Wednesday, November 28, 2012

Do You Need to Register? Foreign Investment Firms Fined By SEC

If you are doing business in the United States, you need to follow the US securities laws, regardless of where you are located. While there are exemptions from registration and other exceptions that may be available, all firms need to examine the issue and doing business in the US is very broadly interpreted. The costs of failing to comply with the state and federal securities laws can be very costly, as four foreign financial services firms just learned.
The SEC announced charges against four financial services firms based in India for providing brokerage services to institutional investors in the United States without being registered with the SEC as required under the federal securities laws. The four firms agreed to pay more than $1.8 million combined to settle the SEC’s charges.
According to the SEC’s orders against the firms, they engaged with U.S. investors in some of the following ways despite being unregistered broker-dealers: Sponsored conferences in the U.S. Had employees travel regularly to the U.S. to meet with investors. Traded securities of India-based issuers on behalf of U.S. investors Participated in securities offerings from India-based issuers to U.S. investors.
Almost two million dollars in fines for failing to register, a process that can be costly, but certainly not two million dollars worth of costly. Now add to that the possibility that their clients may have claims against the firms because they were not registered  and this becomes a very costly oversight.
The full details are at the Commission's website - SEC Charges Four India-Based Brokerage Firms with Violating U.S. Registration Requirements; If you have questions about the registration status or requirements for any financial services firm, foreign or domestic, give us a call or email me at We have been representing financial firms across the country in compliance and registration matters for decades.
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