News and Articles

“Bad Actor” Disqualification from Regulation D Exemptions

On September 23, 2013, an amendment to Rule 506 of Regulation D, concerning exemption from registration requirements for private placement offerings, went into effect. Colloquially referred to as the “bad actor” rule, the amendment potentially eliminates the private placement safe harbor if any “covered person” associated with the offering has been involved in a “disqualifying event.” Importantly, the scope of possible disqualifications are potentially much broader than what might appear at first glance and could have major implications for broker-dealers, issuers and financial professionals involved in the sale of private placements. more

Issues in Consolidated Investment Reporting for Customers

Securities firms frequently offer customers consolidated financial account reports, prepared by third party entities, that provide clients with valuation and performance information for all of their assets, including those held away from the firm. Because such services (referred to as “consolidated reports” or “consolidated reporting”) are becoming increasingly commonplace, securities firms risk losing a competitive edge by not offering such statements or reports. However, regulators have placed Member firms on notice that consolidated reporting raises a host of potential regulatory and compliance issues. This article will synthesize some pertinent guidance on the use of third party consolidated reporting and outline some best practices for their use. more

Understanding and Avoiding the Risks of Life Insurance Premium Loan Financing

Premium financing provides an avenue for high net worth individuals with substantial assets to obtain life insurance for estate planning purposes, collateralized by the insurance policy itself or other assets. It, therefore, allows individuals to maximize the face value of insurance while minimizing the current expense of paying premiums. Although there are several benefits of premium financing, including obtaining insurance without having to liquidate other assets, and certain estate planning / tax benefits, premium financing for estate planning purposes can pose significant risks that could have devastating effects on insureds. This article aims to raise awareness of such risks and provide strategies to avoid some of them. more