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Nathaniel Segal

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Nathaniel Segal is a Shareholder at Vedder Price and is a member of the Investment Services group.

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On July 25, 2024, the U.S. District Court for the Eastern District of Texas stayed the U.S. Department of Labor’s (DOL) recently-issued final rule, set to take effect September 23, 2024, which would amend the definition of an “investment advice fiduciary” for purposes of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (the 2024 Rule).  One day later, in a separate case challenging the 2024 Rule, the U.S. District Court for the Northern District of Texas also stayed the 2024 Rule on similar grounds.  Both decisions stay the effective date of the 2024 Rule indefinitely while the cases are pending.Continue Reading Two Federal District Courts Stay DOL Fiduciary Rule

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On July 1, 2024, the SEC adopted tailored disclosure requirements and offering processes for non-variable annuity contracts—specifically, for registered index-linked annuities (RILAs) and annuity contracts that offer fixed investment options and apply market value adjustments (MVAs) to amounts withdrawn before the end of the fixed option’s term. The final rule will require issuers of RILAs and MVAs to register offerings on an amended Form N-4, the form currently used to register most variable annuities.Continue Reading SEC Adopts Significant Form and Rule Amendments for the Registration of RILAs and MVAs

On May 23, 2024, the SEC approved exchange rule changes that will allow the listing and trading of a number of spot Ether exchange-traded products (ETPs). Ether is the second-largest cryptocurrency by market capitalization after Bitcoin.  The decision follows the SEC’s recent approval of spot Bitcoin ETPs in January 2024, as previously summarized here. Continue Reading SEC Approves Exchange Listings for Spot Ether ETPs

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On June 6, 2024, the New York Stock Exchange (NYSE) filed an application with the SEC pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, proposing a rule change that, if approved by the SEC, would exempt closed-end funds (CEFs) registered under the Investment Company Act of 1940 and listed on the NYSE from the requirement to hold annual shareholder meetings.Continue Reading NYSE Proposes to Exempt Registered Closed-End Funds from Annual Shareholder Meeting Requirement

On June 14, 2024, the SEC announced the settlement of administrative proceedings brought against a registered investment adviser for disseminating allegedly misleading performance information of a private fund that it advised.  The SEC alleged that from at least November 2021 through February 2023, the adviser advertised performance returns that were experienced by a single investor in a private fund as the private fund’s performance even though the investor’s performance was at times significantly higher than the fund’s performance.  According to the order, the performance disparity was due to certain successful IPO investments the fund had made that were credited to the investor’s capital account in greater proportion than other fund investors’ capital accounts because the other investors were unable to participate fully in the IPO investments due to investment restrictions under FINRA Rules 5130 and 5131.Continue Reading SEC Settles Enforcement Proceedings Against Adviser for Allegedly Misleading Performance Advertising

On June 18, 2024, the SEC announced the settlement of administrative proceedings brought against a marketing and business communications firm for alleged internal accounting control deficiencies that caused the firm’s failure to promptly respond to a ransomware attack that occurred between November 29, 2021 and December 23, 2021, and which involved the unauthorized encryption of the firm’s computers, exfiltration of firm and client data, and business service disruptions.  According to the order, the firm received and reviewed network intrusion alerts escalated to it by its third-party managed security services provider, but the firm’s cybersecurity alert review and incident response policies and procedures failed to adequately establish a prioritization scheme and provide clear guidance to internal and external personnel on procedures for responding to such incidents. As a result, the firm did not take the malware-infected instances off its network, investigate the activity, or take other steps to prevent further network compromise until December 23, 2021. Continue Reading SEC Settles Enforcement Proceedings Against Business for Allegedly Insufficient Internal Controls Relating to Cybersecurity Incident

On June 26, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the SEC’s 2022 rescission of certain rule amendments regarding proxy advisory firms, holding that the SEC’s explanation for rescinding the amendments was “arbitrary and capricious and therefore unlawful.”Continue Reading Fifth Circuit Court of Appeals Vacates SEC’s 2022 Rescission of Certain 2020 Amendments to Proxy Rules

On May 22, 2024, the SEC announced the settlement of administrative proceedings against a U.S. securities exchange and certain of its subsidiaries for their alleged failure to timely inform the SEC of a systems intrusion in violation of Rules 1002(b)(1) and 1002(b)(2) of Regulation Systems Compliance and Integrity (Regulation SCI). The rules require that covered entities notify the SEC of a system disruption or intrusion within 24 hours unless the covered entity immediately determined that the disruption or intrusion would have no or a de minimis impact on operations or market participants.Continue Reading SEC Settles Charges Against Exchange for Alleged Failure to Inform SEC of Cyber Intrusion

On May 21, 2024, the SEC announced the settlement of administrative proceedings brought against a dually-registered broker-dealer and investment adviser for its alleged failure to address conflicts of interest in compliance with Rule 15l-1(a) of the Securities Exchange Act of 1934 (Regulation Best Interest) and the Investment Advisers Act of 1940.Continue Reading SEC Settles Charges Against Dually-Registered Broker-Dealer and Adviser for Alleged Failure to Address Conflicts of Interest

On May 1, 2024, the Financial Industry Regulatory Authority (FINRA) proposed a new series of rules—FINRA Rule 6500 Series—regarding reporting of securities lending transactions pursuant to the requirements under new Rule 10c-1a under the Securities Exchange Act of 1934 which the SEC adopted on October 13, 2023. Rule 10c-1a requires “covered persons” to report specified information about “covered securities loans” (as these terms are defined in Rule 10c-1a) to FINRA by the end of the day on which a loan is made or modified, in accordance with rules that FINRA is required to adopt by May 2, 2024 and that detail the format and manner by which the loan information is reported. Continue Reading FINRA Proposes Rules Regarding SEC-Mandated Reporting of Securities Lending Transactions