Broker- Dealer Law Corner

Broker- Dealer Law Corner

Category Archives: Sanctions

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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

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

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

Statutorily Disqualified? FINRA Says “Deal With It”

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions, Statutory Disqualification
It is a nasty thing when one becomes statutorily disqualified. It means either leaving the industry, permanently, or having to file an MC-400 and trying to convince FINRA that you should be permitted to remain in the industry, albeit subject to heightened supervision and extra scrutiny from FINRA.  I have previously blogged about statutory disqualification,… Continue Reading

Frequently Asked Questions About FINRA Rule 8210

Posted in Disciplinary Process, Enforcement, Examination, FINRA, Rule 2010, Rule 8210, Sanctions
As readers of this Blog know, Rule 8210 is a favorite subject of mine to complain about, particularly the frightening vigor with which FINRA constantly tests the limits of the rule.  What follows are some very helpful FAQs about Rule 8210 from Michael Gross.  –  Alan The Scope of the Rule Can FINRA really ask… Continue Reading

Advertising Case Loss Reveals Limits To FINRA’s Jurisdiction Over Outside Business Activities

Posted in Advertising, Disciplinary Process, Enforcement, FINRA, Rule 2210, Sanctions
It is a simple fact that a broker-dealer has no obligation to supervise a disclosed outside business activity. How do I know?  FINRA has said so.  This, for instance, comes straight from Reg Notice 05-50:  “Rule 3030 does not require that the firm supervise or even approve an outside business activity, although a firm may… 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

(Another) Landslide Victory: FINRA Enforcement Offers ZERO Evidence Of Fraud

Posted in Disciplinary Process, Enforcement, FINRA, Private Placement, Sanctions
At the end of last week, we received our second[1] decisive win in a FINRA Enforcement case in a matter of days. Following a two-day hearing back in July, the hearing Panel dismissed all charges against our clients Paul J. McIntyre and MSC-BD, LLC. While any victory is nice, and doing justice for a client… 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

For Those About to be Suspended: The Guessing Game is Over Whether You Can Receive Your Trails

Posted in Disciplinary Process, Enforcement, FINRA, Rule 2040, Rule 8311, Sanctions, Supervision, suspension, Trail commissions
There are lots of FINRA rules, so many that some don’t get the attention they deserve because others, like the suitability rule or the supervision rule, generally hog the limelight. Moreover, some rules have such narrow application that you may not realize they even exist because they impact only a very few people or entities.… Continue Reading

David Slays Goliath…And Goliath Is Pissed

Posted in Administrative Proceedings, appeal, Disciplinary Process, Enforcement, Sanctions, SEC
I reported a few weeks ago on the victory that my clients, Mark Robare and Jack Jones, achieved in the administrative proceeding that the SEC initiated against them last year. Against all odds, they convinced Judge Grimes that not only had they not committed the fraud claimed by the SEC, but, in Judge Grimes’ words,… Continue Reading

FINRA’s New Sanction Guidelines: The More Things Change, The More They Stay The Same

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions, Settlements, Supervision
Just a week ago, I ran a post about FINRA’s Sanction Guidelines, suggesting that they appear to have no relevance anymore, given the vast disparity between fines that FINRA is actually imposing in settled cases, on the one hand, and the supposed maximum fines described in the Sanction Guidelines, on the other. In an excellent… Continue Reading

Do The FINRA Sanction Guidelines Continue To Have Any Relevance?

Posted in Disciplinary Process, Enforcement, Sanctions, Settlements, Supervision
I read with interest the press release FINRA issued this week announcing an $11.7 million settlement with LPL, principally over what FINRA characterized as “widespread supervisory failures.” There were two things most noteworthy to me.[1] The first, interestingly, is not the size of the monetary sanctions (a $10 million fine plus $1.7 million in restitution),… Continue Reading

The True Definition of a FINRA “OTR”: “O”utrageous “T”ime and “R”esources”

Posted in Enforcement, Examination, FINRA, OTR, Sanctions
Before I became a District Director for NASD, I was an attorney with its Department of Enforcement. In those days, I would occasionally take someone “on the record,” but only when it was clear that a formal disciplinary action, i.e., a complaint, would be forthcoming. The purpose of the OTR was principally to memorialize and… Continue Reading
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