NYS Attorney General Says that Law Firm Introductions Required BD Registration
A law firm that attempted to facilitate introductions between public pension plans and private funds agreed to pay $550,000 and a five-year appearance ban for failing to register as a broker-dealer. The agreement with New York State arose from the continuing investigation into pay-to-play practices. The New York Attorney General charged the law firm with attempting to effect transactions in securities without proper registration or licensing. The firm did not receive compensation and was not successful in securing investments.
OUR TAKE: Generally, the requirement to register as a broker-dealer arises because the purported broker-dealer received some type of transaction-based compensation. The New York State Attorney General has dispensed with that requirement, alleging that mere introductions give rise to BD registration requirements.
http://www.ag.ny.gov/media_center/2010/oct/oct12a_10.html
OUR TAKE: Generally, the requirement to register as a broker-dealer arises because the purported broker-dealer received some type of transaction-based compensation. The New York State Attorney General has dispensed with that requirement, alleging that mere introductions give rise to BD registration requirements.
http://www.ag.ny.gov/media_center/2010/oct/oct12a_10.html
Posted by Todd Cipperman at 10/14/2010 5:10 AM 
Categories: Distribution and Broker-Dealers
Tags: new york state attorney general broker-dealer registration pay-to-play introduction
Categories: Distribution and Broker-Dealers
Tags: new york state attorney general broker-dealer registration pay-to-play introduction
I think you guys were reading too fast. This is from the AG’s press release:
Manatt received fees for successfully placing one investment with the California Public Employees’ Retirement System (“CalPERS”). Its other efforts failed.
* * *
The investigation by the Attorney General’s office found the following instances in which Manatt sought to help firms obtain investments from public pension funds without a securities license:
• In 2003, in partnership with California-based lobbyist Platinum Advisors, Manatt helped to place a $25 million investment by CalPERS in Levine Leichtman Capital Partners Fund III, for which Manatt and Platinum each received $187,500
I’m guessing you read the following without reading the whole thing: “Other than the CalPERS investment in 2003, no investments resulted from Manatt’s efforts and Manatt did not receive compensation.”
You should put out a correction.
Reply to this
The NYS AG made clear that the compensation was not what triggered registration. This was probably because the NYS AG had no jurisdiction over the CalPERS transaction. With respect to all the New York activity over which the NYS AG had jurisdiction, the law firm received no compensation and was not successful in soliciting investments. I think this is a significant expansion of the Martin Act.
Reply to this