Recently, the Financial Industry Regulatory Authority (“FINRA”) launched a new pilot program offering parties in small claims cases free or low-cost telephone mediation. This program is voluntary and open to all cases involving claims of $50,000 or less.

On January 25, 2013 the Securities and Exchange Commission (“SEC”) charged a financial adviser in Florida with illegally “tipping” his friend about inside information he acquired regarding the upcoming sale of a pharmaceutical company in exchange for $35,000 and a jet-ski dock. The friend (along with another individual whom the friend informed of the sale) made $708,327 in illicit insider trading profits in just two days. The SEC is alleging that the financial adviser learned this information from his supervisor, who in turn was informed by a client of the advisory firm who served on the pharmaceutical company’s board of directors. The SEC is seeking disgorgement of all ill-gotten gains with prejudgment interest, a financial penalty, and a permanent injunction against the financial adviser. Additionally, the U.S. Attorney’s Office for the District of New Jersey announced that it will seek criminal charges in a parallel action against the adviser.

This week, President Barack Obama nominated former U.S. attorney Mary Jo White to be chairman of the Securities and Exchange Commission (“SEC”). If confirmed by the Senate, White would take over the helm at the SEC from Elisse Walter, who is serving out the rest of former SEC chair Mary Schapiro's term - who resigned last November.

The Securities and Exchange Commission (“SEC”) recently indicated that by April of 2013, it plans to issue a Notice of Proposed Rulemaking on requiring public companies to disclose their political spending. This rule could have broad sweeping effects as it’s estimated that numerous large companies, including almost half of the S&P 100 index, do not currently disclose their political contributions.

As of January 1, 2013, rule AB 1844 went into effect in California, effectively banning California employers from asking job seekers and workers for their usernames and passwords on social networking accounts. In addition to this, AB 1844 also bans employers from discharging or disciplining employees who refuse to divulge such information under the terms of the bill. However, this restriction does not apply to passwords or other information used to access employer-issued electronic devices.

Back in January, the Securities and Exchange Commission (“SEC”) issued guidance regarding Registered Investment Adviser’s (“RIA’s”) use of social media in a National Examination Alert, Investment Adviser Use of Social Media (the “Alert”). Part of the Alert dealt with third-party content – specifically stating how “likes” and comments from third-parties on social media websites may be interpreted as improper testimonials prohibited by Rule 206(4)-1(a)(1) of the Investment Advisers Act of 1940.

Recent settlements continue to show how regulators are cracking down on Anti-Money Laundering (“AML”) violators of all shapes and sizes. This week HSBC, Europe's largest bank by market value, agreed to a settlement after facing accusations it transferred funds through the U.S. from Mexican drug cartels and on behalf of nations such as Iran that are under international sanctions. The settlement - $1.9 billion, or 9% of the company’s 2012 profits, is the largest penalty ever imposed on a bank. Additionally, another British Bank - Standard Chartered PLC, signed an agreement with New York regulators this week for $340 million to settle a money-laundering investigation involving transactions it undertook with funds from Iran.

Recently, the Financial Industry Regulatory Authority (“FINRA”) has requested the Securities and Exchange Commission (“SEC”) to approve amendments to Rules 2267 and 8312, which would increase disclosure requirements and promotion of their BrokerCheck program.

The Commodity Exchange Act (‘‘CEA’’), as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’), authorizes the Secretary of the Treasury (‘‘Secretary’’) to issue a written determination that foreign exchange swaps, foreign exchange forwards, or both, should not be regulated as swaps under the CEA. On November 20^th, the Secretary decided to do just that, and used its power to exclude foreign exchange swaps and foreign exchange forwards from the definition of a swap. Thus, this decision removes these securities from the new swap regulatory regime set up by Dodd-Frank (as discussed in the previous blog entitled “Will You Need to Register as a “CTA” in the New Year?”).

The California Department of Corporations (“DOC”) recently proposed amendments to the California investment adviser custody rule, Section 260.237 of Title 10 of the California Code of Regulations. The October 18, 2012 announcement follows an initial invitation for comments on the proposed changes issued by the DOC on July 8, 2011. The proposed changes are in response to, and incorporates provisions from, the recently adopted amendments to the Securities and Exchange Commission’s (“SEC”) Custody Rule, and the North American Securities Administrators Association’s (“NASAA”) Model Custody Rule.