Right after I posted this, FINRA announced a third AML settlement, this time with Interactive Brokers. It was no small deal: it came with a $15 million fine and an obligation to retain an independent consultant. (In addition to the FINRA AWC, Interactive simultaneously entered into settlements with the SEC — with another $11.5
Supervision
The Trouble With The “Should-Have-Known” Standard, As It Applies To Red Flags
By Alan Wolper on
Last year, I wrote a piece called “Wedbush Learns That It’s Not Enough Just To Spot Red Flags.” As the title suggests, it analyzed an SEC decision in which Wedbush was sanctioned because it failed in several respects to follow up on certain red flags it saw that were indicative of potential misconduct.
I am…
When It Comes To Suitability Violations, There Is No Flattening Of The Curve
By Alan Wolper on
Posted in Disciplinary Process, Enforcement, FINRA, Rule 2111, Senior Investors, Suitability, Supervision
Let’s take a step back from Covid-19 news, for a moment, which, rightfully, has dominated the news and everyone’s collective conscience, and focus on something that has been pervasive in the broker-dealer world for much, much longer than this virus, and which has taken its own toll on the industry in terms of dollars –…
When It Comes To Sanctions, What Does “Relevant Disciplinary History” Mean To FINRA, And Does It Vary Depending On The Size Of The Firm?
By Alan Wolper on
The day after Christmas, FINRA issued a press release announcing that five big firms – Citigroup, J.P. Morgan Chase, LPL, Morgan Stanley and Merrill Lynch – had each entered into a settlement, collectively agreeing to pay a $1.4 million fine. Their offense? They each violated FINRA’s supervisory rules because for a number of years, dating…
Wedbush Learns That It’s Not Enough Just To Spot Red Flags
By Alan Wolper on
Posted in SEC, Supervision
I have been busy the last month getting ready for a big arbitration, and attending the first week of what looks like is going to be a four- or five-week slog when all is said and done. So, I am just catching up on some recent developments, and mulling over what might be of interest…
Ameriprise Learns The Hard Lesson That To Be Deemed “Reasonable,” A Supervisory System Actually Has To Work
By Alan Wolper on
Posted in SEC, Supervision
A little over a year ago, I blogged about a FINRA Enforcement action against an Ameriprise rep – but, notably, not Ameriprise – to highlight what a great job the firm did in ensuring that its sales force was not engaging in any undisclosed outside business activities. It had a robust supervisory procedure, with multiple…
FINRA’s Exam Guidance Is A Big Yawn
By Alan Wolper on
As promised, FINRA has released its first Report outlining common findings from its examinations, in an effort to help member firms comply with the rules and, presumably, avoid problems that other firms encountered. A noble idea, especially for an entity not exactly known (at least lately) for its proactive measures to assist BDs with their…
The Head-In-The-Sand Approach To Supervision: A Primer
By Alan Wolper on
There’s a claimant’s lawyer I’ve litigated against several times who is very good at his job, and who I personally like very much. Part of the reason for his success is that he is very engaging, so even when he utterly lacks any decent facts on which to base his claim – which is often…
FINRA’s AML Fines: Murky (And Expensive) Waters
By Michael Gross on
Posted in AML, Disciplinary Process, Enforcement, FINRA, Rule 3011, Rule 3310, Sanctions, Supervision
In this post, Michael Gross complains — and rightly so — about the lack of any definitive guidance from FINRA regarding the appropriate range of fines to be imposed for AML violations. The bigger issue, however, at least in my view, is not necessarily the lack of guidance, but the fact that the fines FINRA…
As Berthel Fisher Just Learned, Those Who Don’t Know FINRA’s History Of Disciplinary Actions Are Doomed To Repeat It
By Alan Wolper on
I have often used these posts to lament the fact that FINRA consistently acts as an enforcement driven group of crazed examiners, hell-bent on writing firms up for technical violations, at best, uncaring about the dramatic ramifications of their seemingly ceaseless attack on well-meaning broker-dealers and their owners. While I still harbor those feelings, occasionally…