By Alan Wolper on Posted in Disciplinary Process,Enforcement,Examination,FINRAFINRA loves to tout its supposed intent to bring meaningful cases, cases that matter to the investing public, rather than enforcing “foot faults,” as it has been accused of doing over the years. My own experience with FINRA suggests that while it talks a big game, in reality, we all still live in foot-fault city.… Continue Reading
By Alan Wolper on Posted in Disciplinary Process,Enforcement,Examination,FINRAWhile I feel I have enjoyed as much success defending respondents in FINRA Enforcement matters as anyone, I am still careful to caution clients who are unwilling to consider any settlement that going toe-to-toe with FINRA at a hearing is always a difficult proposition, even though they are presumed innocent and FINRA bears the burden… Continue Reading
By Alan Wolper on Posted in Examination,Privacy,Reg S-P,SECI am hardly saying that SEC Regulation S-P is the sexiest of regulations. I mean, has any customer is history actually read one of those exciting statement stuffers that discloses in some dense font a BD’s privacy policy? Likely not, but, nevertheless, it remains that in this day and age, with hacking and phishing and… Continue Reading
By Alan Wolper on Posted in Compliance,Examination,FINRA,Rogue repIn what has become an annual, but hardly exciting – I mean, it’s not like anxiously awaiting the day that pitchers and catchers report to Spring Training – tradition, with the turning of the calendar to the new year, FINRA has once again released a letter announcing what it deems to be its priorities for… Continue Reading
By Alan Wolper on Posted in Enforcement,Examination,FINRAOn Friday last week, FINRA released a report discussing the findings from its 2018 exams, providing what it described as “selected observations” that were deemed to have “potential significance.” Even with that tepid introduction, in theory, this is still a great idea, since anyone in the industry, even so-called “good” or “clean” firms, should welcome… Continue Reading
By Alan Wolper on Posted in Examination,FINRAAs I am (probably too) fond of reminding people, I was an English major, and pride myself, at least to some degree, on my ability to use words effectively to communicate clearly. I get easily frustrated, therefore, when I read or hear something that was purportedly designed to relate a specific message, but the message… Continue Reading
By Michael Gross on Posted in Disciplinary Process,Discovery,Examination,FINRA,Rule 8210Here is a really interesting post from Michael regarding those potentially uncomfortable moments when FINRA calls non-complaining customers. Because FINRA is not the government, it has no subpoena power over these people, and so needs them to cooperate voluntarily. The problem is that FINRA does an awful job of informing non-complaining customers that they are… Continue Reading
By Michael Gross on Posted in Examination,examiners,FINRA,ODAMichael 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
By Alan Wolper on Posted in Disciplinary Process,Enforcement,Examination,FINRA,SECAt 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
By Michael Gross on Posted in Disciplinary Process,Enforcement,Examination,FINRA,OTRLast week, I published a post about the benefits of “lawyering up” when dealing with FINRA, particularly to handle the defense of an OTR. Here, my partner Michael Gross, who, like me, is a former FINRA Enforcement attorney, offers his advice about how properly to prepare for an OTR. While this post is helpful, it… Continue Reading
By Alan Wolper on Posted in Examination,RIA,SECLet’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
By Alan Wolper on Posted in Compliance,Conflict of Interest,Culture,Examination,Fiduciary Standard,FINRABy 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
By Heidi VonderHeide on Posted in Annual Report,Examination,SECTis 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
By Alan Wolper on Posted in Confidential customer information,Examination,FINRAA few months ago, I blogged about how FINRA rarely holds itself to the same standards of conduct that it expects from member firms, and I gave some examples. The other day, a good friend of mine brought to my attention yet another example, this one so blatant it can only make you laugh. As you… Continue Reading
By Alan Wolper on Posted in Compliance,Conflict of Interest,Examination,FINRA,SupervisionI 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
By Alan Wolper on Posted in Disciplinary Process,Enforcement,Examination,Fiduciary Standard,FINRAHere are my thoughts after Day One. At a minimum, you would have to admit that FINRA has a sense of humor: the song they played when Rick Ketchum, FINRA’s Chairman, was introduced to give his keynote speech was “Why Can’t We Be Friends,” the 1975 song by War. Predictably, there were few laughs after… Continue Reading
By Alan Wolper on Posted in Enforcement,Examination,FINRA,OTR,SanctionsBefore 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
