More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Securities and Exchange Commission Chairwoman Mary Jo White said Tuesday that she will meet Sept. 12 with leaders of the exchanges and other self-regulators “to accelerate ongoing efforts to further strengthen our markets” following last week’s technical glitch that paralyzed trading on the Nasdaq.
The meeting, to be held at SEC headquarters in Washington, will address "the market data dissemination system involved in last week's halt as well as other critical market systems and infrastructure issues," according to SEC spokesman John Nester.
White said on Aug. 23 that while the technical glitch that paralyzed trading on the tech-heavy Nasdaq for hours was “resolved before the end of the day” the previous day, the incident was “serious.”
White said that the malfunction should “reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants.” The SEC, she said, “is determined to enhance the safeguards necessary for strong market systems.”
White said she would “work to advance rules that the commission proposed earlier this year regarding new standards for the trading and other systems that are central to the integrity of our markets.”
Nasdaq OMX issued a statement Thursday stating that it became aware that price quotes were not being disseminated by the Securities Industry Processor (SIP), which consolidates and disseminates all prices for the industry.
The exchange said it issued the halt in order to protect the integrity of the markets. Nasdaq said it wouldn't be canceling any open orders, but that customers could cancel orders if they wanted to.
"In the first 30 minutes, technical issues with the SIP were resolved," Nasdaq said. "For the remaining period of time, NASDAQ OMX, other exchanges, regulators and market participants coordinated with each other to ensure an orderly reopening of trading in NASDAQ-listed securities."
Trading then resumed and the balance of the trading day finished in normal course, Nasdaq said. Nasdaq OMX said that it "will work with other exchanges that are members of the SIP to investigate" Thursday's technical issues, and that "we will support any necessary steps to enhance the platform."
Nasdaq resumed trading around 3:25 p.m. and closed up 1% at 3,638.71. Shares of Nasdaq OMX (NDAQ), however, fell 3.4%.
The technology malfunction echoed the sudden plunge in stocks in May 2010 that came to be known as the flash crash and the glitch-plagued initial public offering of Facebook last year.
The SEC charged Nasdaq in late May with securities violations resulting from “poor systems and decision-making” during the IPO and secondary trading of Facebook shares.
Nasdaq agreed to settle the SEC’s charges by paying a $10 million penalty — the largest ever against an exchange.
Check out SEC’s White Vows New Trading Rules After Nasdaq Glitch on ThinkAdvisor.