The new SEC "bad actor" provisions of Rule 506(d) become effective on September 23, 2013. Investment banks, which monitor FINRA compliance by their professionals, must ensure that their compliance systems capture all the potentially new requirements of Rule 506(d). The FINRA disclosure obligations of Forms U4 and U5 are more extensive than the Rule 506(d) provisions and for the most part, the texts are very different. But it is clear that most of the SEC "bad actor" disqualifying events are picked up by FINRA other than Rule 506(d)(1)(viii), which addresses violations of U.S. Postal regulations. For our readers' convenience, attached is a chart comparing the FINRA U4/U5 disclosure obligations to Rule 506(d): http://www.mofo.com/files/Uploads/Images/130913-Comparison-Rule-506d-Bad-Actor-Provisions.pdf.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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