Broker- Dealer Law Corner

Broker- Dealer Law Corner

Category Archives: Compliance

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What Is FINRA’s Job?

Posted in Compliance, FINRA
A client of mine bought a BD, thereby requiring him to go through the CMA process. It was a very small firm, with fewer than ten registered reps.  He was a newly minted 24, so he had other, more experienced principals on board to handle all supervisory responsibilities.  His job, as outlined in the firm’s… Continue Reading

The Nuts And Bolts Of FINRA’s New Financial Exploitation Rule

Posted in Compliance, FINRA, Rule 2165, Senior Investors
A few weeks ago, I posted a blog about FINRA’s new rule concerning senior investors.  My take was largely that the rule made sense, but only to the extent that it provides protections for BDs that encounter the need to share otherwise confidential information about a customer due to concerns about the customer’s health, particularly… Continue Reading

FINRA Releases Its 2017 Exam Priorities: No More “Culture Of Compliance” References, Plus The List Of Usual Suspects

Posted in Compliance, Culture, FINRA, Senior Investors
In the blog I posted yesterday, I discussed a late Xmas present that the 10th Circuit gave everyone who is subject to the SEC’s jurisdiction.  Today, let’s talk about FINRA’s New Year’s gift to its member firms: the annual Regulatory and Examination Priorities Letter, which was released this week.  As is typically the case with… Continue Reading

In AML World, The Need To File A SAR Can, Apparently, Be Too Obvious To Ignore

Posted in AML, Compliance, Disciplinary Process, Enforcement, FINRA, SEC, Supervision
If you’re reading this, then you undoubtedly already know that FINRA and SEC are, simply, AML crazy. Rightly or wrongly, they are both focusing more than ever on broker-dealers’ fulfillment of their supervisory obligation to be sensitive to the laundry list of red flags first articulated in a Notice to Members back in 2002 that… Continue Reading

According To FINRA, “Culture Of Compliance” Is Not Only Definable, It’s Enforceable

Posted in Compliance, Culture, Disciplinary Process, Enforcement, FINRA, Supervision
Earlier this year, as part of its 2016 Examination Priorities, FINRA spent a lot time discussing the “culture of compliance” at broker-dealers, the notion that firms need to create an atmosphere where compliance with rules and regulations is more than just lip service, but, rather, where it is a priority established by firm management –… Continue Reading

Not So Naked And Not So Afraid: FINRA’s New Compensation Rule Does Not Require Brokers To Bare All (Financially) When Changing Firms

Posted in Compensation, Compliance, Disclosure, FINRA, Hiring practices, Rule 2272
Two years ago, FINRA first proposed to the SEC a rule that would require brokers to disclose to clients not only when they receive compensation (including signing bonuses and other payments) to switch from one broker-dealer to another, but, worse, the amount of that compensation. The industry was seriously not pleased with the rule.  FINRA,… Continue Reading

Highlights from Day Two of SIFMA-CL Conference

Posted in AML, CCO, CCO liability, Compliance, Culture, FINRA, Senior Investors, SIFMA
The Rick Ketchum Show. Today’s sessions opened with what was likely the highlight of the entire conference, Rick Ketchum’s swan song “conversation” with Ira Hammerman, GC of SIFMA, before he toddles off into retirement. Granted, these interviews never remotely approach Sixty Minutes intensity, but this year’s featured even more coddling than ever: What would you… Continue Reading

A Miscellany Of FINRA Issues A Little Too Big To Call Nitpicking

Posted in Arbitration, Compliance, Disciplinary Process, Enforcement, FINRA, PIABA, Registered Representative, Sanctions, Wells process
For some reason, a bunch of noteworthy events all happened around the same time this week, so please bear with me as I vent a little about them.  Individually, they are irritating; in the aggregate, they are borderline alarming. First, the FINRA Wells process. I have blogged about this before, and how, in a couple… Continue Reading

FINRA Merely Wants To Understand Your Firm’s “Culture” (And I Have A Bridge To Sell You)

Posted in Compliance, Conflict of Interest, Culture, Examination, Fiduciary Standard, FINRA
By now you have probably read FINRA’s recent “Targeted Exam Letter” entitled “Establishing, Communicating and Implementing Cultural Values.”  In case you haven’t, it is clear that FINRA is following up on the promise it made in January in the 2016 Regulatory & Examination Priorities Letter to “formalize [its] assessment of firm culture while continuing [its]… Continue Reading

Lost at Sea: Why FINRA’s Lack of Formal Guidance to CCOs Could Leave Them Adrift in Dangerous Regulatory Waters

Posted in Compliance, Defenses, Disciplinary Process, FINRA
In Homer’s epic poem the Odyssey, Odysseus and the crew of his ship are faced with the impossible choice of either sailing closer to Charybdis, a whirlpool capable of sinking their entire ship, or, alternatively, to Scylla, a sea monster just as deadly.  Odysseus’ dilemma sprang to mind as I listened to a presentation last… Continue Reading

FINRA’s 2016 Examination Priorities Letter: Focus On “Firm Culture”

Posted in Compliance, Expungement, FINRA, Senior Investors, Suitability, Supervision
Yesterday, FINRA released its annual Examination Priorities Letter in which it set forth the top issues that would guide its examinations in the coming year. Running 13 pages in length (while complaining about having to be so “brief”), FINRA set forth some of the “many areas of potential concern” it expects to encounter this year.… Continue Reading

SEC Offers Guidance On Compliance: Don’t Forget The Basics

Posted in Compliance, Conflict of Interest, Examination, FINRA, Supervision
I posted several blogs this summer about our victory over the SEC in the Robare case (which, naturally, has been appealed by the SEC’s unhappy Division of Enforcement). One of the key elements in our ability to prevail in that matter was my client’s extensive use of outside securities consultants to assist in the preparation and… Continue Reading

Nobody’s Perfect (And Even FINRA Finally Acknowledged It)

Posted in Compliance, Disciplinary Process, Enforcement, FINRA, Statutory Disqualification
Fans of this blog (or, at least, readers of this blog who are fans of Jeopardy) will no doubt remember Alan’s prior post, published a few weeks ago, and discussing a recent case that FINRA’s Department of Enforcement brought against one of our clients. From the very beginning, we, as her counsel, were both bewildered… Continue Reading

Compliance Officer Liability: Findings Without Sanctions? The Plot Thickens

Posted in Administrative Proceedings, appeal, Compliance, Enforcement, RIA, Sanctions, SEC, Supervision
We have previously posted on the issue of CCO liability, a very sensitive subject, to say the least, for many readers of this blog.  If this is a subject that interests you, then there was a very intriguing development this past week in this area that merits your attention. It came in the form of… Continue Reading

Actions Speak Louder Than Words: The Regulation of Chief Compliance Officer (CCO) Conduct

Posted in Compliance, Disciplinary Process, Enforcement, SEC, Supervision
Yesterday, the SEC held its 2015 “National Compliance Outreach Program for Broker-Dealers.” The program was designed to “provide[] an open forum for regulators and industry professionals to share strong compliance practices and promote the exchange of ideas to develop an effective compliance structure.” In the spirit of this cooperation, SEC Chairwoman White opened the conference… Continue Reading
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