My job frequently requires that I explain to someone – whether my client, an ALJ, an arbitration panel, even a regulator – the fundamental difference between a broker-dealer and an investment advisor. An IA operates pursuant to a fiduciary duty; a BD, on the other hand, even with the advent of Regulation BI, largely has
UB Greensfelder
Passing The Suitability Buck To The Customer Is Never A Good Strategy
By UB Greensfelder on
I continue to wade my way through a few months’ worth of cases, press releases, etc., looking for things that manage to catch my attention. I found this SEC settlement from the end of July involving Integral Financial, a BD out of California, and its founder, majority owner, President, and Chairman of the Board of…
Believe It Or Not: FINRA Wants To Be Your “Partner”
By UB Greensfelder on
Posted in FINRA
I am still catching up on things that happened over the last couple of months, as I dig myself out of the hole created by (finally) completing a 39-day FINRA arbitration (SOC filed in 2014, hearing started in 2019). Truthfully, it seems there’s been a lot of the usual. You know, FINRA taking formal disciplinary…
A Sad Story Of Regulators Simultaneously Doing Too Much And Too Little
By UB Greensfelder on
Not too long ago, a single, small BD experienced a bizarre combination of regulatory overzealousness and regulatory indifference, by the SEC and FINRA, respectively. These things, sadly, happen all the time, but what happened to this unfortunate firm presents an excellent case study in regulators who simply do not wield their considerable prosecutorial discretion in…
Securities America SEC Settlement Raises Prospect Of New Supervisory Standard
By UB Greensfelder on
There have been tons of cases where firms got in trouble – in AML trouble, which is one the worst kinds of trouble – for failing to be sufficiently on top of third-party wires, i.e., where a customer wires money not to himself but to someone else. In a change of pace, last week, the…
SEC Settlement Is A Wake-Up Call To Review Outdated Procedures
By UB Greensfelder on
Most securities regulations, by design, create a gray world where compliance is not crystal-clear, but, rather, subject to interpretation. After all, what you think constitutes “reasonable” supervision and what FINRA or the SEC think is reasonable may very well be two extremely different things. Indeed, it is the existence of subjective standards of conduct like…
For FINRA, Unlike The SEC, Blaming The BD Always Seems To Be The Answer
By UB Greensfelder on
FINRA Enforcement has often been accused (again, admittedly, by me, and not too infrequently) of going after the “low-hanging fruit,” that is, taking the easy case when it presents itself. Putting aside the question whether this observation is accurate or not – for what it’s worth, I think the answer is that it is often,…
Gamification: Regulators Should Try The Investor Education Game
By UB Greensfelder on
The controller has been passed to a new team of players in Washington. New players prefer to hit the reset button and start a new game, not pick up where the prior player left off. We know how our new players like to play the game. They want to control every aspect of the game…
JAMS vs. FINRA Arbitrations . . . And The Winner Is JAMS
By UB Greensfelder on
Posted in Arbitration, FINRA
So I spent last week – the whole week – doing an arbitration with JAMS. It involved some of the typical elements of a FINRA claim, e.g., allegations of the sale of an unregistered security, of an “investment” gone bad, of misrepresentations and omissions in connection with the “sale” of that “investment,” but for reasons…
You Should Understand The Difference Between Violating A Firm Policy And Violating A FINRA Rule . . . Even If FINRA Doesn’t
By UB Greensfelder on
I am writing this while flying home from my first business trip in over 15 months. I have to tell you, it is more than a bit of a strange feeling to be out and among people again. While my face is sore from wearing this N95 mask nearly non-stop for three days, my hands…