Introduction

For much of the twentieth and twenty-first centuries, American securities regulation has developed through conflict, compromise, and historical accident. Long before Congress enacted the federal securities laws of the New Deal era, states had already ventured into the field of securities regulation by adopting “blue sky” statutes intended to protect residents from fraudulent securities schemes. With the introduction of federal regulation in the 1930s, this dual system became entrenched, producing an interlocking but often discordant web of oversight.

While federal authority expanded over time—particularly through the adoption of, and amendments to, the Securities...

By David Proskin, Managing Director, Integrated Solutions

So, you’ve made the decision to embark on one of the most exciting, challenging and fear-inducing adventures of your career, launching a fund. Whether you are a seasoned veteran or a newly minted CFA with an “edge”, this is not a decision to be made without careful consideration. It is critical that before putting pencil to paper you understand what your motivations are for spinning out of the mothership. Is it the desire for autonomy? A spark of entrepreneurial spirit? ego? A drive to build a lasting legacy? Or perhaps a noble objective to make the world a better place (unlikely as it may sound)? The answer to those ...

Authored by: David Proskin, Managing Director, Integrated Solutions

Contributions by: Rafael Beck, Senior Managing Director, Integrated Solutions

In the world of asset management, particularly within hedge funds and private equity—shadow accounting has evolved from a discretionary practice to a critical control mechanism. This article defines what shadow accounting is, why it matters, and who relies on it most.

To understand its growing importance, we must look at the evolution of fund structures, investor expectations, and regulatory scrutiny. As institutional investors demand greater transparency and operational due diligence becomes more rigorous, maintaining internal books and records...

By Peggy E. Chait

We have all learned the concept of assigning blame since we were children. Who among us did not chant at the top of our voices in unison, “Who stole the cookie from the cookie jar? Who me? Yes you. Couldn’t be. Then who?” Pointing our finger and the act of CYA (cover your a…) go hand in hand in our litigious society and Regulators encourage us to assign responsibility in order to make their jobs more lucrative and easier. Yes, I know about whistleblowers and the need to protect them for the betterment of society, and I am in agreement about the dangers of retaliation given their whistleblowing revelations. No contest there. What I would like to exami...

By Peggy E. Chait and Howard Spindel

For those of you that are old enough to remember the slogan, “when EF Hutton talks, people listen”, and the powerful effect the ad had on the general public, we can now attest that when the Wall Street community gathers in unity and speaks out, the regulators eventually listen.

We at Integrated Solutions are proud to be a member of the community that has been speaking up for a soon to be effective change in FINRA’s rule 1210. See FINRA Regulatory Notice 21-41. As a leading provider of financial accounting and compliance services to the financial services industry, we have written comment letters to FINRA on several occasions (June 30, 2020...

By Peggy E. Chait

Piaget’s theory of “object permanence” recognized that a developmental milestone in an infant’s life is when they cognitively understand that an object still exists, even if the infant cannot see or perceive it. So too, exists the ability of a Broker/Dealer to function efficiently and effectively without anyone conducting an onsite Branch Office Inspection. It has never before been so well evidenced that the need for an onsite examination is a fossil of previous generations, and that the Covid-19 pandemic worked like a team of well-trained archeologists to uncover this. For FINRA requested information and documentation from remote locations, including...

By Peggy E. Chait

2020 is a year that most of us would like to forget for a myriad of reasons, the foremost being the COVID-19 pandemic. It has wreaked havoc on our nation, our citizens, livelihoods, and the faith we have in each other and our country. It has had far reaching implications in our Wall Street community. Many issues that affect the way we conduct our business have been addressed by the regulatory community. Here are a few that we had touched upon in our Comment Letter which was submitted to FINRA on February 16, 2021.

> Broker/Dealers can function effectively even when their employees are not physically located under one roof, in one state or perhaps one country. Connectivity ...

By Peggy E. Chait

In my younger days, like many women, I was somewhat attracted to the “bad boy.” He was somewhat aloof, ran a bit wild and didn’t conform to the rules. Yet, he was what I wanted. Perhaps when he grew up, he would turn into a law-abiding, conservative Wall Street gentleman, and by then I knew better.

I also remember as the Chief Compliance Officer and Chief Financial Officer of a NYSE Member Firm, back in the mid 1980’s, reviewing U4 forms and disciplinary histories. I have to confess that I was sometimes amused by what I saw disclosed. People that you would least suspect were anything other than upstanding citizens their entire lives, had their past dal...

We love regulation! We owe our success to the regulatory environment in the financial services industry. From a selfish standpoint, we can say that we enjoy regulations. Similar to the way doctors love the flu and dentists love cavities, we are happy that we have a raison d'être.

Now that I have been associated directly or indirectly with the financial services industry for over five decades, I have come to the realization that while I value regulation, I really hate some of the regulations. I don’t hate all regulation since I recognize that at least some regulation is necessary. On the other hand, I recognize that the current regulatory environment in the securities industry is s...

By Peggy E. Chait

40 years ago, when I started working in this illustrious industry, we call Wall Street, much of what was agreed upon was done with a handshake. A person’s word was his or her word, and “just and equitable principles of trade” as espoused in FINRA Rule 2010, were understood and confirmed through the extension of a hand. Trust existed between client and professional and the number of rules that existed to “guide” the behavior of the professional was limited. Trust existed between professionals as well. For some reason, written agreements between Broker-Dealers were concise, and made their point without pages and pages of representations and warra...