Yesterday, two of my colleagues here at Ulmer, Fran Goins and Michael Hoenig, published an article in @BLaw Insight in response to a recent report by FINRA outlining the best practices for BDs to deal with cyber threats. Since this is undoubtedly a subject of considerable interest to many of you, I wanted to share it right… Continue Reading
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Contrary To What FINRA Believes, Rule 8210 Is Not A Search Warrant
Posted in FINRA, Rule 8210I have been waiting for a while to write about this issue, since it arose in an Enforcement case I handled for a client, and I wanted the matter to run its full course at FINRA before I started throwing stones. Sadly, there are so many things I could complain about here. The fact that… Continue Reading
Does FINRA Have Jurisdiction Over Me?
Posted in Arbitration, FINRADoes 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 InvestorsThe 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, FINRAAbout 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 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
Yes, You Can Form A Broker-Dealer Without Running Afoul Of FINRA’s Outside Business Activities Rule
Posted in FINRA, Outside business activities, Rule 3270It 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, PIABAWhat 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, 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
The Rule 8210 Karma Train Runs FINRA Over
Posted in Enforcement, FINRA, Rule 8210, UncategorizedIf you’ve read this blog for even a short while, you know my feelings on Rule 8210, or, more specifically, how FINRA uses that rule, i.e., as a cudgel to keep member firms and their associated persons in line. Endless 8210 requests for documents and information, sometimes asking multiple times for the same stuff, each… Continue Reading
Money Talks, And FINRA Is Listening
Posted in Disciplinary Process, Enforcement, FINRA, SanctionsLast 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
All’s Fair When It Comes To Arbitrator Ranking
Posted in Arbitration, FINRA, PIABAI just read an article about a research study conducted of FINRA arbitrations by three people associated with Harvard, Stanford, and the University of Texas, respectively, and their overarching conclusion is a doozy. Now, admittedly, I have not read the study itself (as it costs $5 to get a copy), so I only know what… Continue Reading
FINRA Announces Changes To Its Exam Program. Or Does It?
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
Tips For Staying Off The SEC’s Naughty List In 2019
Posted in CFTC, Compliance, Crypto, Cybersecurity, FINRA, SECI recently had to the opportunity to sit in on a talk from high ranking CFTC and SEC enforcement officials at a local bar association meeting. The purpose of the get together was, in part, to let industry folks and their lawyers know what the regulators will be focusing on in the near future in… Continue Reading
FINRA Plays Guessing Game With Expungement Waiver Request
Posted in Arbitration, Expungement, FINRA, Rule 2080When a registered rep contacts us about seeking expungement of customer complaints from his or her CRD record, we always respond that expungement is not a sure thing. It turns out that is more true than ever before because of the way FINRA is treating its “waiver” process. You see, we recently participated in an… 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 FINRAIf 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, FINRAOnce 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, UncategorizedIn 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, UncategorizedYou 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’s Efforts To Get A Law Passed To Ensure Payment Of Legal Fees Off To Rough Start
Posted in Arbitration, FINRA, PIABAAbout a month ago, I posted a blog about the apparent success that PIABA had achieved in getting two US senators — a Democrat and a Republican — to sponsor a bill to require FINRA to create a fund from which unpaid arbitration awards — and, of course, unpaid claimants’ counsel fees — would be… Continue Reading
PIABA Lawyers Convince Congress Of The Importance Of Them Collecting Their Attorneys’ Fees
Posted in Arbitration, FINRA, PIABAI 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, FINRAMany 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’s Attempt To Change Well-Established Federal Law On Churning
Posted in Churning, Enforcement, FINRAWhen Michael called me to tell me about the subject of this post, I frankly thought he was making it up. The notion that FINRA was seriously suggesting deleting one of the historically recognized essential elements of a churning claim — principally because otherwise it was too difficult for FINRA to prove churning — seemed… Continue Reading
FINRA Knows Best – At Least According To FINRA – When It Comes To Hiring Decisions
Posted in FINRA, Hiring practices, Rule 1017I 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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