Broker- Dealer Law Corner

Broker- Dealer Law Corner

Category Archives: Examination

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FINRA Examiners Are Like A Box Of Chocolates . . .

Posted in Examination, examiners, FINRA, ODA
Michael discusses the differences in examiners — and, potentially — examination results from District Office to District Office.  Remember, however, that such differences aren’t supposed to exist!  That’s why the Office of Disciplinary Affairs exists.  I suppose the question is whether the ODA is doing its appointed task of achieving consistency throughout FINRA. – Alan My… 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

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

Tell Me Something I Don’t Know: OCIE’s Tips To Surviving An SEC IA Exam

Posted in Examination, RIA, SEC
Let’s chalk this one up to “great minds think alike,” or maybe just “minds think alike.” You may recall that in his recent letter to member firms that accompanied FINRA’s 2017 Exam Priorities Letter, FINRA CEO Robert Cook said, “starting this year, we will publish a summary report that outlines key findings from examinations in… 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

The Long Arm Of The Law Has Nothing On FINRA’s Reach

Posted in Disciplinary Process, Enforcement, Examination, FINRA, Registered Representative, Rule 2010
So, you’re a registered rep, working for a broker-dealer. Necessarily, you are registered with and subject to the oversight of FINRA, not a particularly happy proposition.  But at least you can take comfort in the fact that while FINRA may have the right to stick its nose into your securities business, what you do away… Continue Reading

FINRA Merely Wants To Understand Your Firm’s “Culture” (And I Have A Bridge To Sell You)

Posted in Compliance, Conflict of Interest, Culture, Examination, Fiduciary Standard, FINRA
By now you have probably read FINRA’s recent “Targeted Exam Letter” entitled “Establishing, Communicating and Implementing Cultural Values.”  In case you haven’t, it is clear that FINRA is following up on the promise it made in January in the 2016 Regulatory & Examination Priorities Letter to “formalize [its] assessment of firm culture while continuing [its]… Continue Reading

What To Expect When You’re Expecting (An SEC Exam)

Posted in Annual Report, Examination, SEC
Tis the season for announcing the year’s top examination priorities. This week, the SEC released its own examination priorities. Top priorities include: liquidity controls; public pension advisers; product promotion; exchange-traded funds; and variable annuities. Thematically, the SEC’s priorities adhere to its larger objectives: protecting retail investors (especially retirement savings); assessing market-wide risks; and utilizing data analytics… Continue Reading

SEC Offers Guidance On Compliance: Don’t Forget The Basics

Posted in Compliance, Conflict of Interest, Examination, FINRA, Supervision
I posted several blogs this summer about our victory over the SEC in the Robare case (which, naturally, has been appealed by the SEC’s unhappy Division of Enforcement). One of the key elements in our ability to prevail in that matter was my client’s extensive use of outside securities consultants to assist in the preparation and… Continue Reading

The Ongoing Puzzle Of Ongoing Due Diligence

Posted in Disciplinary Process, Due diligence, Enforcement, Examination, Fiduciary Standard, FINRA, Private Placement, Reg D, Rule 2111, Supervision
I am currently in the midst of a FINRA examination that is largely focused on the adequacy of the due diligence that my broker-dealer client conducted of a private placement. What is puzzling about the exam is that FINRA is not just interested in the due diligence that was conducted prior to effecting any sales… Continue Reading

Day Two of FINRA’s Annual Conference

Posted in Enforcement, Examination, FINRA, Registered Representative, Rule 2111, Senior Investors, Suitability, Supervision
I wish I was able to report some fireworks, or something semi-controversial, but FINRA and its hand-picked panelists managed to avoid saying anything particularly remarkable in any way. If you have never attended one of these conferences, and think that people come to learn cutting edge strategies, forget it. It is all very basic, very… 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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