Recent Developments in BSA/AML: SEC’s Waiver of Rule 506(d) Disqualification for Oppenheimer & Co. Sparks Dissent Among SEC Commissioners

Sullivan & Cromwell LLP - February 12, 2015

On January 27, 2015, the Securities and Exchange Commission (the “SEC”) issued an order granting a waiver to Oppenheimer & Co. Inc. (“Oppenheimer”), a full-service broker-dealer, from automatic disqualification under Rule 506(d) of the SEC’s Regulation D (the “Waiver Order”) in connection with Oppenheimer’s violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”)—violations for which the SEC issued, on the same day, a cease-and-desist order and assessed civil money penalties, disgorgement, and interest of $10 million.  The SEC’s decision to grant the waiver was the object of a formal dissent by Commissioners Luis A. Aguilar and Kara M. Stein, issued on February 4, 2015, in which the two Commissioners  harshly criticized the SEC’s grant of Oppenheimer’s waiver request in light of what they described as the “wholly failed compliance culture” at Oppenheimer and the firm’s numerous violations of the securities laws and the Bank Secrecy Act (the “BSA”).