Global Player to Pay $200 Million for Ignoring U.S. BD and RIA Registration
A large, global financial institution agreed to disgorge $200 Million for failing to register as a U.S. broker-dealer and investment adviser even though it advised US clients on the purchase and sale of securities. According to the SEC, the defendant used a team of client advisers to solicit clients and securities transactions by traveling to the U.S. and communicating with U.S. clients from non-U.S. jurisdictions. The illegal communication alleged included phone calls and e-mails from non-U.S. servicing centers. The SEC alleges that the defendant knew that it violated U.S. securities laws but tacitly allowed the illegal practices to continue because of business reasons.
OUR TAKE: Firms should be aware that most countries have laws prohibiting securities solicitation without registration. Just because you don’t set foot in a particular jurisdiction doesn’t mean you are exempt from their securities laws. And, once you go in-country, you will most certainly trigger registration and regulation.