Broker- Dealer Law Corner

Broker- Dealer Law Corner

Tag Archives: disciplinary hearings

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’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

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

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

Article II Appointments Clause Defense To SEC Administrative Actions Gains Momentum In The Courts

Posted in Administrative Proceedings, appeal, Dodd Frank, SEC
Here is Part II of Ken Berg’s analysis of constitutional defenses that have been raised in response to the SEC’s increased use of administrative proceedings.  In the interest of full disclosure, note that the Malouf case referenced towards the end is one that Heidi VonderHeide and I are handling.  In addition, it also worth mentioning… 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

Looking For A Silver Lining: Post-Election Thoughts On The SEC

Posted in Administrative Proceedings, appeal, Disciplinary Process, Enforcement, SEC
Wednesday morning marked the confluence of two events. First, like the rest of the world, I awoke to the reality of the results of the presidential race.  Then, as soon as I got to the office, I received the results of a case (on which I have previously blogged) that the SEC’s Division of Enforcement… Continue Reading

When It Comes To Churning, FINRA Knows What’s Best For Investors

Posted in Churning, Disciplinary Process, Enforcement, FINRA
Since I first started practicing law back in the 1980s, customer complaints against brokers have often involved allegations of “churning,” which is deemed to be fraud. Now, as it was 30+ years ago, to prove a churning claim, a customer needs to demonstrate that (1) the broker acted with scienter, which is defined to be… Continue Reading

It’s Official: The SEC Has No Sense Of Humor

Posted in Administrative Proceedings, Disciplinary Process, Enforcement, SEC
One of my colleagues and I were busy the last two week defending an SEC administrative proceeding out-of-town, so I have not had much chance to blog. But…there was one development during our hearing that merits some immediate attention. My client has been accused, essentially, of making a number of material misrepresentations and omissions in… Continue Reading

The Math of Mark-Ups/Downs

Posted in Disciplinary Process, Enforcement, FINRA, Mark-ups, Rule 2121
I am pleased to welcome a new author to Broker-Dealer Law Corner, my partner in Ulmer’s Boca Raton office, Michael Gross.  Like myself, Michael returned to private practice after a stint at FINRA, specifically, with the Department of Enforcement, where he handled big, litigated cases all over the US.  There is no substitute for the perspective one gains… 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

Procedural Motions In FINRA Enforcement Actions: An Exercise In Futility

Posted in Disciplinary Process, Enforcement, FINRA, Rule 9253
Defending a FINRA Enforcement action is not easy. This stems principally from the fact that FINRA simply won’t file a complaint in the first place if they believe that there’s any realistic chance they will not win the case.  Thus, they expect to win every time they do file a complaint, and perhaps not unreasonably… 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

Good Grief! MetLife Agrees To $20 Million Fine, And Another $5 Million In Restitution! For Negligence!

Posted in annuities, Disciplinary Process, Enforcement, FINRA, Suitability, Supervision
FINRA announced today that it entered into a settlement with MetLife Securities, Inc. in which MetLife agreed to pay FINRA a $20 million fine and its customers up to $5 million in compensation for, basically, making misrepresentations over a five-year period to customers who replaced one variable annuity with another regarding the costs of making… Continue Reading

What In The Wells Is Going On With FINRA’s “Wells” Process?

Posted in Defenses, Disciplinary Process, Enforcement, FINRA, Settlements, Wells process
With any luck, you can go your entire career in the securities industry without ever participating in the dreaded “Wells process.” And that’s a good thing, as the Wells process occurs only after FINRA has completed an examination and has concluded that whatever it has encountered is so serious that a formal disciplinary action is… 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
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