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February 10, 2011

FINRA Regulatory Notice 11-08 February 10, 2011 As part of the process of developing a consolidated rulebook, FINRA is requesting comments on new rules to govern markups, markdowns, commissions and fees. New FINRA Rules 2121-23 would transfer, with "significant changes," NASD Rules 2430 and 2440, NASD IM-2440-1 and -2, and NYSE Rule 375. Among other things, the new rules would make the following changes: (1) Deletion of the "5% Policy." FINRA notes that the policy is outdated, as 5% is frequently an excessively high markup or markdown. Rather than propose a new percentage, FINRA sets forth a

March 29, 2011

March 28, 2011 SIFMA submitted a lengthy comment letter to FINRA regarding its recent proposal in RN 11-08 to adopt new rules on markups, commissions, and fees. Primarily, SIFMA supports the withdrawal of the 5% policy, but questions how the new rule would apply absent any clear guiding principles from FINRA. In addition, SIFMA argues that (1) FINRA should further expand the "QIB Exemption" relating to debt markups, (2) FINRA should provide further guidance on debt markups, given the "continued uncertainty and implementation difficulties under current IM-2440-2," and (3) the proposed retail

April 13, 2011

Securities and Exchange Commission April 8, 2011 The SEC released a no-action letter allowing a 501(c)(3) tax-exempt microfinance charity to offer and sell certain notes without registration under the Securities Act or the Investment Company Act, and without qualification under the Trust Indenture Act. Cross References Securities Act Section 3(a)(4); Trust Indenture Act Section 304(a)(4)(A); Investment Company Act Section 3(c)(10)(A)(i)

August 30, 2012

The SEC Division of Enforcement instituted administrative proceedings against LatAm Investments LLC's former president Angelica Aguilera, pursuant to Section 15(b) of the Exchange Act, for failing to oversee two brokers in connection with the markups and markdown on structured products charged to the Brazilian Funds and another foreign institutional customer. Aguilera was the direct supervisor of the brokers, but had delegated compliance responsibility for reviewing markups and commission to the firm's chief compliance officer (who lacked supervisory authority over the brokers). Accordingly

October 22, 2012

FINRA has ordered David Lerner Associates, Inc. ("DLA") to pay approximately $12 million in restitution to affected customers who purchased shares in Apple REIT Ten on the basis that those who were charged excessive markups on transactions which may not have been suitable. In addition, FINRA fined and suspended the President of the firm for the markups and for supervisory violations. View press release in full here (links externally to FINRA website).