Broker- Dealer Law Corner

Broker- Dealer Law Corner

Category Archives: Enforcement

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FINRA’s Board Acts To Fix The Problem…That FINRA Created

Posted in Arbitration, Board of Governors, Enforcement, FINRA
So, as you undoubtedly recall, in its typical reactive approach to regulation, FINRA has expressed concern – after having concerns expressed to it by others (none of whom are actually from the securities industry, of course) – about (1) the high number of registered reps working in the industry with spotty disciplinary records, and (2)… Continue Reading

The Unassailable FINRA Rule 8210

Posted in Disciplinary Process, Enforcement, FINRA, Rule 8210
My dissatisfaction with FINRA’s Rule 8210 and, more specifically, the aggressive manner with which FINRA wields that rule, has been the subject of several prior blogs.  I happy to report that my partner, Michael Gross, has drunk the Kool-Aid, and joined me in tilting at this windmill.  – Alan The first paragraph of a paper calling… Continue Reading

What Else Is New? FINRA Skates Despite “Massive” Failure To Produce Documents

Posted in Discovery, Enforcement, FINRA, Rule 8210, Rule 9251, Uncategorized
Let’s play pretend.  Can you imagine what FINRA would do to a respondent broker-dealer in an Enforcement action that announced on Day Five of the hearing – i.e., during the “final phase” of the hearing – that – whoops! – it had forgotten to produce certain documents that it should have produced eight months before… Continue Reading

FINRA Provides The Blueprint For Monitoring Outside Business Activities

Posted in Disciplinary Process, Disclosure, Enforcement, FINRA, Outside business activities
Outside business activities are in the news. In Reg Notice 17-20, FINRA announced that it was seeking comments in an effort to learn whether or not the existing rules governing OBAs are effective.  (The comment period is open until late June, so if you have strong feelings on the subject, now is the time to… Continue Reading

Does FINRA Give Credit For Self-Reporting Problems? It Says It Does, But….

Posted in Disciplinary Process, Enforcement, FINRA, Reg Notice 08-70, Sanctions, Settlements
I read a fascinating piece the other day in BankInvestmentConsultant about FINRA’s Enforcement program, specifically about the notion of broker-dealers self-reporting problems, and whether that was a smart thing to do.  Some of the quotes attributed to FINRA senior Enforcement management are really interesting, so I wanted to share them with you in the event… Continue Reading

FINRA’s AML Fines: Murky (And Expensive) Waters

Posted in AML, Disciplinary Process, Enforcement, FINRA, Rule 3011, Rule 3310, Sanctions, Supervision
In this post, Michael Gross complains — and rightly so — about the lack of any definitive guidance from FINRA regarding the appropriate range of fines to be imposed for AML violations.  The bigger issue, however, at least in my view, is not necessarily the lack of guidance, but the fact that the fines FINRA… Continue Reading

FINRA’s Board Continues To Bend In the Wind Of Criticisim

Posted in Arbitration, Board of Governors, Enforcement, FINRA, PIABA, Registered Representative, Rogue rep, Rule 2010, Sanctions
On Wednesday, the FINRA Board met and discussed two topics that I recently blogged about: recidivist brokers and unpaid arbitration awards.  In predictable fashion, FINRA withered in the face of criticism that its existing rules and policies are somehow not tough enough on its member firms, and embarked on a proposed series of steps that,… Continue Reading

Sticks And Stones May Break Your Bones, But Words Will Get You Barred

Posted in Enforcement, FINRA, Registered Representative, Rule 2010, Sanctions
I have been meaning to write something about this recent NAC decision for a while now, but I am still not really sure what to make of it.  I suppose it stands for two propositions.  First, there is almost nothing that a registered rep can do without FINRA sticking its nose in, regardless of whether… Continue Reading

As Berthel Fisher Just Learned, Those Who Don’t Know FINRA’s History Of Disciplinary Actions Are Doomed To Repeat It

Posted in Disciplinary Process, Enforcement, FINRA, Supervision
I have often used these posts to lament the fact that FINRA consistently acts as an enforcement driven group of crazed examiners, hell-bent on writing firms up for technical violations, at best, uncaring about the dramatic ramifications of their seemingly ceaseless attack on well-meaning broker-dealers and their owners. While I still harbor those feelings, occasionally… Continue Reading

When It Comes To Testifying To The SEC, Providing Alternative Facts Can Be A Bad Idea

Posted in Disciplinary Process, Enforcement, Examination, FINRA, SEC
At the beginning of most FINRA OTRs, the examiner reads from a script of sorts, outlining some of the basic rules governing the proceeding. One of the things the script calls for is an express acknowledgement by the witness that he or she is testifying pursuant to Rule 8210, and that, as a result, a… Continue Reading

FINRA Tweaks The Sanction Guidelines Again And – Guess What? – It Wasn’t To Make Them Gentler

Posted in Defenses, Disciplinary Process, Enforcement, FINRA, Sanctions, Supervision
Remember a few weeks ago? Remember I blogged about Robert Cook, FINRA’s new CEO?  And how he was saying all the right things about FINRA perhaps being juuuuust a bit too Enforcement oriented?  I expressed hope – sincere but wary hope – that given his remarks, it was possible that the pendulum might actually start… Continue Reading

Some Amusing OHO Decisions

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions
As a former member of FINRA Enforcement’s Litigation Department and a current practitioner in FINRA regulatory matters, I have read my fair share of decisions from the Office of Hearing Officers (OHO). I recently read the Southeast Investments/Black decision, which was issued in March. There is some good stuff in there – from an entertainment… Continue Reading

When FINRA Can’t Discipline The Firm, Individuals Pay The Price

Posted in CCO liability, Disciplinary Process, Enforcement, FINRA, Rule 3010
There has been a lot of discussion over the past few years, including in this blog, about the growing – and troubling – trend for Chief Compliance Officers to be named as respondents in disciplinary actions.  While regulators regularly deny that they truly have it out for CCOs, as is often the case, their actions… Continue Reading

It Can Pay To “Lawyer Up” When Dealing With FINRA

Posted in Defenses, Disciplinary Process, Enforcement, Examination, FINRA, OTR, Registered Representative, Sanctions
I realize that the title of this blog post may sound self-serving, so I apologize for that up front, as it is not my intent.  Still, there is a lesson here to be learned. I got a phone call yesterday from a reporter asking me to comment on a disciplinary action that FINRA had just… Continue Reading

Is There A Catch-22 To Fighting FINRA Charges?

Posted in Defenses, Disciplinary Process, Enforcement, FINRA, Registered Representative, Sanctions
Here is a fascinating analysis by my partner, Michael Gross, of FINRA’s twisted logic when it comes to sanctions:  your very decision not to admit liability and to put FINRA to its proof can, and will, be held against you when it comes time to determine the appropriate sanctions. Or will it?  –  Alan The FINRA… Continue Reading

2017 Off To A Bad Start For The SEC As The 10th Circuit Finds SEC ALJs To Be Unconstitutional

Posted in Administrative Proceedings, Disciplinary Process, Enforcement, SEC
Many industry authors – including me[1] – have devoted a lot of attention lately to the SEC’s increased use of Administrative Proceedings (rather than Federal court cases) in recent years, and questioned the fairness of such proceedings, given their relative lack of discovery tools, the short timeframe provided within which to prepare a case for… Continue Reading
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