Sullivan
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Sullivan's Broker-Dealer Regulation practice represents U.S. and non-U.S. brokers, dealers, private funds, banks and other financial institutions regarding a wide variety of regulatory matters relating to their securities-related business in the United States.

We routinely advise clients on the state and federal registration, compliance and disclosure requirements applicable to specific business arrangements, services and transactions.

Representative Client Work

  • Registration with the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and state authorities
  • Identifying available exemptions from the broker-dealer registration requirements
  • Evaluating “finder” arrangements
  • Structuring and evaluating securities and services offerings in the United States
  • Obtaining approvals and providing advice regarding new products, lines of business, changes in corporate structure, mergers and acquisitions and joint ventures
  • Crafting custom and protective disclosures for contracts and investor materials
  • Preparing written compliance policies and supervisory procedures and related materials
  • Responding to regulatory examinations and inquiries
  • Defending clients in investigations and disciplinary actions
  • Obtaining no-action and interpretative relief from federal and state regulators
  • Advising on the application of state “Blue Sky” requirements
  • Advising on the application of FINRA and SEC compliance issues, such as financial reporting requirements, books and records retention, the Customer Protection Rule, Pay-to-Play issues, compensation structures, point-of-sale disclosures, gifts and entertainment matters, privacy and anti-money laundering requirements
  • Advising on FINRA and state licensing requirements for principals and representatives
  • Advising on issues relating to the provision of research
Viewpoints
All Viewpoints
SEC Establishes Retail Fraud Working Group to Combat Fraud Targeting Everyday Investors
The U.S. Securities and Exchange Commission (“SEC”) announced on July 7, 2026, the creation of the Retail Fraud Working Group, a new initiative within the Division of Enforcement designed to identify and combat fraud targeting main street investors. The announcement formalizes a priority that SEC Enforcement Director David Woodcock previewed in his May 13, 2026, remarks to the Managed Funds Association Legal & Compliance Conference, reflecting the current Commission’s broader back-to-basics enforcement posture. For issuers, broker-dealers, investment advisers, and private fund managers with retail exposure, the announcement signals that retail-facing enforcement will be a sustained focus of the Division’s work in the months and years ahead. Overview The Retail Fraud Working Group will leverage staff and resources across the Commission to identify fraud and other misconduct targeting retail investors, including offering frauds, pump-and-dump schemes, market manipulation, and breaches of duties owed to customers by investment advisers and broker-dealers. The Group’s initiative is threefold: (i) to serve as a dedicated resource to proactively generate cases; (ii) to work with the Commission’s domestic regulatory partners and foreign counterparts; and (iii) to assist with educating retail investors in coordination with the SEC’s Office of Investor Education and Assistance. The Group will be led by Kate Zoladz, Deputy Director, West, and Kim Frederick, Assistant Director of the Asset Management Unit. Ms. Frederick’s role in the Asset Management Unit suggests that adviser and private fund conduct affecting retail investors will be a focus area for the Group. Chairman Paul S. Atkins described the initiative as “a return to the core values and principles of the enforcement program,” and Director Woodcock emphasized the Group’s role in “generating cases, building partnerships with our regulatory counterparts, and using data and technology to find and stop those who seek to take advantage of retail investors.” About Our Small-Firm Task Force Sullivan & Worcester’s Small-Firm Task Force is actively engaged in advising clients on the implications of the Retail Fraud Working Group and can assist with responding to any related SEC inquiries. The Task Force unites the firm’s Capital Markets, Regulatory Compliance, Government Investigations, and Financial Services Litigation practices, each with deep experience advising issuers, broker-dealers, investment funds, and institutional investors in the small-cap, micro-cap, and mid-market segments. Our interdisciplinary team is well-positioned to help clients navigate the SEC’s renewed retail-fraud enforcement priorities and to develop practical, risk-based compliance strategies aligned with the current regulatory environment.
FINRA’s Small-Cap Sweep: Strategic Steps for Broker-Dealers
It has been approximately one (1) month since the Financial Industry Regulatory Authority (FINRA) has launched a targeted review of broker-dealer activity in small-capitalization offerings involving foreign issuers—particularly those with operations in foreign jurisdictions such as China. The scope of the review extends across both public and private offerings of small-cap exchange-listed issuers and applies to firms that have acted as underwriters, bookrunners, syndicate or selling-group members, placement agents, or engaged in follow-on trading or omnibus account activity. For broker-dealers active in this market segment between January 1, 2023, and September 30, 2025, this initiative warrants immediate attention. FINRA’s focus underscores the need for firms to proactively strengthen compliance, supervisory and due-diligence frameworks before scrutiny is initiated. Implications for Broker-Dealers For broker-dealers that have acted in offerings of foreign-issuer small-cap companies, or engaged in corresponding trading, the risk of regulatory inquiry is now heightened. Firms should assume that FINRA may request detailed documentation of supervisory procedures, training materials, due-diligence records, compensation arrangements, and transaction lists. Potential exposure encompasses both the underwriting/placement side and the secondary trading side, particularly where omnibus accounts or affiliate-linked trading have occurred. Moreover, compliance weaknesses in this area may expose firms to broader regulatory focus given FINRA’s emphasis on market integrity and manipulative trading risks in small-cap IPOs. As a result, firms should view this not simply as a matter of historical transactions but as an active compliance priority for present-day operations and future offerings. Strategic Compliance Priorities and Action Plan Broker-dealers should undertake an immediate, firm-wide review of their involvement in relevant small-cap foreign-issuer offerings. This review should begin with an inventory of all transactions, public or private, in which the firm acted as underwriter, bookrunner, syndicate or selling-group member, placement agent, or participated in secondary trading during the relevant period. Firms should review whether their written supervisory procedures (WSPs), compliance manuals, training materials and internal guidance adequately address the risks particular to small-cap foreign-issuer offerings. This includes controls around due diligence of issuers, audit-firm and management backgrounds, beneficial-owner structures, cross-border legal/regulatory risks, syndicate compensation, and trading after the offering. Surveillance systems and trading desk controls should similarly be assessed to ensure they capture unusual trading patterns consistent with manipulative or coordinated activity. Firms should evaluate whether their AML/KYC programs are appropriately scaled to the enhanced risk of foreign issuers and thinly-traded securities, and whether their vendor-risk frameworks adequately cover third-party trading platforms, omnibus accounts, and algorithmic or remote trading tools. From a governance standpoint, senior management, compliance heads and the board should elevate this matter within their risk-assessment frameworks. Firms should consider whether internal audit scopes and independent reviews cover this business line, whether incentives or compensation structures may have encouraged participation in higher-risk offerings, and whether escalation procedures are clearly defined and monitored. Finally, firms should prepare for regulatory engagement by gathering and organizing deal files, training logs, supervisory review documentation, compensation records and transaction lists now, rather than waiting until a request arrives. Key Takeaways The targeted review by FINRA of small-cap foreign-issuer offerings signals a clear regulatory priority and a call to broker-dealers to raise their vigilance. For firms with exposure in this area, now is the time to act. Waiting until after a request is received may leave a firm scrambling and vulnerable to findings of deficient controls or documentation. The themes underpinning the review—cross-border risk, thin-traded securities, manipulative activity, and weak controls—are broader than the specific focus and should prompt firms to proactively enhance controls across the board. Senior leadership should not view this as a niche compliance issue, but rather as a signal of elevated scrutiny across multiple lines of business. With proper preparation, firms can not only respond to potential regulatory requests but demonstrate a thoughtful, forward-looking compliance program aligned with the evolving risk landscape.
Regulators Poised to Lighten Disclosure Requirements for $26 Trillion Private Fund Industry
John Hunt was quoted in the article "Regulators Poised to Lighten Disclosure Requirements for $26 Trillion Private Fund Industry" published by the National Law Journal [sub. req'd] on April 24, 2026.  The article discusses a proposed rule by the SEC and CFTC to significantly raise reporting thresholds for private fund advisers, reducing disclosure requirements for many firms while aiming to ease compliance burdens. It also highlights concerns from critics who argue that scaling back oversight could increase systemic risk and reduce transparency in the large and growing private funds industry. John said that existing reporting requirements include many smaller funds that do not present a systemic risk to the economy. “This is a return to kind of where the Form PF was originally intended to go,” he said.  
New SEC, CFTC Pact Could Accelerate Existing Data-Sharing Practices
John Hunt was quoted in the article "New SEC, CFTC Pact Could Accelerate Existing Data-Sharing Practices," published by FedScoop on March 18, 2026. The article discusses a new Memorandum of Understanding (MOU) between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) that strengthens collaboration, especially in data sharing and crypto regulation, with a focus on secure information exchange and more technology-neutral oversight. John highlights a more skeptical perspective on the agreement, noting that the MOU “hardly says anything” and suggesting it reflects broader political dynamics around crypto regulation. He described it as a “shot across the bow to [former SEC Chair] Gary Gensler” and emphasized the intent behind technology-neutral regulation, stating, “They don’t want to favor one type of technology over another, rather than focusing on, ‘well, we want to move everybody to blockchain.’ … I think the idea is to be more agnostic.”