More On Legal & Compliancefrom The Advisor's Professional Library
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
Talk about saving face. The SEC approved a plan on Monday for Nasdaq to pay customers as much as $62 million for losses stemming from last year's controversial Facebook IPO. Despite the settlement, Wall Street firms will still be able to “pursue further legal action” if they so choose.
Dow Jones Business News reports (ironically posted to the Nasdaq website) that Wall Street banks are estimated to have lost around $500 million from the delay in the opening of Facebook trading and subsequent confusion over individual trades.
UBS has said the Facebook debut cost it $356 million, and said in a statement Monday that it intended to recover from Nasdaq "the full extent of our losses." Dow Jones says a spokeswoman said the bank has already filed a demand for arbitration against Nasdaq with the Financial Industry Regulatory Authority.
UBS on Monday said "the SEC's approval of the plan does not change our opinion," calling the payout "inadequate and insufficient." Citigroup, whose losses were estimated at about $20 million, had also urged regulators to reject Nasdaq's plan, calling the package too small, according to the news service.
Nasdaq's compensation plan has satisfied some of the firms damaged in the social network's rocky debut, including Knight Capital Group and Citadel, which lost around $35 million each trading the stock May 18, Dow Jones adds. UBS and Citigroup had also objected to Nasdaq's requirement, upheld by the SEC Monday, that any firms claiming compensation under the exchange's plan must waive legal claims against Nasdaq.
The social networking giant, Wall Street firms and the Nasdaq were all heavily criticized for what was largely seen as a disappointing debut last spring. At the time, AdvisorOne contributor Ron DeLegge said it was so bad, lead underwriter Morgan Stanley was forced to buy up FB shares to prevent them from dipping below its $38 offer price. The Wall Street Journal described Morgan Stanley as Facebook’s “stabilization agent.”
Read Popular Company, Unpopular Stock: What's Wrong With Facebook? by Ben Warwick on AdvisorOne.