K&L Gates’ Broker-Dealer group is a key component of the firm’s core Financial Services practice. The attorneys in this practice advise a broad range of broker-dealers including broker-dealer affiliates of banks, hedge funds, insurance companies, investment advisers, and international, national, and regional firms. The lawyers in the Broker-Dealer practice include former senior U.S. Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) – now Financial Industry Regulatory Association (FINRA) – officials, two former state securities commissioners, and practitioners who have worked in-house at well-known securities firms. Collectively, our lawyers have appeared before every state securities commission in the United States.
Many of the lawyers in the Broker-Dealer group also practice in other areas such as investment management, securities enforcement, hedge funds, internal investigations, and litigation. Although we regularly provide advice to clients who are engaged solely in broker-dealer activities, we also provide comprehensive legal services to diversified financial services companies that offer investment management and brokerage as part of their business.
We regularly advise and support clients with regard to a broad range of regulatory and compliance issues, including:
Our Broker-Dealer lawyers routinely assist clients with inquiries from the SEC, self-regulatory organizations (SROs), and state regulators, including routine and cause examinations and regulatory sweeps. When a client is the subject of a broad investigation, or one with serious potential regulatory, reputational, or economic risks, we coordinate with our securities enforcement and litigation colleagues to draw on their depth of experience in defending all such investigations and any related enforcement proceedings, civil litigation, or arbitrations.
K&L Gates advises broker-dealers on information barrier policies and procedures and performs reviews of such barriers. Representative clients range from integrated firms having active investment banking, research, and trading operations to specialized research and trading boutiques. Our services include drafting control room policies and procedures to address, among other things, compliance with:
Our Broker-Dealer lawyers are often called upon to conduct audits or investigations of a client’s compliance with SEC, SRO, or state regulatory obligations. These audits or investigations are performed for clients to assess their compliance with industry best practices, or for those who may have received some indication of possible noncompliance as a result of a regulatory inquiry, customer complaint, or internal discovery of potential misconduct by a firm employee. Our Broker-Dealer lawyers are very experienced in conducting these types of audits and, where noncompliance is discovered, in assisting clients with correcting deficiencies and determining whether and when to approach the regulators about those deficiencies.
Our Broker-Dealer lawyers also assist clients in designing effective supervisory systems and drafting compliance and supervisory procedures manuals. We also assist with the internal inspections, annual evaluations, and certifications required by FINRA Rules 3010, 3012, and 3013.
In the United States, K&L Gates represents clients seeking to enter or continue in the broker-dealer business. With our corporate colleagues, we oversee the creation of the broker-dealers. We then manage the broker-dealer registration and SRO membership application process. K&L Gates’ representation in this area includes drafting business plans, supervisory procedures, and service, employment, and vendor agreements. SRO membership requires the filing of numerous operational documents. We draft and comment on these operational documents and other processes to secure SRO membership, including making continuing education assessments; advising clients on net capital, disclosure, and other ongoing requirements; and working with clients and regulators to facilitate and expedite the registration, membership application, and authorization processes. Our services also include representing broker-dealers before SROs in the continuing membership context in the case of material changes in business or direct and indirect changes of control. In the United Kingdom, our lawyers can assist clients with all aspects of their FSA authorization application.
Regarding status issues, K&L Gates has advised numerous clients on U.S. state and federal registration obligations and exemptions and exclusions from U.S. state or federal broker-dealer registration. Our London office advises on the scope of U.K. financial services authorization requirements for brokerage and corporate finance business done in the United Kingdom. K&L Gates has also advised clients on the nuances of jurisdictional issues raised in cross-border activities.