SEC Release No. IA-3198 May 10, 2011 The SEC published a proposal to raise certain dollar thresholds that would need to be met before an investment adviser could charge clients performance fees. The amendments, which are required under Title IV of Dodd-Frank, would amend the client asset requirements in IAA Rule 205-3 to $1 million for assets under management and $2 million net worth (from $750,000, and $1.5 million, respectively). The proposal would also, among other things, provide a method for calculating future inflation adjustments to the dollar amounts. Cross References SEC Press Release

SEC Release No. 34-64442 / IA-3197 May 9, 2011 The SEC announced a settled civil administrative action against a California-based investment adviser and two of its principals for violations that included (i) failing to disclose certain requested information regarding prior SEC examinations; (ii) failing to implement appropriate policies and procedures; (iii) failing to have an annual surprise examination of the adviser's hedge funds and to provide the hedge fund investors with quarterly account statements and timely annual audit reports; and (iv) failing to keep employee acknowledgments of

SEC Release No. 34-64424; SR-FINRA-2011-023 May 6, 2011 The SEC published a FINRA proposal to (1) amend FINRA Rule 6121 to expand the scope of the trading pause pilot to include all NMS stocks covered by the trading pause pilot rules of a primary listing market, and (2) amend FINRA Rule 6272 to conform the quotation requirements on the ADF to those on other national securities exchanges. FINRA Rule 6121 currently applies only to securities that are part of the S&P 500, the Russell 1000, and certain exchange-traded products. The other SROs filed proposals that are substantially similar to the

FINRA AWC Letter No. 20100229218 May 5, 2011 FINRA fined a St. Louis-based broker-dealer $1 million for its failure to deliver mutual fund prospectuses in a timely manner to nearly one million customers. The FINRA action alleges that the firm failed to take action to correct the prospectus delivery failures even after the third-party service provider who mailed prospectuses to customers informed the firm that customers were not receiving prospectuses on time. In addition, FINRA alleged that the broker-dealer failed to promptly report information on its representatives through Forms U4 and U5

FINRA RN 11-23 May 6, 2011 FINRA announced that recent amendments to its rules governing motion practice in arbitration proceedings will become effective on June 6, 2011. The amendments provide a moving party with a five-day period to reply to a response to a motion. Cross References SEC Release No. 34-64225 (approving rule changes) FINRA Rules 12206, 12503, 12504, 13206, 13503, 13504