Rules about how securities trade reach further than most companies expect. An issuer buying back stock during an offering, a fund shorting ahead of a follow-on, a startup building a matching engine for tokenized assets, and an executive posting about the stock price can all run into the Exchange Act's market rules. These rules are technical, enforced by the SEC and FINRA with detailed surveillance data, and applied to trading technology that changes faster than the rules do. We advise on compliance before the conduct happens and represent clients when regulators ask questions about trading that already took place.
Manipulation And Trading Conduct
Exchange Act Section 9(a)(2) prohibits a series of transactions that raise or depress a security's price to induce others to trade, and Section 10(b) and Rule 10b-5 reach manipulative and deceptive conduct more broadly. Enforcement cases involve spoofing and layering, wash trades and matched orders, marking the close, pump-and-dump schemes promoted through social media, and coordinated trading in thinly traded stocks. Intent is the key element, and regulators prove it with order data, messages, and trading patterns. For algorithmic traders, the question is often whether a strategy's design, rather than any single order, shows an intent to mislead. We review strategies, code, and communications with that evidence in mind.
Regulation M And Regulation SHO
Regulation M keeps offering participants from propping up prices during a distribution. Rules 101 and 102 restrict underwriters, issuers, and their affiliates from bidding for or buying the offered security during a restricted period, Rule 104 governs stabilization, and Rule 105 bars buying in an offering after shorting the same security shortly before pricing. Regulation SHO governs short sales: Rule 200 order marking, the Rule 203 locate requirement, Rule 204 close-out obligations for fails to deliver, and the Rule 201 price test that restricts short selling at or below the national best bid after a stock falls 10 percent in a day. We build procedures for issuers, funds, and brokers and answer real-time questions during offerings.
Exchanges, ATSs, And Trading Platforms
A system that brings together the orders of multiple buyers and sellers using established, non-discretionary methods is an exchange under Exchange Act Rule 3b-16 unless it registers as a national securities exchange or operates as an alternative trading system under Regulation ATS. An ATS must be a registered broker-dealer, file Form ATS, or Form ATS-N if it trades NMS stocks, and meet fair access requirements once it crosses volume thresholds. Broker-dealers with market access must maintain risk controls under Rule 15c3-5, and quoting OTC securities runs through Rule 15c2-11. We read the system design, including matching logic, order types, and who controls them, and match it to the right regulatory status.
Digital-Asset Market Questions
Whether a trading venue for digital assets is subject to securities market rules depends first on whether the assets it trades are securities, which still turns on the Howey investment contract test as courts apply it. The federal approach has been moving. Congress enacted the GENIUS Act in 2025 to regulate payment stablecoins, the SEC formed a Crypto Task Force, issued staff statements on particular asset types, and dropped several enforcement cases, and market-structure legislation dividing authority between the SEC and the CFTC has been debated. Courts and regulators may still reach different answers on similar facts. We give measured advice: an analysis of each asset and activity under current law, a record of that analysis, and a plan for when the rules change.
Investigations, Disputes, And Common Mistakes
Market conduct cases often begin with a FINRA surveillance referral, an SEC Division of Enforcement inquiry, an exchange request for trading records, or a Wells notice. Early decisions about document preservation, privilege, and whether to make a presentation can shape the outcome. We represent companies and individuals through blue sheet requests, testimony, and Wells submissions, and we handle related private claims, including investor suits and disputes between trading counterparties, some of which go to FINRA arbitration. Mistakes we see before investigations start: buyback programs that ignore the Rule 10b-18 conditions, chat messages that describe trading strategies loosely, trading systems launched without a status analysis, and written procedures describing controls no one runs.
