Broker- Dealer Law Corner

Broker- Dealer Law Corner

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Does FINRA Have Jurisdiction Over Me?

Posted in Arbitration, FINRA

Does FINRA have jurisdiction over me? This is a question that I regularly field at the outset of regulatory engagements. My answer differs depending on a number of factors, including the nature of a person’s role and duties at a firm, his or her registration status, when the alleged misconduct occurred, whether he or she… Continue Reading

The Securities Regulators All Have Senior-itis. Maybe For Good Reason.

Posted in FINRA, Rule 2165, Rule 4512, Senior Investors

The securities industry’s concern over the aging of the U.S. population, specifically, aging investors, has, apparently, reached a fever pitch. Yesterday in New York, SIFMA hosted its “Senior Investor Protection Conference – One Year Later: FINRA Rules 2165 and 4512,” and, for a securities conference, it received pretty extensive news coverage. I saw at least… Continue Reading

FINRA’s 529 Share Class Self-Disclosure Initiative: If It’s Good Enough For The SEC, It Must Be Good Enough For FINRA

Posted in 529 Plan, FINRA

About a year ago, the SEC offered investment advisors the unique opportunity to report themselves to the SEC if they sold mutual funds to their clients that offered a lower priced share class than the class actually selected by the advisor, but failed adequately to disclose the conflict of interest that created.  For those advisors… Continue Reading

FINRA’s 2019 Examination Priorities Letter: Beware, More Of The Same Is Coming

Posted in Compliance, Examination, FINRA, Rogue rep

In 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

Yes, You Can Form A Broker-Dealer Without Running Afoul Of FINRA’s Outside Business Activities Rule

Posted in FINRA, Outside business activities, Rule 3270

It is not a wise career move for a registered rep to leave his broker-dealer – thereby abandoning his customers, and affording competitors the opportunity to make his customers their own – and then to begin the long, expensive, and uncertain process of forming a FINRA-registered broker-dealer. Common sense, principles of fundamental fairness, and good… Continue Reading

The Disturbingly Cozy Relationship Between FINRA And PIABA

Posted in Arbitration, FINRA, PIABA

What exists at the point where PIABA’s transparent self-interest in getting paid and FINRA’s historical lack of transparency about who is actually driving its agenda regarding arbitrations? This: a late December decision by FINRA to propose a rule that prohibits non-lawyers from representing – for a fee – customers in arbitrations, and an even more… Continue Reading

The Real Lesson From FINRA’s 2018 Exam Findings Report

Posted in Enforcement, Examination, FINRA

On 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

Money Talks, And FINRA Is Listening

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions

Last year I wrote about FINRA’s effort to encourage firms to self-report their problems, pausing to wonder at the suggestion attributed to Jessica Hopper, a Senior Vice President with Enforcement, that cooperating with FINRA by self-reporting “not only fulfills a firm’s regulatory responsibilities, but it can also mean the difference between a slap on the… Continue Reading

FINRA Stats Reveal Horribly Kept Secret: Small Firms Are The Heart And Soul Of The Brokerage Industry, But Dying Off, Nevertheless

Posted in FINRA

If you are like me, and spend your idle time twiddling around the FINRA website, then you already know that FINRA publishes a variety of mathematical statistics, updated periodically, that provide, along with the sobering tally of the Enforcement actions brought and fines imposed, a good insight into the composition of the membership.  Yesterday, FINRA… Continue Reading

FINRA Proposes To Require Disclosure Of Insurance Information In Arbitrations. Seriously.

Posted in Arbitration, FINRA

Once upon a time, FINRA at least pretended that it was interested in maintaining a level playing field for claimants and respondents in the arbitrations it administers. Today, all that pretense has been jettisoned.  In Regulatory Notice 18-22, which seeks comments on FINRA’s proposal to require respondents to produce information relating to their insurance policies,… Continue Reading

BD Learns It’s Not Enough To Have A Supervisory Procedure For OBAs, You Actually Have To Follow It

Posted in Enforcement, FINRA, Outside business activities, Rule 3270, Uncategorized

In most Enforcement cases involving outside business activities, it is the registered rep who is named as the respondent, and the allegation is that the RR failed to provide notice (or timely notice) to his or her broker-dealer about the OBA. On occasion, however, it is the BD that gets tripped up, typically for not… Continue Reading

FINRA’s “Massive” Discovery Failure Results In…Absolutely Nothing

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions, Uncategorized

You are not going to believe this one. Here are the unadulterated facts, taken directly from the Order entered by the FINRA Hearing Officer (an Order, by the way, which FINRA elected not to publish on its website): Five days into an Enforcement hearing against Respondent Steven Larson, “Enforcement disclosed that it just realized it… Continue Reading

PIABA Lawyers Convince Congress Of The Importance Of Them Collecting Their Attorneys’ Fees

Posted in Arbitration, FINRA, PIABA

I have written before of the ferocious effort by PIABA lawyers to fight for their ability to collect attorneys’ fees on contingency matters – FINRA arbitrations – that they manage to win but which never get satisfied because the respondent broker-dealer has the temerity to go out of business rather than paying the award. PIABA… Continue Reading

The Demise Of FINRA’s District Committees…And Self Regulation, Too?

Posted in District Committees, FINRA

Many people, myself included, are of the view that FINRA today remains a self-regulatory organization in name only. For years now, FINRA has taken a series of actions decried by its member firms – new rules, new interpretations of old rules, zealous enforcement of rules, the imposition of punitive sanctions – who correctly complain that… Continue Reading

FINRA Knows Best – At Least According To FINRA – When It Comes To Hiring Decisions

Posted in FINRA, Hiring practices, Rule 1017

I don’t know how many times I’ve written about FINRA’s efforts over the years to address “rogue brokers,” or what it refers to nowadays more politically correctly as “high-risk brokers.” It doesn’t really matter what blog post you read, or when I wrote it, as they all tell essentially the same story:  FINRA is just… Continue Reading

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