Let’s talk about commissions today. Or, as they are sometimes referred to, transaction based compensation. Specifically, who can receive commissions. Actually, that’s not phrased correctly. The correct phrasing of this issue, courtesy of FINRA Rule 2040, would be: to whom a broker-dealer may legally pay commissions? According to that rule, BDs can only pay
FINRA
FINRA Continues To Turn Its Back On Its Members By Failing To Pass A Popular Rule
By Alan Wolper on
There are certain topics that broker-dealers have been encountering for decades, yet continue unnecessarily to wrestle with due to the absence of clear guidance from the regulators. I have written about one such topic before, and that’s the fuzzy line between most outside business activities, which RRs are obliged (at a minimum) by rule to…
Filing A Frivolous Customer Arbitration Carries Real Monetary Risks
By Chris Seps on
Here is a very interesting piece from Chris about the fact that some customers who file arbitrations may come to learn the hard way that even when their attorney takes the case on a continency fee basis, they still have real skin the game. I also want to be clear: while the award that serves…
Order Granting Motion To Vacate Arbitration Award Raises Question: Is FINRA Meeting Its Obligation To Provide A Fair Process?
By Alan Wolper on
Posted in Arbitration, FINRA
Motions to vacate an adverse arbitration award are rarely granted by courts. Indeed, that should come as no surprise to anyone inasmuch as the awards rendered at the conclusion of the arbitral process are explicitly designed to be “final.” As a matter of both federal and state law, there are very, very few available bases…
New Account Forms: As Evidence, They Can Be A Blessing Or A Curse
By Alan Wolper on
I am fond of saying that, at least generally speaking, the most important document in a customer arbitration alleging unsuitable recommendations is the new account form. If the NAF is in good shape, i.e., it is accurate, it is complete, it is up-to-date, it doesn’t have any changes or white-outs, then I am free to…
Passing The Suitability Buck To The Customer Is Never A Good Strategy
By Alan Wolper on
I continue to wade my way through a few months’ worth of cases, press releases, etc., looking for things that manage to catch my attention. I found this SEC settlement from the end of July involving Integral Financial, a BD out of California, and its founder, majority owner, President, and Chairman of the Board of…
Believe It Or Not: FINRA Wants To Be Your “Partner”
By Alan Wolper on
Posted in FINRA
I am still catching up on things that happened over the last couple of months, as I dig myself out of the hole created by (finally) completing a 39-day FINRA arbitration (SOC filed in 2014, hearing started in 2019). Truthfully, it seems there’s been a lot of the usual. You know, FINRA taking formal disciplinary…
A Sad Story Of Regulators Simultaneously Doing Too Much And Too Little
By Alan Wolper on
Not too long ago, a single, small BD experienced a bizarre combination of regulatory overzealousness and regulatory indifference, by the SEC and FINRA, respectively. These things, sadly, happen all the time, but what happened to this unfortunate firm presents an excellent case study in regulators who simply do not wield their considerable prosecutorial discretion in…
FINRA Is Bearish On FinTech (For Now) With Its Record Fine Against Robinhood
By Denise Fesdjian on
I am certain that, by now, you have read the Robinhood AWC. Here is a fascinating take on that settlement, and what it portends for the securities industry, as well as for FINRA, by Denise. – Alan
There’s no question that FinTech firms are on the rise, and attempting to revolutionize the financial services space…
For FINRA, Unlike The SEC, Blaming The BD Always Seems To Be The Answer
By Alan Wolper on
FINRA Enforcement has often been accused (again, admittedly, by me, and not too infrequently) of going after the “low-hanging fruit,” that is, taking the easy case when it presents itself. Putting aside the question whether this observation is accurate or not – for what it’s worth, I think the answer is that it is often,…