SEC Waives Oppenheimer's Automatic Disqualification from Regulation D; SEC Commissioners Dissent

The SEC issued an Order to Oppenheimer & Co. Inc. ("Oppenheimer") waiving Oppenheimer's automatic disqualification from certain provisions of Regulation D.

The SEC determined that, as part of the "showing of good cause" under Rule 506(d)(2)(ii), Oppenheimer will comply with the conditions stated in its waiver request, including the following: (i) it will retain a law firm to review its policies and procedures relating to Rule 506 offerings, and (ii) it will adopt improvements or changes both as private placement agent in its investment banking business, and as issuer and compensated solicitor in its wealth management business. Oppenheimer's waiver also is conditioned upon its completing firm-wide training for all registered persons in complying with Rule 506 of Regulation D.

SEC Commissioners Aguilar and Stein (the "Commissioners") jointly issued a dissenting statement regarding the Oppenheimer waiver, explaining that Oppenheimer's "egregious misconduct" makes clear the "extent of the error" in granting a full waiver. The Commissioners detailed Oppenheimer's actions in their statement, noting that the firm's violations "are just the most recent chapter in a long and unfortunate history of regulatory failures."

Additionally, the Commissioners pointed out that the SEC's order does not legally require Oppenheimer to hire an independent consultant, as was stated in the conditions of the waiver. According to the Commissioners, the SEC "set a dangerous precedent by ignoring this sound approach in drafting the Order in this case."

See: Oppenheimer Waiver; Commissioners Aguilar and Stein's Statement of Dissent.