A couple of events caught my attention this week and, since they are related, I thought I’d address them together. On Monday, the SEC announced a proposed rule change to FINRA Rule 8312, the FINRA BrokerCheck Disclosure Rule. Rule 8312 permits FINRA to disclose certain information on BrokerCheck about registered individuals. As many of you… Continue Reading
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FINRA Discovery Guide’s Misguidance: Part 2
Posted in Arbitration, Discovery, FINRA, Registered RepresentativeI’ve previously posted about my frustration with the way the discovery guide is written, with particular attention focused on List 1 Item 10. See my prior post here. Item 14 causes me similar angst. Why? Because Item 14 is so poorly worded that, if read literally, almost no audit report will ever be responsive to it.… Continue Reading
If You’re a Respondent, Time is NOT on Your Side
Posted in Arbitration, Defenses, Disciplinary Process, Enforcement, FINRA, Registered Representative, SECThere was a decision this week from the D.C. Circuit Court of Appeals on an appeal of a decision by a respondent who – stop the presses! – lost an SEC administrative proceeding, and then lost his appeal to the SEC. Montford and Company, Inc. v. SEC, No. 14-1126 (July 10, 2015). One of the… Continue Reading
FINRA Discovery Guide’s Misguidance: Part 1
Posted in Arbitration, Discovery, FINRA, Registered RepresentativeFINRA’s Discovery Guide for Customer Disputes is not perfect. I think that FINRA would be the first one to admit that – which is why the Discovery Guide adopted under the Code of Arbitration Procedure for Customer Disputes has been revised three times in the past five years, and a task force has been set… Continue Reading
FINRA Got It Right – The New Definition of a Non-Public Arbitrator
Posted in Arbitration, FINRABy now, it should be clear, we are oft to criticize FINRA in this blog. Much of that criticism is self-inflicted by, in our view, their unfair or unreasonable decisions. But, in a departure from the norm, I want to recognize an instance when FINRA is getting something right. Effective this Friday, there will be… Continue Reading
To Mediate or Not: Arbitration v. Enforcement
Posted in Arbitration, Disciplinary Process, Enforcement, FINRA, Mediation, SettlementsI recently had two clients, both respondents in pending matters – ask me the same question in the same day: should I mediate this case? The answers I gave them differed dramatically, not just because the facts of each case were very different, but because one case was a customer arbitration, where we are defending… Continue Reading
Why are Senior Investors so Special? (Part 2)
Posted in Arbitration, FINRA, Rule 1250, Senior InvestorsIn a recent blog post, I wrote about the challenge a rapidly deteriorating change in mental capacity can cause BDs and RRs alike. Often, we are asked to speak to groups and firms, and this subject is a popular one. In my view, there are a couple of reasons for this development. First, FINRA has… Continue Reading
Sometimes You Lose: Why Mandated Insurance Coverage for Broker-Dealers Is Absurd
Posted in Arbitration, FINRAI recently had the extremely unhappy experience of losing a FINRA arbitration following a week-long hearing. Fortunately, this tends to be a rare occurrence around here, but that’s not really a surprise, since we tend to go to hearing only in those cases with strong facts, while we work hard to settle those with difficult… Continue Reading
Mid-Case Disciplinary Referrals: Unnecessary and Unfair
Posted in Arbitration, Enforcement, FINRAFINRA recently passed an amendment to the Code of Arbitration Procedure which provides that arbitrators no longer have to wait until the end of a case to make a disciplinary referral. Now, panelists are free to make such a referral in the middle of a hearing! My first observation is: was there really a need… Continue Reading
The Mystery Why FINRA “Close-Out” Letters Are Inadmissible in Arbitrations
Posted in Arbitration, FINRAAnyone who’s handled FINRA arbitrations is well familiar with panelists who regularly respond to evidentiary objections by overruling them, but with the admonition that they will only give whatever weight, if any, to the evidence that they deem appropriate. While that can sometimes be frustrating, it is understandable. The Federal Arbitration Act, and the many… Continue Reading
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