Arnold & Porter Kaye Scholer LLP

Kaye Scholer’s broker-dealer practice is an integral part of the firm’s investment funds and financial services practices. Clients range from international, national and regional broker-dealer firms and their affiliates, to hedge funds, insurance companies and investment advisers. Our broker-dealer lawyers work closely with other practice areas, such as corporate finance, securities, litigation, mergers and acquisitions, employment and antitrust law, allowing us to provide comprehensive advice for businesses engaged principally in broker-dealer activities, as well as diversified financial services companies.

Our lawyers have also represented international firms based in Latin America, Europe and Asia in forming new broker-dealers, establishing rule 15a-6 relationships with U.S. broker-dealers and acquiring existing U.S. broker-dealers. We advise on all relevant aspects of broker-dealer regulation, and have particular experience advising clients on the nuances of issues raised in cross-border activities.

Formation

Using our hands-on approach, we manage the registration and self-regulatory organizations ("SRO") membership application process from start to finish. For startups, we advise on the appropriate business vehicle from commercial and tax perspectives, whether as a limited liability company ("LLC") in the United States or as a limited company or limited liability partnership ("LLP") in the United Kingdom and, where a new group is to be established, we can structure tax-efficient ownership and income arrangements both at the country-specific and the global level.

Our lawyers draft organizational documents, operating agreements, advisory agreements, administration agreements, subscription agreements, placement agreements, side letters, registration forms and compliance manuals. We handle all aspects of the regulatory application from the initial filing through the pre-membership interviews.

Acquisition

Working in concert with our mergers and acquisitions colleagues, we advise on various unique regulatory and legal issues that arise when acquiring a brokerage firm. We perform due diligence reviews of broker-dealer, investment management and advisory firms that are candidates for acquisition. We focus on the internal controls of the target, its compliance with regulatory standards and its management structure, and handle all necessary filings with the Financial Industry Regulatory Authority ("FINRA") and state and federal regulators.

Our lawyers review sales materials and advise and prepare filings under federal and state securities laws, commodities laws, international securities laws and tax laws. In addition to these core services, we advise on employment contracts and employee incentives, and protection of intellectual property rights.

When a broker-dealer business or equity interest in such a business is acquired, we advise on the tax, regulatory, corporate and commercial aspects of the deal. We have handled all aspects of these transactions from beginning to end. We have structured equity interest transactions for clients in situations where the goal is continuity of business without interruption and a smooth regulatory process. We are well versed in both the business and regulatory nuances associated with the sale of broker-dealers.

Prime Brokerage Services and Distribution Activities

Since our lawyers request many hedge fund managers, we are experienced in reviewing prime brokerage documents and custody agreements from the buy-side. This gives us a more rounded perspective and an eye for the key issues when advising the sell-side. We are experienced in advising prime brokerage customers with respect to risks, rights and remedies associated with financially troubled broker-dealers. In addition, we advise parties to financial markets contracts with respect to counterparty insolvency risks.

Our lawyers have represented both placement agents and underwriters in a wide variety of capital raising transactions. We are experienced in navigating the regulatory issues relating to the limitations on underwriting compensation. In this regard, we draft engagement letters, placement agreements and/or underwriting agreements, along with any required selling group or syndicate documents.

Regulatory Compliance and Investigations

Compliance and awareness of impending regulatory changes are critical to a broker-dealer client's success. Our lawyers advise on all relevant aspects of broker-dealer regulation, including authorization requirements, regulatory capital, client classification, market abuse, anti-money laundering, commodity and derivatives trading, and financial promotions. Our broker-dealer lawyers are experienced in drafting, auditing and reforming compliance and supervisory policies and manuals.

Our day-to-day work includes drafting and reviewing counterparty and customer documentation; ISDA documentation; clearing, give-up, introducing broker, repo and stocklending agreements; and compliance procedures and advising on issues relating to exchange-traded derivatives.

We are well versed in regulatory issues and requirements globally and work in close collaboration across our offices to advise on cross-border and region-specific compliance matters. Kaye Scholer has particular experience advising clients on the nuances of jurisdictional issues raised in cross-border activities. Our lawyers actively collaborate with various regulators around the world to reduce unnecessary regulation and generally streamline the regulatory process. We routinely submit comments on SEC, FSA and EU consultation and rule-making processes to promote simpler regulation of investment funds and their advisers.

Internal Audits and Supervisory Reviews

At the request of our clients, our lawyers audit and investigate their compliance with FINRA, SRO, SEC and state regulations. Such audits and investigations help clients identify compliance with best practices in response to regulatory inquiries and investigations, customer complaints, or whistleblowers. We also help clients comply with FINRA Rules 3010, 3012 and 3013 by assisting with internal inspections, evaluations and certifications.

Our lawyers assist clients with responding to inquiries from, and investigations by, regulators and SROs by coordinating with the lawyers in our litigation department who have substantial experience in representing broker-dealers, investment managers and advisers, and other service-provider clients.

Anti-Money Laundering

We have advised broker-dealers on their obligations and responsibilities associated with the establishment of Anti-Money Laundering ("AML") programs as required by the U.S. PATRIOT Act and other rules promulgated by the various SROs. For our U.K. clients, we advise on the Proceeds of Crime Act and the Money Laundering Regulations. We have drafted AML manuals, conducted training seminars and have advised on matters and issues relating to compliance with reporting requirements applicable to broker-dealers and other financial institutions.

Our lawyers have represented companies and individuals in money laundering investigations and asset forfeiture proceedings by the Department of Justice, including those involving monetary transactions routed through banking institutions on multiple continents.

Foreign Corrupt Practices Act

Operating in environments without the benefit of well-established rule of law presents unique challenges. As cross-border transactions multiply, Kaye Scholer is there to help clients establish their presence around the globe. We advise our transnational clients on the U.S. Foreign Corrupt Practices Act of 1977 ("FCPA") and have represented both foreign and domestic clients being investigated for multi-national transactions by the Department of Justice and the SEC. We have helped develop FCPA compliance programs for many clients.

Representative Matters

• Representation of multiple New York-based broker-dealers.
• Represented a prominent broker-dealer before the NYSE's enforcement division on matters involving complex short sale trading.
• Advised FINRA members during audits.
• Representation of the then-second largest broker-dealer in South Korea.
• Representation of the then-second largest broker-dealer in Mexico.
• Formation of a broker-dealer for an electronic trading network.
• Formation of a broker-dealer for a mergers and acquisition boutique.
• Formation of a broker-dealer for a large international insurer.
• Formation of a broker-dealer for an asset-backed derivatives boutique.
• Formation of a broker-dealer for one of the larger, publicly traded Swiss private banking groups.
• Formation of a joint venture with a Swiss broker-dealer for the issuance of structured products tied to a commodity index.
• Formation of a joint venture with an Argentine broker-dealer group for development of opportunities in Latin American fixed income markets.
• Advised and drafted various agreements for two broker-dealers forming a real estate joint venture.
• Representation of a Canadian broker-dealer acting as an advisor to a Canadian company with U.S. mining operations in connection with proposed liquidity transactions.
• Acquisition of a Texas-based broker-dealer by a large Mexican broker-dealer.
• Acquisition of a New York broker-dealer for a prominent New York bank.
• Advised a New York broker-dealer on U.K. and various other jurisdictions' financial promotion rules.
• Advised a U.K.-based research house and broker on the Markets in Financial Instruments Directive ("MiFID"), including passporting and disclosure issues, relating to a group reorganization.
• Advised a U.K. broker on business organization issues, including formation of an LLP.
• Representation of a significant New York broker-dealer in several SEC enforcement investigations.
• Representation of a significant New York broker-dealer in commercial, corporate and contract litigation.

Kaye Scholer is committed to fostering diversity in a positive and supportive work environment. We firmly believe that a diverse group of lawyers, including differences in race, ethnicity, gender, sexual orientation, disability, religion or any other underrepresented status in the legal community, increases the value of our law firm, strengthens our firm's ability to attract talented individuals, and enhances our ability to retain and serve our clients.

Our commitment to cultivate and maintain a diverse workforce remains at the core of our recruiting, retention and promotion efforts as we strive to maintain a firm culture that taps into the potential of every Kaye Scholer employee.

The Diversity and Recruiting Committees work together, recruiting at job fairs such as the BLSA Northeast Job Fair and the DuPont Minority Job Fair. We conduct on-campus interviews at law schools, and we actively seek out diverse candidates at every school. Kaye Scholer is an original signatory to the Statement of Goals of New York Law Firms and Corporate Legal Departments for Increasing Minority Hiring, Retention and Promotion, and we have surpassed the goals in each of the years of their existence. We are also an original signatory to the Statement of Goals of New York Law Firms and Corporate Legal Departments for the Retention and Promotion of Women, and we have participated in the City Bar Fellowship Program since its inception.

Kaye Scholer was the recipient of the 2006 "Black Entertainment and Sports Lawyers Association Law Firm Diversity Award" at the 26th Annual Conference of the Black Entertainment and Sports Lawyers Association (BESLA). The "Conference Chairs' Welcome," published in the "Conference Journal" distributed to all attendees, said about Kaye Scholer: "Our Law Firm Diversity Award recipient this year is the law firm of Kaye Scholer, LLP. With offices from New York to Shanghai, and points in between, this firm has made significant contributions to the entertainment legal community. We acknowledge Kaye Scholer for being a consistent supporter of BESLA and its programs, a corporate sponsor of BESLA's conferences, and for its continuous efforts in the areas of diversification by recruiting and hiring qualified minority professionals, including in particular, members of this organization."

Our partners' commitment to diversity extends beyond the firm. Sheila Boston, a partner in Kaye Scholer's Litigation Department, was named the Chair of the Committee on Recruitment and Retention of Lawyers, a committee devoted to enhance diversity in the profession at the Association of the Bar of the City of New York. This special committee is charged with encouraging the hiring, retention and promotion of professionals from all walks of life in New York law firms and corporate legal departments. All of us at Kaye Scholer take great pride in her appointment, and we pledge our full support to the work of her committee in this important area.

Last year Kaye Scholer entered into a partnership with the Bronx School for Law, Government and Justice. Kaye Scholer attorneys have coached the school's mock trial team in a state competition, conducted a mock labor negotiation with the students, and judged several moot court competitions at the school. Next year we will initiate a mentor program.

Other organizations in which our partners are involved include the Asian American Bar Association of New York, Committee 504 (Minorities and Women in the Profession) of the ABA's Intellectual Property Law Section, Legal Momentum, The Women's Legal Defense & Education Fund, Inwood House, Just One Break, National Association of Women Lawyers (NAWL), American Bar Association's Section of Litigation's Women In Products Liability (WIPL), National Hispanic Bar Association, and Black Entertainment and Sports Lawyers Association (BESLA).

We are proud to have received several awards recognizing our commitment to offering equal employment opportunities to all.

Diversity Statement from Managing Partner

At Kaye Scholer LLP we are proud of our commitment to diversity and equal opportunity. We work actively to foster an inclusive work environment, support minority-owned vendors and enrich our firm's culture through our diversity and inclusion initiatives for lawyers and staff.

The firm's commitment to diversity and equal opportunity is reflected in its mission to attract, retain, and advance a diverse group of lawyers and staff. Kaye Scholer is home to individuals from varied cultural, educational, religious and ethnic backgrounds, making it a vibrant and engaging community. We strongly believe that promoting diversity in background and perspective strengthens our entire firm.

At Kaye Scholer, we recognize that diversity among our professionals is a necessity if we are to best serve the needs of our increasingly diverse clientele. Kaye Scholer enthusiastically supports programs designed to ensure that our own makeup adequately reflects the growing ranks of diversity in business today. Our commitment begins early, when we urge summer associates to meet with more senior lawyers to develop enduring mentoring relationships. Our affinity group programs continue to support our attorneys as they develop in their careers. Kaye Scholer has an active Diversity Committee consisting of approximately thirty attorneys of all levels of seniority, including partners, counsel, senior attorneys and associates. Working through various subcommittees, the members of the Diversity Committee assist in attracting and hiring a diverse class of attorneys, promote community-building, and provide training as well as host events that promote awareness of diversity issues.

We at Kaye Scholer are committed to fostering and maintaining an inclusive work environment where individual differences among us are respected, valued and recognized as a source of strength of the firm. We believe that offering diverse perspectives to our clients enhances our counsel and sparks intellectual energy within the firm.

Barry Willner
Managing Partner

Diversity Training

All Kaye Scholer lawyers participate in the Firm's mandatory diversity training program. Diversity training sessions are composed of a combination of partners, counsel and associates from various departments in the Firm. Through discussion, videos and case studies, the program enables participants to gain insight into the different viewpoints and workplace challenges of both their peers and others.

Mentoring Program

In 2008, the Firm rolled out a revised mentoring program designed to assist associates' career development and enhance their experience at the Firm. Highlights of the program are:

• all associates are paired with mentors for a period of at least two years at a time
• associates are encouraged to select rather than be assigned mentors
• virtually all mentor/mentee communications are confidential

In addition, there are four Program Coordinators who monitor the mentoring relationships to ensure that mentors and mentees are meeting in a timely fashion, to ensure that the mentor-mentee pairings are appropriate and to evaluate the extent to which the program is functioning successfully.

Ombuds Program

Recently, the Diversity Committee established an Ombuds Program, a confidential resource for all attorneys. The Ombuds Representatives are neutral confidants who advocate not for a specific individual, but for equity, fair process and compliance with firm policy and procedure. The program was established with a special emphasis on issues concerning women, minorities, sexual orientation and religion. The Ombuds Representatives are available, however, to assist all attorneys in resolving work-related concerns in an informal, confidential and impartial manner. The primary goal of the program is to improve the overall working environment at Kaye Scholer.

Affinity Groups

The Firm recognizes the importance of active affinity groups for lawyers who share common interests or backgrounds. With the Firm's support, our attorneys have voluntarily formed African American, Latino, Asian, Women and Lesbian, Gay, Bisexual and Transgender (LGBT) affinity groups. Participation in these affinity groups accelerates professional development, provides additional mentoring opportunities and increases networking opportunities. 

Diversity Events

Kaye Scholer is a proud participant and sponsor of a wide range of programs that celebrate and promote diversity in the legal community. The Firm's Diversity Committee believes that exposure to diverse speakers and points of view promotes professional development and growth. The Committee has hosted several speakers, panel discussions and movie nights. Recent speakers include Clarence B. Jones, a speech writer and attorney for Martin Luther King Jr., as well as lawyers from the NAACP Legal Defense Fund, the Puerto Rican Legal Defense and Education Fund (PRLDEF), the Asian American Legal Defense and Education Fund (AALDEF) and from Lambda Legal.

Movie nights have become a tradition at the Firm. The Diversity Committee arranges screenings of thought-provoking films such as "Crash" and "The Namesake." The movie is followed by a lively and stimulating discussion of the diversity and community issues that the film addresses.