment adviser regulation, securities and adviser registration exemptions, the review and preparation of partnership agreements, subscription agreements, and fund offering documents, and SEC reporting and compliance requirements.
  • Litigation and Dispute Resolution

    Our securities industry group litigators handle disputes over securities and corporate governance issues throughout the country, with responsibilities that range from responding to regulatory inquiries and pre-complaint investigations to litigating claims of securities fraud. We routinely defend financial services organizations, including their officers and directors, against class action litigation, shareholder derivative actions, suits arising out of failed securities offerings and other complex matters involving the Securities Act of 1933, proxy suits, appraisal actions, the Securities Exchange Act of 1934, and the Investment Company Act of 1940.

    We guide and represent corporate defendants, investment advisers, broker-dealers and other market professionals through internal investigations, inquiries, and proceedings initiated by the SEC. Our firm handles all phases of SEC inquiries and investigations, from responding to Wells notices to defending against enforcement actions relating to market manipulation, insider trading, claims of financial fraud and other issues.

    We routinely represent registered broker-dealers and other professionals in regulatory proceedings and arbitrations involving FINRA, and do so in a way that limits our clients’ financial, reputational and licensing exposure.

All Insights

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

July 27, 2018

On July 24, in preparation for its August 4 meeting at the NAIC 2018 Summer National Meeting, the Annuity Suitability (A) Working Group released a working draft of proposed revisions to the Suitability in Annuity Transactions Model Regulation (#275). This alert discusses the significant proposed changes, comments, and suggestions for discussion at the Summer National Meeting.

Two New FINRA Rules for the Protection of Senior Investors

Two New FINRA Rules for the Protection of Senior Investors

July 10, 2018

The protection of senior investors continues to be a priority for FINRA, from both an examination and enforcement perspective. In fact, FINRA detailed how seniors are one of its major areas of concern in the last three editions of its Annual Regulatory and Examination Priorities Letter.

COI Litigation Update

COI Litigation Update

June 25, 2018

Life insurers that defend challenges to their exercises of discretion to adjust cost of insurance (COI) rates on universal life insurance policies continue to seek opportunities to narrow the scope of the claims through early dispositive motions.

Expect Slower SEC Processing of Investment Company Filings

Expect Slower SEC Processing of Investment Company Filings

June 25, 2018

The SEC has reported to Congress that it expects the Division of Investment Management (IM) to provide comments at a slower pace during the 2018 and 2019 fiscal years.

FINRA Moves Toward SEC Anti-Churning Proposal

FINRA Moves Toward SEC Anti-Churning Proposal

June 25, 2018

On April 18, the SEC voted to propose major rule changes to reconcile and clarify the standards of conduct that apply to broker-dealers and investment advisers.

FINRA Proposes to Ease Regulation of Outside Business Activities

FINRA Proposes to Ease Regulation of Outside Business Activities

June 25, 2018

FINRA has proposed a major paradigm shift for regulating outside business activities (OBAs) and private securities transactions (PSTs) of broker-dealer personnel.

New York Pushes Mutual Fund Active Share Disclosure

New York Pushes Mutual Fund Active Share Disclosure

June 25, 2018

New York’s Attorney General issued a report on its recent investigation of fees charged by actively managed equity mutual funds and a metric known as "Active Share."

Recalls of Loaned Securities by Insurance Dedicated Funds

Recalls of Loaned Securities by Insurance Dedicated Funds

June 25, 2018

In March, the SEC sanctioned the investment advisers of two funds supporting variable insurance contracts for inadequate disclosure about the funds’ recalls of loaned portfolio securities in advance of the securities’ dividend record dates.

SEC Warns About Third-Party Destruction of Broker-Dealer Records

SEC Warns About Third-Party Destruction of Broker-Dealer Records

June 25, 2018

The SEC staff issued an April 12 letter addressing broker-dealer contracts with third-party recordkeeping service providers under which the service provider can delete or discard records of a broker-dealer who fails to pay fees due under the recordkeeping agreement, among other scenarios.

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

June 25, 2018

On May 3, Governor Henry McMaster signed the South Carolina Insurance Data Security Act, making South Carolina the first state to adopt the NAIC Insurance Data Security Model Law.

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

June 25, 2018

In April, the U.S. Supreme Court heard oral argument in Lucia v. SEC to resolve the federal circuit court split on whether the SEC’s administrative law judges (ALJs) are "inferior officers" of the United States who must be appointed in accordance with the Appointments Clause of the U.S. Constitution, and not mere employees whose hiring is not required to meet constitutional standards.

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

June 25, 2018

During two weeks in April, two different courts — the Second Circuit and the New Jersey Superior Court — considered nearly identical allegations regarding variable products and reached diametrically opposed conclusions about the extent to which the claims were barred by the Securities Litigation Uniform Standard Act (SLUSA).

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

June 25, 2018

The pace of developments in the unclaimed life insurance benefits space remained active in the first six months of 2018, with new judicial decisions and state legislative enactments making an impact.

Which Thoroughbred Will Win the Standards of Care Derby?

Which Thoroughbred Will Win the Standards of Care Derby?

June 25, 2018

The NAIC and the State of New York continue racing as each is revising its suitability regulation to incorporate enhanced standards of care. Only time will tell which version will gallop to victory.

Win for MassMutual in Rare Class Action Trial

Win for MassMutual in Rare Class Action Trial

June 25, 2018

A California jury recently returned a verdict in favor of MassMutual following a 12-day trial in a state-court class action that claimed the insurer failed to pay dividends owed to policy owners.

FINRA Requires Order Taker Registration

FINRA Requires Order Taker Registration

March 31, 2018

In late 2017, FINRA pronounced in Regulatory Notice 17-30 that, "Beginning on October 1, 2018, unregistered persons cannot accept an order from a customer under any circumstances.

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

March 31, 2018

Following the financial crisis, the NAIC undertook a solvency modernization initiative (SMI) to update insurance regulators on insurance companies’ regulatory frameworks.

SEC Targets Variable Insurance Products

SEC Targets Variable Insurance Products

March 31, 2018

Once again, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has made variable insurance products an exam priority.

Cyan Makes SLUSA Removal Proponents Feel Blue: Supreme Court Holds That Securities Act of 1933 Class Actions Can Stay in State Court

Cyan Makes SLUSA Removal Proponents Feel Blue: Supreme Court Holds That Securities Act of 1933 Class Actions Can Stay in State Court

March 22, 2018

Cyan sets – and limits – the legacy of SLUSA as affixing the federal substantive standard to class actions for securities wrongdoing against issuers and their officers and directors.

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

December 29, 2017

The Proposed Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation

Preparing for New York Regulation 210’s Effective Date

Preparing for New York Regulation 210’s Effective Date

December 29, 2017

The Preamble to New York’s Regulation 210 (the "Regulation") contains a March 19, 2018 effective date.

Regulators Continue to Scrutinize Initial Coin Offerings

Regulators Continue to Scrutinize Initial Coin Offerings

December 29, 2017

As reported in the most recent issue of Expect Focus, the SEC issued an investigative report in July cautioning market participants that distributed ledger (blockchain) technology-based offers and sales of digital "tokens" or "coins" in a so-called initial coin offering (ICO) may be subject to federal securities laws, depending on the circumstances.

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

December 29, 2017

On December 7, the Investor Advisory Committee of the Securities and Exchange Commission (SEC) adopted a recommendation that the SEC seriously explore the development of a summary disclosure document for mutual fund companies to use to satisfy their shareholder report delivery requirements.

SEC Exam Staff: “Surprise, We’re Back”

SEC Exam Staff: “Surprise, We’re Back”

December 29, 2017

In August, Kevin Kelcourse, the associate director for examinations at the SEC’s Boston Regional Office, confirmed that his office has been making "surprise" examination visits to registered advisers in the region.

SEC Whistleblower Awards to Insurance Department Employees?

SEC Whistleblower Awards to Insurance Department Employees?

December 29, 2017

Many federal, state, and local governmental employees may be eligible for awards pursuant to the SEC’s whistleblower program under the Dodd-Frank Act.

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

December 29, 2017

A recent European Union (EU) directive prohibits certain investment managers from receiving securities research whose cost is "bundled" together with broker-dealers’ costs of effecting securities transactions directed by the investment managers.

Treasury Department Urges SEC to Act on Life Company Products

Treasury Department Urges SEC to Act on Life Company Products

December 29, 2017

The U.S. Department of the Treasury published an October 2017 report, "A Financial System That Creates Economic Opportunities — Asset Management and Insurance" in response to President Trump’s Executive Order 13772 on "Core Principles for Regulating the United States Financial System."

A Ticking Clock: New York’s Pending Non-Guaranteed Elements Rule for Life Insurance and Annuity Products

A Ticking Clock: New York’s Pending Non-Guaranteed Elements Rule for Life Insurance and Annuity Products

September 26, 2017

The clock is ticking on the New York Department of Financial Services’ issuance of new Regulation 210 "Life Insurance and Annuity Non-Guaranteed Elements" (the Rule).

Certified Financial Planner Board Proposes Fiduciary Obligations for All CFP Financial Advice

Certified Financial Planner Board Proposes Fiduciary Obligations for All CFP Financial Advice

September 26, 2017

In June, the Certified Financial Planner (CFP) Board released proposed revisions to its standards of professional conduct that would require CFPs to adhere to a fiduciary standard at all times when providing any "financial advice" to a client.

Communications With Auditors and Audit Committees May Change

Communications With Auditors and Audit Committees May Change

September 26, 2017

The SEC has proposed for comment major revisions in the disclosures auditors are required to make in their reports on financial statements audited pursuant to Public Company Accounting Oversight Board (PCAOB) standards.

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

September 26, 2017

The National Association of Insurance Commissioners (NAIC) Cybersecurity (EX) Working Group (Cybersecurity WG) approved Version 6 (Finalized) of its Insurance Data Security Model Law (Model) on August 7 at the NAIC Summer 2017 National Meeting in Philadelphia.

Nevada Securities Act Amendments – What’s Next?

Nevada Securities Act Amendments – What’s Next?

September 26, 2017

Over the summer, much was written about amendments to the Nevada Securities Act provisions governing financial planners, which became effective July 1, after being signed by the Governor on June 2.

Pennsylvania Court Holds Fiduciary Duty Exists Only Where Consumer Cedes Decision-Making Control to the Fiduciary

Pennsylvania Court Holds Fiduciary Duty Exists Only Where Consumer Cedes Decision-Making Control to the Fiduciary

September 26, 2017

The Pennsylvania Supreme Court recently held in Yenchi v. Ameriprise Financial, Inc. that a financial adviser owed no fiduciary duty to a couple who purchased a life insurance policy based on the adviser’s advice where they did not cede all of their decision-making control to him.

SEC Cautions on Use of Distributed Ledger/Blockchain Technology to Raise Capital

SEC Cautions on Use of Distributed Ledger/Blockchain Technology to Raise Capital

September 26, 2017

In July, the SEC issued a report addressing the applicability of U.S. federal securities laws to the offer and sale of securities by "virtual corporations or capital raising entities that use distributed ledger or blockchain technology to facilitate capital raising and/or investment."

SEC Investor Advocate’s 2018 Objectives Target Key Issues for Life Insurers

SEC Investor Advocate’s 2018 Objectives Target Key Issues for Life Insurers

September 26, 2017

On June 29, the SEC’s Office of the Investor Advocate released a report that prioritizes addressing the inconsistency in the standard of care applicable to broker-dealers (a suitability standard) versus investment advisers (a fiduciary standard) in fiscal year 2018.

SEC Scrutinizes Multi-Manager Arrangements

SEC Scrutinizes Multi-Manager Arrangements

September 26, 2017

Many mutual funds implement their investment strategies through "multi-manager" (also called "manager of manager") arrangements, particularly funds used to support variable life insurance and annuity products.

SEC Stays Approval of Quadruple-Leveraged ETF

SEC Stays Approval of Quadruple-Leveraged ETF

September 26, 2017

In July, MetLife obtained a win in the Northern District of Illinois when the court granted summary judgment in its favor on a claim that it had breached the duty of good faith and fair dealing in setting interest rates for a retirement plan.

Special Purpose National Bank Charter for FINTECH Firms

Special Purpose National Bank Charter for FINTECH Firms

June 23, 2017

The draft makes clear that FINTECH special purpose banks will not be permitted to engage in any activity that is prohibited for other national banks and will be required to engage in at least one "core banking activity" such as lending money or paying checks.

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation

June 23, 2017

"From a litigation perspective, this change to a fiduciary status for the sales agent is substantial and in many cases will afford litigants unhappy with investment results, or the ultimate characteristics of a particular form of annuity, the opportunity to second-guess the original decision applying a significant range of issues."

FINRA Fines Firms for WORM Problems

FINRA Fines Firms for WORM Problems

April 10, 2017

Broker-dealers, including principal underwriters of insurance products, may retain required records in electronic format, subject to satisfaction of longstanding conditions.

SEC Adopts T+2 Securities Settlement Cycle

SEC Adopts T+2 Securities Settlement Cycle

April 10, 2017

On March 22, the Securities and Exchange Commission (“Commission”) adopted a rule amendment that shortens the time by which most securities transactions effected by a broker-dealer are required to settle.

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

April 10, 2017

The SEC recently approved an amendment to FINRA Rule 4512 that requires FINRA members to make reasonable efforts to obtain, from each customer for whom they maintain an account, specified information about a “trusted contact person.”

SEC Staff Allows Brokers to Set Commissions for Mutual Fund “Clean Shares”

SEC Staff Allows Brokers to Set Commissions for Mutual Fund “Clean Shares”

April 10, 2017

The CG Letter clearly states clean shares may not be sold with sales loads or asset-based fees for sales or distribution. However, the CG Letter does not address whether a selling broker may receive service fees, such as sub-transfer agent or shareholder servicing fees, or revenue sharing payments from the fund’s adviser.

Key Contacts

Other Team Members

Gary L. Sasso

Gary L. Sasso

President and Chief Executive Officer

Featured Insights

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.